We've Got a Bleeder!
Does this upside breakout portend thinning liquidity or the other way around?
This article was posted on the Buzz at 2:49 PM today and is reprinted here for the benefit of the Minyanville community.
Why do stars fall down from the sky?
Everytime you walk by?
Just like me, hey, long to be
Close to Boo..."
I hear ya, Warren, that echoing scream you hear isn't Ted Stroemann zipping and flipping his beans and franks, it's the sound of scared bulls wondering what happened to their rally.
To be sure, the tape remains open for business and if we've learned anything these last few months, it's the necessity to stay on our toes until thy closing bell tolls. Beta (Yahoo (YHOO), eBay (EBAY), Amazon (AMZN), Google (GOOG), Baidu.com (BIDU) ) remains bid, after all, and pockets of strength remain. That, and the seemingly obvious heavy close, are the Cliff Branches into the final hour of the Hump.
For my part, I'm looking away from the "here and now" and looking for the "there and then." In that vein, the VXO jumped out and bit my ankle, as if to say "Dude, look at me, look at me!" I am, and I see that the near-term pennant, which resolved in the direction of the overall trend, broke out to the upside.
As discussed, there's a bit of "chicken and the egg" here"(chicken, eggs, franks, beans--is anyone else getting hungry?). We know that volatility is the inverse of liquidity (Ever try to buy a thin stock? Remember VXO 10ish for years as the Fed pumped liquidity into the system?) so, the answer I really wanna know is--does this upside breakout portend thinning liquidity or the other way around?
Confused? Dude, it's not your fault (it's not your fault, it's not your fault). It is confusing out there. It is volatile. It is dangerous if you're a step slow. That's why we preach the virtues of discipline over conviction and waiting it out when you're in doubt. I'll also offer that trading smaller is a necessity with movements like we're seeing. Indeed, the very fact that traders (and trading desks) are "out-sized" and leveraged is likely responsible for movement in the first place.
For my part and with my coin, I'm forcing myself to make some covers into the close(at least against the downside exposure I added yesterday). Again, you can call me Todd-lot as, well, I'm trading a shadow of my former size but that's entirely alright. In times like these, hitting for average rather than power will ensure that you're still in the game.
As always, I hope this finds you well.
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at firstname.lastname@example.org.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter