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Random Thoughts: Bad Meaning Bad, or Bad Meaning Good?


Soft economic data spurs chatter or more stimuli.


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

Following a five (count 'em) hour meeting yesterday and a two-hour panel last night (thank you M.I.T), I return to my turret to find some pain in Spain (testing March '09 lows as we speak) and a huge miss in the ADP employment numbers.

My first order of business was to punt my remaining Banco Santander (STD) as I've been stopped out below my entry level (and stops should never be post-rationalized); I made a quarter on the first half, lost a quarter on the last half, and, well, that's the way the sangria spills! It was a small position to begin with, but size doesn't matter when it comes to discipline; the mechanics of the swing always trump the results of the at-bat.

To that end, I would like to like to address an email shared with me last night by one of my favorite Minyans in Italy. And I quote:

"Ciao Todd -- I've just realized you and Jeff Cooper are "for sale" on eBay. I've just placed my bids for you both -- and one for Rick Bensignor -- and I hope I win. If not... well, both of you are welcome for a good dinner and prime wine chez moi in Italy. Regards, GM."

Very nice indeed; but it was the PS that caught my attention:

"PS -- You shouldn't talk about stops and then show lack of commitment to execute them. It's not good for novice traders looking at [Minyanville] as a guide in this [sic] turbulent markets."

As I communicated back to him -- and as I'll say here -- he's entirely right. While every trader has the right to call audibles as a matter of course, my discipline has slipped the last few months. I've taken an entirely more proactive role in business development, strategic meetings, and other out-of-office (YPO) duties, and I've often returned to find that my positions had traded through my pre-determined limits (most of my positions are options, and it's not easy to set auto-stops in that arena).

I then attempted -- sometimes successfully but other times not -- to trade around those positions after the fact, but that's certainly not what I wish to demonstrate to those who chill in the 'Ville to learn and earn. I will offer an apology, as well as my word that I'll make a more concerted effort to limit risk when I'm away from my screens and trade to win when I know I'll be here.

Turning my attention to the tape, I'll offer the following top-line vibes:
  • Is bad news (Europe, labor) bad or are we back in the mindset that bad news is good (as it will facilitate another round of QE)? I 'think' the Ben Bernanke put is below the market -- perhaps a ways below -- but nobody knows for sure. The only thing we do know is that the Fed hopes the specter of additional stimulus will be enough to keep the bears at bay.
  • The financials continue to be the carrot to the broader markets' nose; two charts in that regard, the S&P vs. the BKX (note how the banks have led) and a straight-laced trend-line for the financials (we're sitting directly on it now).

  • Finally, and as some of you know, 2012 is Minyanville's 10-year anniversary! To celebrate a decade of our journey together -- and what a journey it's been! -- we are ordering old-school track jackets (click here to see a larger image). If you would like to score one of these puppies, the price tag is $125, with 20% to benefit The Ruby Peck Foundation for Children's Education. Stock is limited so we'll offer these up on a first-come, first-serve basis. Email me directly if you would like to to claim some snazzy garb!
  • It's good to be back; I'll see YOU over on the Buzz!

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.
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