Randoms: Goldilocks and the Scared Bears
By Todd Harrison Oct 06, 2009 11:40 am
A surprise rate hike leads to a surprise reaction.
- Yesterday we touched on the S&P trendline from the March lows and the similar set-up for the four-letter freaks. The initial Snappers off those levels were intuitive (on the first probe in a pronounced uptrend) and bulls will buy dips until such time that it doesn't work. Please keep in mind that overnight gap risk is the fatal flaw of blind ambition.
- Turnabout is fair play for Boo, who finally felt like half a bear last week. Should he wish to define his risk, he could use the "Mini-Me" resistance at S&P 1050ish and NDX 1710ish if he wants to stay tight or recent highs should he wanna give the zoom some room.
- It might be a good time to revisit the reverse dandruff in gold that we flagged a while back (while "seeing both sides"). $1035 is the right shoulder of that bullish pattern and should it push through, it'll morph into support and viable defined risk for gold bugs.
- Perhaps I'm over-thinking the dynamic but if you told me we would see a surprise rate hike in Australia, I would have ventured to guess gold would be down $20 rather than up $20. I guess that's why trading is more of an art than a science and we must stay humble lest the market will do it for us.
- The reason for that rhyme, so you know, is that Australia raising rates puts pressure on the greenback, which in turn, offers a spark in the dark through the lens of "asset class deflation vs. dollar devaluation."
- A pal of mine rode this ride higher and has started peeling out of his exposure. I offered that energy should be the last of his sales, for if something geopolitical permeates-and I believe the probability of that is higher than most others do-that complex could potentially serve as a hedge against broader market merchandise.
- I'm all about respecting the price action and understanding the relay race in play, as the government tries to pass the baton to corporate America who will in turn stuff it in the hands of the consumer (or that's the plan).
- With that said-and I'm consciously offering this while the screens are green-an abundance of anecdotal evidence suggests that for the majority of Americans, things are getting worse, not better. That and $2.25 will get you on the subway but it's what I see and we pride ourselves on truth and trust.
- In terms of today's tea leaves, it's hotter than a popcorn fart out there. Banks are green, beta is green (although Research in Motion (RIMM) is laggy), the dollar is getting dunked like Dominique Wilkins (DXY 75.80 is near-term support) and breadth is snazzy (7:1 positive).
- It is Turnaround Tuesday so stay on your toes. If you're disciplined-and practice risk-management over reward chasing-you're in good shape regardless of where the next step of this magical journey takes us.
- When I first wrote about my father's condition, a multitude of Minyans emerged to share similar situations about friends and families. I've long believed mental illness is the most misunderstood disease in our society and I've continued to educate myself to better understand the "what's, why's and how's." Through that lens, Dr. Julie Holland just published a book that addresses just that and, as we're a community that shares, I wanted to pass it along.
- My previous comment on gold wasn't sour grapes-after riding the yellow metal from the $300-range, in and out since 2003 until the back-end of 2007, I've only dabbled on pure trades. It was more along the lines of the reaction to news (Aussie rate hike) and assimilating what that means as it's the polar opposite of what I've been conditioned to expect. Giving credit where credits due, snaps to Professor Lewis for his steadily bullish bent.
- We don't hide from our mistakes in the 'Ville, we learn from them. And what did I learn this past week? I wasn't at my turret on Friday to spy the first probe of the very defined uptrend lines in the S's and N's. While I covered a slew of short-side exposure as a function of discipline (vs. exposure added at higher levels), I would have been more aggressive if I was strapped into my cockpit-heck, I may have covered up entirely or take a stab at a Snapper. No post-rationalizing here, just sharing my missteps with hopes that Minyans have the foresight to avoid them in the future. It's what we do.
- Looking forward-that's where the profits are-I've been trading around my partial bets with an eye towards the mini-me trendlines we discussed earlier and given their proximity, I'm not opposed to shoveling more coal in a very defined risk fire.
- Good traders know how to make money and great traders know how to take a loss and while I've never claimed to be great, I always strive to be better, as a trader, and as a man.
- Even when I'm channeling Abby.
- Finally, some red beans in the green sea today include Visa (V), Boeing (BA) and Pepsi (PEP). Maybe something, maybe nothing--maybe a pterodactyl--but should the worm turn, those shouldering supply will likely lead the crimson dye.
- Good luck Minyans, and let's be careful out there.
Position in ndx, s&p
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