Randoms: Homebuilders on the Radar
The first to squirm might be the first to turn.
Editor's Note: The following was posted in real time on our premium Buzz & Banter (click for a free trial). It's being shared here for the benefit of the Minyanville community. See also 2009: The Year of the "W" and What Does Chrysler Mean for the Market?
America's Worst Nightmare - 10:24 am
No, I'm not talking about O-Dog (although he's pretty scary), I'm talking about the housing crisis, which was the first domino to fall, eventually toppling the entire financial construct. Given that it was a leading indicator of the malaise, I've been keeping half an eye on the homebuilders for any signs of life.
Through that lens, I wanted to draw your attention to the chart of the homies (HGX), which are trying to trace out a "W" formation of a different breed (one entirely more bullish). Please note that this complex has mounted the 200-day moving average (92.60) and will face staunch resistance in and around the 100 level. Keep in on ye radar, Minyans, as we see both sides.
Click to enlarge
On a seperate note, I'll offer that I'm not thrilled with the early action in the financials (JPMorgan (JPM), Wells Fargo (WFC)) and, while I respect the potential for some pop (before the anticipated drop), I've nibbled on some FAZ and S&P puts for a pure trade with a tight leash.
My intention is to catch a quick fade and set a trailing stop at my entry levels. If we don't get that--and we might not, given the snazzy market breadth--I will be quick to cut my losses and let the market do what the market will do.
Discipline over conviction as we find our way.
Answers I Really Wanna Know... - 12:55 am
- Given the global psychological fragility surrounding the swine virus, shouldn't our leaders choose their words extra carefully?
- Y'all see Deutsche Bank (DB) and Goldman (GS) frippin' the downside switch?
- As we spied the FAS gap fillage earlier, wouldn't "seeing both sides" dictate a mention of the upside gap in its evil twin sister (FAZ) between $14.50 and $17.50?
- Hey, maybe I really do have a face for radio? (25th minute, for those who care.)
- Does the S&P have to trade with a 9-handle to officially suck in the bad news bears?
- It could be worse?
- Have I mentioned how ridiculously awesome the Saturday Night Grateful Dead Garden Party was?
- Are you allowing ample margin for error in your approach?
- Given the pullback (from where I initiated my FAZ position (downside bank bet) and S&P puts), can I now slap some trailing stops at my entry levels and manage my risk reward through that lens? (Sure.)
- Have you seen Hoofy and Boo's take on consumer confidence?
- Has anyone ever seen me and a moth in a light bulb factory in the same room at the same time?
- Who's got some snaps for the petrol?
- Is it true, can it be, that there is a large contingency of folks out there who still want to be told what to do rather than understanding the "what, where, why, when and how" of doing it?
- Can we say "remember to breathe" in good conscious given what's in the air?
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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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