Randoms: Set-Up for Turnaround Tuesday?
Where you stand is a function of where you sit.
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 What's Shakin' Bacon? and Engine Room, More Scream!
So here we are, deep in the throws of contra-hour as the wheels wobble on the wagon anew. I was just thinking to myself, "Self, doesn't make intuitive sense that the tape tickles fresh upside acne only to get smacked like Charlie Murphy?" And while everyone "expected" a pullback, doesn't it have to feel fugly in order for the market to actually trade lower?
And doesn't the path of maximum frustration dictate that April paper had to come off before the schvitz hit the fan? True and truer all the way around but that was then and this is now and profitability lies in the ride ahead.
My internal dialogue today is centered around the "path" vs. the "destination." As discussed this morning, we sensed two 20% rallies this year nestled around a pretty prickly marketplace. We've gotten the first and now, I suppose, the question is whether we've begun the tricky traverse back towards the lows (in front of the second 20% in the back half on 2009).
In the interest of full disclosure, I'll confidently tell you that I'm not sure. There's a big part of me that believes the bulls need to suck in the last remaining bears by breaking out over S&P 875. The little critter on my right shoulder, however, is reminded me that we eyed a 20-25% lift and that's been fulfilled and then some.
So, how am I trading it? Carefully, with one eye on BKX 30ish and the other on FAS $6.25 (for a potential Turnaround Tuesday Snapper). I'm not betting the farm either way but I am, so you know, open to the idea of adding some overnight exposure if the ducks line up, the gap fills and we see some sloppiness into the close.
That would be a pure trade with trailing stops, if and when, given my broader picture bent that we've got unresolved business to the downside. And yes, I may well be trying to pick up dimes in front of a bull dozer but if there wasn't risk, it would be called winning, not trading.
Where you stand is a function of where you sit. I'll simply share my process, as always, with hopes that it adds to yours.
As always, I hope this finds you well.
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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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