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Reactive Masses Await the Next Leg of the Stock Market

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Observations from the front.

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MINYANVILLE ORIGINAL

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

One of the more pernicious consequences of multitasking while trading, running a small business, planning a philanthropic event (23 days until Festivus!), attending creative collaborations (MV Studios produces white-label solutions for enterprise clients), writing real-time content, mapping business development initiatives, vetting professors and managing a staff-while balancing the important stuff-is that there will be times when risk is blind. Yesterday afternoon was such a stretch.

As discussed in real-time-and later in the day on MV.com-we anticipated a Turnaround Tuesday Snapper (read: hard move higher) yesterday when we woke up to find the S&P (INDEXSP:.INX) and NDX (INDEXNASDAQ:NDX) futures in the hole. My chosen vehicle? Apple (NASDAQ:AAPL), as 1) it recently pulled back 23%, 2) had nice and tight defined risk (sell-stop under $630) and 3) it's the go-to name for upside performance anxiety, if that is the direction the dynamic plays out.

Better lucky than smart; less than an hour after the position was initiated, the stock popped 10 bucks. And while I made a token sale (discipline over conviction), I kept the meat of the exposure overnight, in large part because I was knee-deep in a (very positive) conversation with a potential partner and time kept on slipping slipping slipping into the future.

I enter today's session with a bias similar to what I shared the last two sessions: I'm allowing some wiggle room in and around S&P 1380 (1.5% or so) and so long as the bulls hold that line, my sense is that we see an upside try (led by the tech stocks, which were hammered almost twice as hard as their old-school brethren in the most recent downdraft, NDX -11% vs. SPX -6%).

It's just a feel, which is of course subject to change as a function of time and price. We will update this-and many other-positions in real-time over on the Buzz & Banter (click here for a free two-week trial!).

Random Thoughts:
  • If and when the buy-stops get cleared out (under S&P 1380), we could see a whoosh lower before any potential liftage. For comparative purposes, the false breakdown in June measured about 1.5% under the 200-day.
  • I believe the two sides of the aisle will identify a solution prior to the fiscal cliff, but I'm not so sure Greece is in the euro (if there is one) a few years out.
  • Note the financial complex; as go the piggies, so goes the poke. The BKX (INDEXDJX:BKX) 200-day is nestled immediately below at BKX 47.
  • Will Archer Daniels (NYSE:ADM) and/or Altria (NYSE:MO) corner the cannabis market when the time comes?
  • Why does the word, "anticlimactic" come to mind when vibing this week's tape?
  • Short Google (NASDAQ:GOOG) against my long Apple (trade) or just peel out of Apple as a function of price? (The latter, as I'm in "hit it to quit it" mode.)
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.
No positions in stocks mentioned.

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.

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