Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Random Thoughts: Volatility Rocks the Markets

By

What to watch for, and when.

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

I'm learning to fly, but I ain't got wings. Coming down is the hardest thing.
-- Tom Petty

It's Hump Day in Gotham and you know what that means-we're halfway home on the weekly trek toward our requisite respite. With earnings coming fast and furious, and market volatility picking up in kind, there's no rest for the weary, at least not yet.

The way I see it, the series of "lower highs" (a sign of distribution) remains intact under S&P (INDEXSP:.INX) 1570. You will also remember S&P 1580 from previous missives-The S&P Alley-Oops-and that remains critical through a longer-term lens. Technical resistance is now tranched between S&P 1570-1610, so where you stand is a function of where you sit (as it pertains to your time horizon, risk profile, and stylistic approach).

Of course, nestled within our forward probability spectrum is the potential that bad news will continue to get shrugged off; for all I know, that could have been the sell-off, all 2.82% of it, peak-to-trough (consistent with Camp 2 discussed yesterday).

I don't believe that will prove true-remember, there are three phases of leave-but if we're to practice what we preach, discipline must always trump conviction and we should always see both sides as we continue to find our way.

Random Thoughts:
  • The "lower highs" discussed above.
  • Apple (NASDAQ:AAPL) is making a fresh 52-week low-which is pretty amazing when you think back to the sentiment that has surrounded this stock-proving once again that there are two sides to every trade.
  • The two charts below help paint the technical picture. The first is the importance of S&P 1540, which has held a few times (note: support gets weaker with each subsequent retest).
  • The second is the S&P trend line from the November lows, which we're probing today. If and when either one breaks, past support will become future resistance.
  • There's been a lot of chatter about gold and for good reason; the yellow metal has been crushed of late, and the Snapper attempt yesterday was feeble at best and wreaked of forced selling. It has to bounce, right? Well, maybe, but not necessarily (see The Gold Scold). The chart below pulls back the lens on this particular commodity; to fully appreciate where we are, we much understand how we got here.
  • Goldman Sachs (NYSE:GS) continues to take a five-finger sally to the downside-and the insider sales window typically opens a few days after earnings, so keep that in the back of your crowded keppe.
  • The S&P lost 44 points from Thursday's high to yesterday's close; as such, 22 points (where we more or less ended the session) was a 50% retracement of that decline.
  • The VXO (INDEXCBOE:VXO) was down 19% yesterday, right back at Bar Mitzvah levels (13), before ramping 30% today. Even still, I tend to steer clear of VIX (INDEXCBOE:VIX) options as there are better ways to play volatility.
  • On Tuesday, I will be poked and prodded from 7 a.m. - 2 p.m. as a precursor to the main event; the following Tuesday, I'm under the knife for at least one full hip replacement. That's the good news; the bad news? Insurance isn't what it used to be; inflation in things we need, deflation in things we want-in real-time!
R.P.

Twitter: @todd_harrison

Follow Todd and over 30 professional traders as they share their ideas in real-time with a FREE 14 day trial to Buzz & Banter.
Position in SPY.

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 todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE