Random Thoughts: Clues in the Fuse
The bulls try to avoid the dreaded Triple Lindy.
With the shape I'm in you could donate my body to science fiction.
-- Thornton Mellon
Following Twin Dips -- and globally correlated dips at that -- the world awakes to a mixed bag of nuts.
Europe (sans Spain) is mostly higher, Asia listened to some chin music (Japan and China) and stateside futures are indicated higher, and have held their gains on the heels of an ADP Employment number that was more or less in line (and well below the whisper).
As discussed in real-time yesterday on the Buzz & Banter (free trial!), I flattened my directional bias into the late-afternoon red melt -- I had re-initiated an S&P short after covering my S&P and NDX bets an hour or so earlier -- and enter today's trade with a handful of Research in Motion (RIMM) calls (defined risk and house money) against an odd-lot of NDX puts (net flat exposure). It's not sexy, per se, but sexy -- along with crazy -- is on the bus.
My sense -- and it's just that, a sense -- is that we'll see a downside probe this morning and the reaction to that effort will help shape the morning tape. Apple (AAPL) will then step on stage with its 1:00 p.m. EST product release and the reaction to that news will dictate psychology, as well as the tech tape, of which is the poster child.
Of course, we've got the Greek Debt Dilemma hanging over our heads, and while you may only perceive a small probability of the restructuring being rejected by private investors, we must take that assigned amount (let's call it 10%, for purposes of this example) and multiply that by a severely adverse reaction, if and when. That is how you manage risk, by seeing all sides, and positioning yourself in a manner consistent with that risk-reward. And of course, the ability not to trade is often as valuable as trading ability.
I've got a midday midtown required meld -- I'm wearing a lot of hats, at present -- so I'm content to keep risk to a minimum until such time that I'm in front of my screen to manage it. As always, I will keep you up with what I see, hear, and do (in real-time) and this communication is part of that process. The good news is that we've got a strong team who has their finger on the pulse of the tape, whether I'm here or not. We've come a long way, baby.
Trade to win, never trade "not to lose," and think positive. Profitability begins within.
- With the Nasdaq down 3% since Friday, is the "easy" trade behind us?
- Or do we simply need to follow our tells, as we did yesterday as we spied Deutsche Bank (DB) and Barclays (BCS), both down 7%, in real-time on the Buzz. Sometimes you can observe a lot just by watching.
- IF private investors (cough) voluntarily accept the Greek debt restructuring and the tape gaps higher in response, is that an opportunity for bears to position for the "slowing global growth" thesis?
- Do you think ESPN will interrupt the Big East Tournament to update us on the sovereign debt drama?
- Can we use a football analogy and say that the easiest money is made between the 20s, and yardage in the red zone (cusps) is much tougher to gain?
- Take a free trial to any of our Minyanville Professional Products (MVP) if you're looking for an edge in your trading or investing. We've got something for most styles.
- A Gold Scold, indeed. Do you see gold close directly on the 50- and 200-day moving averages?
- If I gave my kids a hot dog, would they relish it?
- We know this tape is trickier than RUN-DMC -- the stock market stopped trading organically long ago -- so we must be careful extrapolating past performance into future results.
- Is it time to revisit this article, even if it's to provide some necessary perspective on our forward path?
- We spied the semiconductor stocks as "trading dry" all day yesterday and sure 'nuff, Intel (INTC), Altera (ALTR), Xilinx (XLNX), and Kla-Tencor (KLAC) flipped the upside switch into the close. That's worth noting, particularly as the semis tested -- and thus far held -- the SOX 400 level.
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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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