Will the Bullish Stateside Setup Trump Europe's Pandora's Box?
See both sides as we together find our way.
Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.
The wheel is turning and can't slow down; you can't let go and you can't hold on. You can't go back and you can't stand still; if the thunder don't get you then the lightning will...
The tape had the distinct summer feel last Friday as we tick-tocked toward the weekend. The tone was constructive (breadth was 2:1) as we tickled two important technical levels in S&P 1335 (the reverse dandruff, once S&P 1335 is breached, works to S&P 1400) and BKX 44 (which has been a tremendous, albeit entirely more stealth guide).
While I smelled a "gap (higher) and go" today, I didn't pull the trigger on upside exposure. As we discussed in real-time, "I'm not in the business of flipping coins" and "The hairs on the back of my neck don't qualify as viable catalysts." I will also note that hope (of more stimuli) isn't a viable investment vehicle although we can certainly front sentiment for a trade at times.
That discipline was rewarded this morning as the bloom faded from the overnight rose (the S&P futures opened 16 handles lower than where they were last night). The fly in the ointment is a deja vu from last Monday's view; Spanish yields are above 7% and giving pause to the rally cause. I respect the fret but I'm not entirely sure last Monday's whack-a-mole is on tap; while S&P 1340 is resistance until proved otherwise, the path of maximum frustration could punish the bears betting on a repeat performance.
I haven't had a horse in that race although I've mapped one on the Buzz & Banter, where our best, most actionable content posts in real-time.
There were a few reasons not to initiate risk into the weekend, aside from the obvious desire to avoid edgeless bets. For one, options expiration tends to cloud the action (we'll see an hour-long hangover this morning as dealers square and squealers dare).
Second, three days of theta (decay) are typically removed from option prices on Friday; if you wanna learn more about the Greeks (options, not Aegean), click here for a snazzy six-part tutorial from one of the best option traders to ever walk the Earth.
I enter today with a toe-dip pairs trade -- long Apple (AAPL) and short Google (GOOG) -- as the spread on the price of the common stock (which is the vehicle I'm trading) is ten bucks. I sense this could widen to fitty and will cut my losses if I'm wish-boned the other way (by $25). The competing Head & Shoulder patterns are still in play, with the former working to $623 (my birthday) and the latter targeting $522. It's just a trade, as are most things these days until the Sovereign Sequel resolves itself.
Lots more to discuss and we will, as always, on real-time. If you're diggin' the Buzz, please tell two friends and perhaps we'll get the Faberge thing going. They'll tell two friends they'll tell two friends and so on and so on and so on!
Speaking of Google, please note the importance of the $550-$560 zone in Google, which has been support and resistance multiple times over the last few years. I'm not talking my book; I'm just sharing my process with hopes it adds to yours.
I may buy the back-test of the S&P if and when it probes S&P 1335 (cash) with a stop below the S&P 1330 (tighter than a snare drum). As always, that strategy is unfolding on the Minyanville Buzz & Banter (click here for a free two-week trial).
- My primary trading tells remain the financials as a whole (BKX 44) and Bank of America (BAC), Goldman Sachs (GS), JPMorgan (JPM) (check the reverse Head & Shoulder in this puppy; works to $38 in a vacuum).
Finally, I would be remiss if I didn't wish Jamie an extremely happy and healthy birthday. You're the most amazing woman I've ever met and I love you more than words can tell.
- Good luck today friends, and remember; trade to win; never trade "not to lose."
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