Random Thoughts: Stock Picks and the Equity Fix
Piecing together the complex market puzzle.
Hoofy—our resident bull—just walked by my turret and said, "Hit me again Ike, and this time put some STANK on it!"
He has some swagger in his step and for good reason; consistent with what we've witnessed since mid-November 2012 and despite nose-bleed sentiment levels—the “bend-not-break” mentality continues to continue, or at least that’s been the pattern as I ready to publish this column.
I will also note, because it's a curious coincidence if nothing else, that the top of the current trend-channel in the S&P (INDEXSP:.INX) coincides with our MOAL (mother of all levels) at S&P 1580. I’ve been playing more stocks and less market in here (particulars below) but if and when we get there, I’ll unleash Boo (our resident bear) for a trade given the confluence of time horizons.
Looking at the tape the other way—always see both sides—initial support resides in and around S&P 1525 (before the lower trend-line comes into play slightly above S&P 1500) and NDX (INDEXNASDAQ:NDX) 2750/60 and until such time those levels are broken, the bulls will say, "What, me worry?" (I’m hopeful that some readers still “get” that reference!)
We spoke earlier in the week—or was it last week?—that Technical Analysis 101 dictates that the optimal time to buy a breakout is on a retest (which was one of the reasons behind my Fade Trade on Friday, which has since been unwound) but that's a guide, not a law. That’s why I continue to view the markets through a stair-step lens; this method of risk management allows up to trip, but not fall.
Strange days in the world—in more ways than one—but all we can do is the best we can do, and there's no hidden meaning there. That applies to YOU, ME, and the rest of us as we strive to balance the important stuff—family, friends, smiles—with the processes necessary to prosper in an increasingly complex and competitive world.
Nobody ever said it was going to be easy, and you know what they say—nobody is always right!
Lenovo (PINK:LNVGY) (a rumored suitor) is out this morning saying "no specific evaluation has been taken" to assess BlackBerry (NASDAQ:BBRY) as an acquisition target. That shook out some of the fast money this morning, which is fine—I don't buy stocks for takeovers, I buy stocks with improving fundamentals, good charts, and solid management; if they happen to get taken over, so be it.
I continue to hold a portion of my BlackBerry trading position (bought Monday around $13; with sales later that day between $14.50 and $15). My stop is set under $12, so the closer we get to that level, the more defined my risk becomes (and the more I will look to reload). I am actively trading this over on the Buzz, so click here for a free trial if you so wish.
Along those lines, I’m trading June puts in Facebook (NASDAQ:FB) against that long exposure and as I attempt to spy additional advantageous risk/reward in individual stocks. I will "wake up" on directional market risk, as discussed above, if and as we get closer to S&P 1580.
Apple (NASDAQ:AAPL) has been trading sloppy and per our vibes on January 30, if the stock approaches our technical target of $360—which is a kitten's whisker from a 50% Fibonacci retracement of the up-thrust to $700—I plan to get involved in decent size for a trade. If it doesn't get there? Well then, opportunities are made up easier than losses!
- Potash (NYSE:POT)—a name I was long against market exposure last week—has rallied directly into the 50- and 200-day moving average, so for those involved, please note this technical toggle.
We hosted an terrific webcast with Bob Prechter of Elliott Wave fame last night; if you missed it, stay tuned as we’ll get it out there as soon as possible. Again, I’ll be joining Bob in Atlanta on April 13 for The Social Mood Conference, which promises to be an excellent adventure.
- The market is a movie, not a snapshot—a wicked, twisted, masochistic movie—but as we're apt to say, we must trade the tape we've got, not the tape we want. From here to there, on our way to better days and easier trades, the market will write the script and Minyanville shall tell the story.
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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