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Positioning Into Quarter-End


Identifying the path of maximum frustration.

Riddle me this: How does the weather flip a switch from blizzards and Nor'easters to 70 degree summery stretches thisquick? Talk about a bipolar stroller; I haven't seen a shift this swift since fear and greed swapped spots! March Madness indeed, and the mood swings are simply getting started.

I compiled a sampling of the emails received in response to yesterday's Full Disclosure which I was gonna share to help measure market psychology (there were some excellent observations) as well as to demonstrate our snazzy community spirit. As I reflected, I opted against that approach; yesterday's vibe was a tribute to Bennet Sedacca and it should stand alone as such. Respect, Mon.

With four witches converging for Friday's expiration -- and all kinds of performance anxiety manifesting into quarter-end -- a slew of crosscurrents are rapidly approaching, if they haven't already arrived. Remember, expiration tends to exacerbate volatility in the days preceding the option burials and while I believe trying to game a directional bias is a lesson in futility, I most certainly respect the undertow.

Having run "big money" for many years, I can assure you there isn't a fund manager on the street who isn't thinking about relative performance as the first quarter bell readies to toll. The buyers are higher; the sellers are lower. If that sounds counter-intuitive, it's because it is. Repeat after me, it's not your fault, it's not your fault, it's not your fault.

Greek Food for Thought

There's variant views in the Eurozone regarding the mechanics of the Greek bailout, if and when. Remember, the greatest trick the devil ever pulled was convincing the world he didn't exist, particularly with €20 billion in debt coming due in April and May.

European Disunion hasn't "mattered" -- contagion fears actually bottom-ticked the tape when the ratings agencies warned of sovereign downgrades -- and money managers have been conditioned to pay-no-mind, particularly as they sharpen their #2's to share their views.

That, coupled with the lack of news on the CDS front (European regulators may be holding that card in their back pocket) and all sorts of complacency as measured by the VXO (it never matters till it does) seemingly sets the stage for madness of a different breed.

Overnight sovereign spreads widened on the aggregate, with Germany leading the charge (+8%) and Norway taking the silver (+6.6%). Day-to-day fluctuations should be taken with a grain of salt, naturally, but it should be noted that the risk premium on Greek 10-year bonds has more than doubled since the beginning of November, according to the fine folks at Bloomberg.

To add spice to the mix, word just arrived that Greek PM George "Papa G" Papandreou is "giving" European leaders until next week to clarify the financial aid package. I'm no expert on the region -- a few frisky toga parties in college notwithstanding -- but uncertainty is not what world markets wanna see, nor is it usually a good idea to issue ultimatums to the folks pulling the purse strings.

I offered last week that a Pop (through resistance at S&P 1150 to clear out remaining shorts still staggering after 1120 was mounted) followed by a drop (before S&P 1200 resistance arrives) was a plausible scenario. The global dynamic as discussed above and the path of maximum frustration (chasing performance into quarter-end only to see the tape reverse before it arrives) are well within the probability spectrum. Tread, and trade, carefully.

Random Thoughts:

Minyan Mailbag!

There is one response (of the hundred or so) that I would like to share; it's from someone I truly admire as a financial professional and he offered some salient sense -- and not because there's embedded praise!

"I think that column may be your best ever. It may be my current mood -- reflective or the day, but it hit me hard. If it is any consolation, it has been a hard year here too -- not because I've bet and lost monetarily, but because it is extremely lonely being so out of sorts with the mainstream view of the world. Having said that, I took comfort -- albeit with great sadness -- from these words offered by George Soros, which were taken from his lectures last fall and recently published in a book:

"'People are not particularly concerned with the pursuit of truth. They have been conditioned by ever more sophisticated techniques of manipulation to the point where they do not mind being deceived; indeed, they seem to positively invite it.'

"I sincerely worry that the further the market diverges from our underlying economic reality, the more obvious all of the manipulation will become. In the meantime it is lonely, and when that day comes it will be equally lonely as I suspect that being right will offer little consolation. Write on my friend. Together we are all stronger."

I would be remiss if I didn't thank all ye faithful who took the time to vibe after yesterday's catharsis. Some said "You're being too hard on yourself," to which I responded, "You really do know me!" It's the fatal flaw of a classic over-achiever and something I've tried to right for as long as I've been. Hey, we're all human -- we all have our 'things' -- but that's entirely alright. That's what makes us, "us."

Best of luck out there in the fray, Minyans -- and enjoy the Madness of March


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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

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