Random Thoughts: Welcome to the Most Important Summer in Years
See both sides of our forward ride.
Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.
It's Turnaround Tuesday--of sorts--as traders, or those of us not enjoying the vacation week, power up for a fresh four-session set. On a personal note, I'll communicate that it's GREAT to be back in the 'Ville after a health scare that put me on my back for the better part of the last month. I tried to put my game-face on last week and it was not to be--but after spending the Memorial Day holiday sleeping, resting, and otherwise relaxing, I feel terrific.
Some Random Thoughts, in no particular order:
We mapped a pretty accurate game plan from S&P 1400 to S&P 1300 (full disclosure: I covered my directional shorts around S&P 1340 as I was (unknowingly) about to go under the knife) and Minyans who followed that script would have been stopped out with the move back above S&P 1300.
We also touched on the notion of eurobonds before they got "mainstream mainstream" and while I view them as a near-term "all clear" for the bulls (a notion I've posited before), lemme be clear that it's more of the same--drugs that mask the symptoms rather than medicine that cures the disease. I do believe we'll see some sort of joint debt relief but the logistics of passing eurobonds are such that it would take a genuine crisis (in terms of price) before something like that passes in seventeen sovereign legislative processes.
I did a lot of reading the last few weeks to keep my mind active. While much of it was market related, some of it was about positive energy, meaningful existences, and the laws of attraction. And what did I re-learn during that stretch? Negative energy is wasted energy, and I've tried to morph any remnant resentment (in various personal and professional situations) into empathy, understanding, and acceptance. I shared many of these thoughts on Twitter, which is likely a more appropriate venue for such musings.
I made a few IN-N-OUT trades while I was laid up, so to speak. The first was a Facebook (FB) flip on the day of the IPO, buying $38.01 stock (leaning against the syndicate bid) and flipping that out around $40.75 (better lucky than smart). While I mused that I would likely "put some away" in and around $38-$40, I've since softened on that position. I may trade it from the long side--there is a LOT of negative sentiment surrounding the stock, which I view as bullish--but it's just that, a trade.
- I entered a very small (2%) short position through out-of-the-money puts in Google (GOOG) on Friday; if the monetization of mobile advertising is the elephant in the room for Facebook, the masses would presumably connect the dots to Google soon enough. Once I spied the potentially bearish Head and Shoulders pattern in the stock (a trade through $590 to the downside "works" to $522 through a pure technical lens), I initiated my risk with a tight stop (above $605). See the chart below.
I read a few articles surrounding Joe Weisenthal, the omnipresent deputy editor of Business Insider ( I, like many in the social sphere, marvel at how prolific he is). I can relate to both sides of the discussion as I toiled 20 hours per day while building the 'Ville and know what it's like to be "all in" every day, weekends included. The first column was the New York Times Magazine column and the second was a retort from a college professor explaining why his particular path is not the script to follow. I suppose I net out somewhere between genuine respect and new-found balance, as best demonstrated by this excellent article from the Harvard Business Review.
In terms of the tape, S&P 1300-1340 remains our stair-step range. I do believe housing is picking up (I bought and sold a home in the last six months--and have two weeks left in NYC!) and agree that there are other anecdotal signs of economic improvement.
Where I struggle is two-fold; first, it took upwards of $13 trillion in stimulus to power us to 2.2% GDP (not so snazzy) and I continue to believe that Europe is slapping Band-Aids on structurally broken bones. Once we get to a place of measuring apples vs. apples (sans synthetic economic steroids), I can make a long-term stand; until then, I'm just trading (in real-time on the Buzz) and doing so with learned patience.
As always, I hope this finds you well.
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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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