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Random Thoughts: Where the Bears Are!

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Technical levels of lore for markets galore.

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MINYANVILLE ORIGINAL

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

The early morning price action is pointing higher, and that's putting some pep in the bovine step.

The bulls will argue that the recent slippage was a "pause to refresh" before they ramp stocks higher into year-end and they may be right-despite the October fright, the Nasdaq (INDEXNASDAQ:.IXIC), S&P 500 (INDEXSP:.INX), and Dow Jones Industrial Average (INDEXDJX:.DJI) are up 17%, 14% and 9% respectively and performance anxiety remains palpable for those with feet on the street.

I will note, however, that Technical Analysis 101 dictates the best time to initiate a position is on a retest of a breakdown (our breakout, as the case may be). Given the S&P "broke" below 1450 and the NDX "triggered" below 2770, as previewed last week, these are levels of lore as we open the front door.

I would add Apple (NASDAQ:AAPL) $650 to that list as well. The bears finally broke the most important stock in the world-which "works" to $600ish in a technical vacuum-and they'll defend that level with all they've got. The reaction to the traction will tell us a lot, so keep your eyes peeled and your thoughts clear as we edge into this Thirsty Thursday!

Random Thoughts:
  • I entered a Research In Motion (NASDAQ:RIMM) common stock position a few weeks ago at $7.65 and sold half the position in the mid-$8s. When I took those chips off the table, I moved my stop on the leaves to below my entry level to ensure a profitable trade.
  • I've never traded in a vacuum before; I would imagine that it's very cramped, but it would certainly be much easier!
  • The banks continue to trade firm, all things considered. As go the piggies, so goes the poke as they encapsulate so much of our finance-based debt-dependent global economy.
  • Festivus 2012 is less than two months away! John Mauldin will be there, as will Peter Atwater, Fil Zucchi, Jeff Saut, and a venerable "who's who" of Minyanville professors. Lock your spot for the Festivus trot today!
  • Facebook (NASDAQ:FB) is getting close to our $19 level-the 50% retracement of the entire corporate lifecycle. See it, as it "matters" through a technical lens, and remember to define your risk no matter which way you play.
  • My channel checks throughout the industry-brokers, dealers, and everything in between-tell me that it's a grind out there, at best. Between trading volumes trailing off and the ZIRP (zero interest rate policy), the financial juggernaut that once was has arrived at "the other side of that trade."
  • Is that troublesome? Depressing? Is it time to put corks on our forks? Where you stand is a function of where you sit. I would argue that as hard as this is-and it's real tough-it's on the margin constructive. We've been saying for years that in order to get through it we needed to go through it, and we're going through it now.
  • Good luck today, and remember that profitability begins within!
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 RIMM

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.

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