Buying BlackBerry for a Trade
It's a market of stocks, not a stock market.
It's a brand new day for the flickering ticks as we embark on a fresh five-session set. Following yet another record-setting week, the weekend headlines were as one might expect. And while John Q. Public has been more engaged as of late, the question remains whether the mainstream will again buy into yet another new paradigm — and whether past performance will again shape forward results.
Last week, we fingered The Two Most Important Charts in the World: the S&P (INDEXSP:.INX) — and the monster level that is 1580 — and the NDX (INDEXNASDAQ:NDX), and the "handle" that resides in and around NDX 2750/60. Those are technical contexts, not catalysts, but I wouldn't be surprised to see us retest those levels as the next leg of our stair-step. That was one of the thoughts behind The Friday Fade Trade, although I covered up (for a small gain) into the weekend as per my stated stylistic approach.
Indeed, you can't blame traders for having a quick trigger to cover bearish bets (the short side has been the cute side this year). While I play two-sided — anything less is akin to boxing with one hand tied behind your back — we're seemingly approaching a cusp in the denial-migration-panic continuum where few dare question the forward direction of the stock market. My email indicator seemingly supports that notion, as the prevailing tone isn't whether or not the tape will turn but rather whether or not to wait for a pullback to buy.
Timing is everything, we know, but that sorta certainty, coupled with other elements (VXO 12), suggests that blind optimism is a dangerous proposition. Be that as it may, I continue to trade surgically — I bit the bullet and bought some BlackBerry (NASDAQ:BBRY) this morning, despite my wanting to add the stock closer to $12 — as we continue to take our journey one careful, and risk-defined, step at a time. Through that lens, my stop is set on the other side of the aforementioned level and as always, I’ll update my risk in real-time on the Buzz & Banter (click here for a free two-week trial).
Chart of the Day:
The VXO (INDEXCBOE:VXO) is again approaching 20-year lows — WOW — and while that perhaps isn't a shocker (volatility is the inverse of liquidity, and the government is pumping historic amounts of liquidity into the system), it's worthy of a mention. This “fear proxy” can stay at subdued levels for an extended period of time (see 2004-2006) but it, like many other elements, is a piece of a very complex multilinear dynamic.
Good luck, and remember that profitability begins within.
Disclosure: Minyanville has a business relationship with BlackBerry.
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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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