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Randoms: Bear Costume Update

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Hitting for average rather than power.

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  • Minyans just don't see "what," they ask "why?"

  • Citigroup (C) is a primary tell today through the lens of "reaction to news being more important than the news (Bank of America (BAC) upgrade) itself."

  • Professor "Metro" (aka B-Rife) has been all over the China Syndrome (-3% overnight, 12% in the last 8 days), noting the double top that broke a double bottom.

  • I took his vibe one step further and juxtaposed Shanghai to the NASDAQ. It's early, I know but it's worth a look, particularly given the confluence of resistance that intersects precisely at the 50% retracement of the entire slide from the 2007 top.

  • She's fallen and I can't get up? Maybe, maybe not, but the dandruff in Granny Goldman (GS) is worthy of a mention. A trade through $159 will seemingly trigger some downside dandruff.

  • Shadow boxing with a mirror! The weirdest action of the last few weeks is that when the tape is sloppy, Research in Motion (RIMM) is dry and when the tape is jiggy, RIMM is a fly in the try.

  • I am, so you know, still lugging some lottery tickets $60-line puts in the name with one eye on the dandruff and the other on the downside gap (between $50 and $57). It's part set-up, part tape call and part edgeless. It's a legacy, sorta like Flounder, which I'll peel into any squeal.

  • Remember on Wednesday when I was adding back some Powershares (QQQQ) December puts into NDX 1625ish with hopes of "tethering out" October puts on a dip down? As the NDX probed 1600 (and filled the parabolic pre-FOMC gap), I did just that. For those keeping track at home, this is the third time that I've sold blips (into NDX 1630) and nibbled on dips (at NDX 1600) as I trade around a broader thesis.

  • Along those lines, and consistent with my relative risk, I'm gonna humbly slip an arm out of my metaphorical bear costume, leaves 2 legs, or 50% conviction on the short-side. Given my covers, I now have this trade set up for a push, at worst. Why? My predetermined stop loss level is 2% above NASDAQ 2000.

  • While it's true that I have a longstanding habit of catching cusps and cutting bait-the proverbial premature evacuation-I will offer that the bear costume appendage removal is a function of a few things:

    • The first is the set-up, which we offered last week was the most compelling of the year. As we slip away from that pivot point, the "edge" rounds on a relative basis.

    • Discipline trumps conviction. While I was "all in" for a trade (100% conviction when I initiated risk at NASDAQ 2007), the three-peat 2% scalps, (as we probed the lower end of the recent trend channel) begs some "in between" respect.

    • It's all about "risk management" in these parts, with some legs alone the way. Crafting a risk-reward that gives me a "free look" at the downside is a profile I'll rarely say shy away from.

    • There's still the potential that the sideways slither between NDX 1580 and NDX 1630 is working off the overbought condition as a function of time. See both sides, Minyans, always see both sides.

  • What are my thoughts bigger picture?

  • Lest there is ANY confusion, that wasn't a victory lap-we don't do them when a trade is booked much less when risk is outstanding. That's asking for trouble and I get into enough of that on my own, thankyouverymuch.

  • Remember in 2007 when I offered that the biggest risk was that we were trading at all-time highs but nobody felt like we were at all-time highs?

  • That spoke to social mood and risk-appetites shaping financial markets. I bring this up as I think it's as pertinent today-if not more so-as it was then.

  • I have a smallish short position in the S&P (most of my risk is tech-centric as a function of the set-up and tracking risk). In terms of that position, I'll stop that puppy out if Snapper busts a meaningful move into four-digit land.

  • The Autumn Wind is a Pirate! I LOVE this time of year. Why? My beloved Raiders are tied for first! Raider Nation. Just win, baby!

  • Bad seasons define good fans just like bad times define good friends.

  • In a world of economic turbulence and confusion with disaster lurking at every turn, where does one go for answers?

  • Do you believe Minyanville is using new media to affect positive change in the world? If so-and only if so-weigh on in! Ye faithful did so last year and almost fried their servers!

  • 23-year old Minyan Will chimed in this morning to express his appreciation of the 'Ville but offered that I often date myself with the music. Jeez, tell me how you really feel! I am old! Anyway, he offered this song as being an apt tune for the current swoon. Fair nuff, friend, here ya go.

  • As I was emailing with a Minyan about Bennet and sent him this tribute, I took the time to read it again and it provided a mindful pause. I share it with ye faithful for one reason and one reason only. Perspective. We miss you cookie.

  • I sincerely hope this finds you well and hitting our requisite respite with a smile on your puss and some jingle in your jeans. Thank you for being you.


R.P.

Position in s&p, qqqq, rimm

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 todd@minyanville.com.

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.

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