Gearing Up for Critical Close
Markets flirting with January lows.
If I go there will be trouble.
If I stay it will be double...
Man oh Manishevitz, it's a nutty strut out there. I mean, seriously... this morning we had strength in Goldman (GS) offsetting weakness in Google (GOOG). This afternoon we have jig in Apple (AAPL), Amazon (AMZN), Research in Motion (RIMM) and Baidu (BIDU) in the context of deteriorating internals. All the while, we're sitting directly on the January lows (closing basis) with every technician and their sister ready to pass judgment.
I continue to hold remnant call positions in Apple and BIDU, both with defined risk stops below S&P 1310, as well as the remainder of my Mother Morgan (MS) calls. The first two positions hang tough and I've managed to effectively "trade around" them and put some powder in my till. The last position was also pared into the previous lift for a marginal loss in an effort to reduce exposure and manage risk.
The big beta side of my book certainly feels like it wants to rip higher. Indeed, IF S&P 1310 can hold and Boo runs for cover, these stocks will produce gaps that would make Michael Strahan blush. That's a big IF, however--it's a monster IF--and it's a dicey bet to make with the internals as they are and dynamic duopoly of Goldman and Google both dancing in Red Dye.
How you stand is a function of where you sit so please allow for all sides of the probability spectrum. Consistent with my stylistic approach, I'm willing to give my remaining positions some room but not much. If there's even a hint of margin calls or forced liquidation in the cards, the real volatility has yet to come. And that's not a fight I'm willing to take.
Jab jab duck jab jab...
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.
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