A Bird's-Eye View of the Stock Market
Pick your spots -- and balance your time.
I had two William Wallace moments yesterday—I teed up some BlackBerry (BBRY) to buy in and around $12.60 ($12 has been my oft-stated desired entry point) but held, held....and didn't pull the trigger (the stock finished the session +6%). The other was a quick fade (sale) of the tech tape out of the opening gate as I saw Google (NASDAQ:GOOG), Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) slip lower but again, I hand-sat.
Part of the rationale (not that you care, but I always share my thought process) is that I had my YPO board meeting at high noon which kept me "risk blind" for two hours. As I told Aaron Task yesterday morning, as we bantered prior to our interview, part of the reason I've embraced the "hit-it-to-quit-it" stylistic trading approach is because I’m often away from the tape for hours at a clip. In short, the only way I can manage risk (as opposed to "hope" for reward) is if I keep it on a tight leash. And yes, opportunities are made up easier than losses.
In terms of the tape, we saw "S's over N's" (S&P (INDEXSP:.INX) out-performance of NDX (INDEXNASDAQ:NDX)) yesterday—spied early on our real-time Buzz & Banter—and that continued to continue throughout the session, although the absolute price movement was tame for the broader indices. I suppose that jibes with my desire to play more alpha (individual stocks) and less market (which is crowded), at least until such time that an advantageous risk-reward emerges (S&P 1580 comes to mind, if and when).
Away from the tick-by-tick, minute-to-minute stuff, the chasm between perception and reality continues to widen, perhaps even more so than what we vibed in December 2006. I suppose that shouldn't be a shocker (we know this dynamic is cumulative) but it doesn't make it any less real. While the papers and pundits scream all-time highs, the rest of the world, it seems, remains mired in The Age of Austerity (if you missed that article the first time around, it's a worthy read).
Indeed, it's taking thrice the effort to make half the money (if that) in today's day and age (for most of us, anyway), and while I'm not smart enough to know when that will matter, I'll bet my bottom dollar that it most certainly will (and for many, it already has). That's the thesis of my presentation at The Social Mood Conference next month—Social Mood Is a Leading Indicator for the Stock Market—and while all the pieces seem to be falling into place, that multi-linear puzzle is ever-changing.
Yes, that has implications for the markets and our investments—and my task at hand is to tie them together in real-time—but it's not just about bringing home the Benjis. The implications and ramifications reach far beyond my pay-grade or our generation. I was reminded of that Tuesday night when my old bones limped home at 8:00 p.m. to see the twins (my daughter Ruby was down). Gavin asked me, "How was the ECO and MED-ia today?" It was all I could do to muster a smile and say, "It's all good, young man."
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 email@example.com.
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