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Navigating an Unsure World Into Quarter-End


The goal when trading is to be in a position to use price to your advantage.

Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.

It's a new day - and a new world, as evidenced by the traction in European bourses and the early stateside jig.

We've spoken a lot this week about the potential for Cyprus to trigger the next phase of the financial crisis and assume the role of MicroStrategy (NASDAQ:MSTR), circa 2000, and American Home Mortgage (PINK:AHMIQ), circa 2007.

Clearly, that analogy - those analogies? - will only be known with the benefit of hindsight, but I thought it might be helpful to share the chart below. When Minyanville flagged AHM on August 29, 2008, the S&P (INDEXSP:.INX) rallied an additional 8% - before dropping 57% in value in the following year and a half. History doesn't always repeat - nor is it written that it must rhyme - but I offer this chart in the spirit of perspective.

I have been trading around some short exposure in the S&P - detailed here and here, and every day (all day) in real-time on the Buzz in Banter (click here for a free two-week trial).

To top-line, I initiated a SPY short into the rally on Monday (25% position of a full position), doubled down into the early rally yesterday (bringing my exposure to 50%), and pared exposure - as a function of discipline - into the sharp sell-off yesterday. (I peeled out of 10% of my risk.) Yes, I should have covered more when the tape was in the hole, but if wishes were knishes, I'd weigh 300 lbs.

My plan is to add back some short-side exposure into rallies - and cover into dips, also known as "trading around a short-bias - under the all-important S&P 1580 level.

Against that exposure, I am long some BlackBerry (NASDAQ:BBRY), which happened to get a double-notch upgrade at Morgan Stanley today (the stock is trading up 7% in the early goings). Consistent with the game-plan shared in recent weeks, I intend to make some sales into the March 22 US launch of the BB10 - just trading, from the long side - as a function of yes, discipline.

As a reminder, Scooter McGavin (that's me with a bum hip in Disney) will be out-of-pocket next Monday through Wednesday, so at a point, that has to factor into my risk profile. I normally prefer to flatten exposure while away from the fray, but that'll be a game-time decision as a function of time and price.

As I told my wife last night, "Who needs a roller coaster when I do board one every day in the global financial markets?"

Random Thoughts:
  • I like to Question Conventional Wisdom; I can't help myself, it's part of my DNA. And while "timing is everything," as evidenced by the timestamp on the column I just linked (declaring the financial crisis was over), I would offer that the only way the financial crisis is over (I don't think it is) is if a social crisis emerged...which would lead to, yep, a financial crisis (truth and trust are the grist of bull markets).
  • As I added some S&P short-side exposure, I rotated out of my Facebook (NASDAQ:FB) short after the 7% nine-session decline. This is an important zone for the stock - the right shoulder of a potentially negative head & shoulders pattern - but I'm keeping my risk tight, both in terms of price and concentration of risk. So it's said, I also have a newbie cannabis play on my books, but I can't speak to particulars because it's so thin.
  • In a stunning point of recognition, Minyan Craig emailed me yesterday to ask, "What, there's no Minyan March Madness Tournament this year?" WOW! I've been so wrapped up in work that I completely spaced that! We have set it up, so please CLICK HERE for details and get your picks in by 12 p.m. EDT tomorrow!
  • If you're digging the Buzz & Banter - or want to learn more about our FINRA and SEC compliant intranet/outward facing communication and content tool - and wanna flip the switch for your office/team/firm, we can do that....we can do that, and we would be much obliged! Please email me for more information; it's a game-changer, in my view.
  • Good luck today and remember, profitability begins within!


Disclosure: Minyanville has a business relationship with BlackBerry.

Twitter: @todd_harrison

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Position in BBRY and SPY.
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