Random Thoughts: The Bull-Bear Battle Royale!
The plot thickens as the world watches with bated breath.
We're a pretty open book in these parts—the good, bad, and ugly—as that's the world we live in and we tell it like it is. I've never been shy about putting it out there and this past year... well, let's just say we haven’t lacked for drama.
Last night—after another MRI and commute home through the rain—I experienced something altogether new. Starting at 10:30 p.m., and continuing until 6 a.m., my alarm system activated, indicating "smoke," "fire," and "heat" in the basement. After several walk-throughs—hands on doors and sniffing the entire way—I ran into a pair of police officers (responding to my alarm) in my dining room at 4 a.m.
The long and short of it: I didn’t sleep, the kids were up most of the night, the alarm continued to ring (after it was shut off), the alarm company gave me an emergency number to call—an answering machine, where I left a message that was never returned.
The upside? The alarm works, I suppose, and the town police are doing their job.
The downside? Sleep deprivation, which is old hat for me, but somewhat new for the kids.
Anyway, it’s time to dive into the flickering ticks, with toothpicks holding up my eyelids.
I dipped my toe into a new position this morning—Potash (NYSE:POT)—as 1) I'm getting to know the space and 2) I dig the defined risk, per the chart below. The stock is down 12% into two levels of support and I'll stop myself out with a move through $37. My vehicles are September call options and yes, this is a pure trade.
Another stock on my shopping list is BlackBerry (NASDAQ:BBRY), which I’ll look to pick up in and around $12 (the 50% Fibonacci retracement). That, too, will be a trade—this stock has been good to me in a hit-it-to-quit-it sorta way—and that's the price point where I'll perk up.
In terms of the broader tape—and consistent with the Four Charts You Need to Know from yesterday—the S&P didn't quite get to the 1475-1480 support we fingered (1485 was the low tick).
The NDX (INDEXNASDAQ:NDX) again held the all-important 2700 level (after a blink-and-you-missed-it false breakdown).
The commodity realm is again soft after yesterday's hot-popper (the chasm between commodities and stocks is still wide as those things go).
And the banks are about to back-test the downtrend line at BKX 54ish.
Consistent with my stylistic approach—when I don't stray from it, as I did last week—I'm looking for advantageous risk-reward dynamics with right-sized risk and relatively tight time horizons. With Italy presumably behind us, the next tangible catalyst will likely emerge from one of two places: Washington, DC (brinkmanship) or Europe (Italy is the tip of the iceberg in terms of their "issues").
As one of my greatest strengths is that I know what I don't know, I'm content to stick-and-move and, as my grandfather used to say, "Take the chips when the dealer puts them in front of you" (when he taught me how to play craps). One step at a time as we continue to find our way.
If you're getting bullish on upticks and bearish on downticks, take a deep breath and a step back.
We offered yesterday that NDX 2700 is a tough level to short given how much is riding on whether or not it holds on a closing basis. The bulls were clearly paying attention.
In the thick of the downside probe yesterday, market internals were never worse that flat; that was our tell.
- Have you seen Hoofy & Boo's Special Report Is Your Smartphone Making You Stupid?
- On June 4, 2003, Minyanville Professor Scott Reamer penned a uniquely personal story, Going Home, as his son Jackson struggled for his life. Fast forward (almost) ten years, and we can all draw some inspiration from this young lad.
Editor's Note: Today at 4:30 p.m. ET, Minyanville is hosting a free webinar with Buzz & Banter contributor Peter Prudden, who will give attendees an in-depth look at his macroeconomic outlook and trading style. To sign up for this free event, click here and hit the register button on the upper-left side of the screen.
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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