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Random Thoughts: Life and Death on Wall and Broad


We used to play for silver, now we play for life.


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

Imagine living in a world where it didn't matter if you made money so long as other people lost more. Not so bad, right? You could eat, sleep, drive, go to the movies, take vacations, and otherwise be quite happy.

There's a catch, though. If a time arrives when other people begin to make money, you not only have to make money too-you have to make at least as much as the average moneymaker in order to live.

Sounds like a bad game show, right? It's called Full Financial Makeover and it's happening as we speak!

While you may not have heard of it, it's been around a long time. It was traditionally a niche show available only for the privileged, and besides, nobody really kept score anyway.

Word eventually spread-this thing called the "Internet"-and strange things began to happen when the digital economy took root.

Everyone and their sister played the game. People mortgaged their homes, leverage expanded recklessly , derivatives redistributed risk on a global scale, and complex algorithms arrived with split-second decisions.

The world's most powerful governments joined together in an attempt to ban the game-but they were too late. They began arguing about who to blame. They took measures to protect themselves. Everyone got testy and social unrest took root.

The game is still played, all right, on every level. Fund managers around the world are watching the clock at this very second, waiting to see where the average comes in.

They know their investors will be watching too; if they underperform or-GASP!-lose money, it's game-over. Fini. Poof!

Good luck into quarter-end, and remember that you don't get paid for activity; you get paid for performance, relative as it may be.

Random Thoughts:
  • Just when you thought the world's wildest reality show couldn't get any better, I'll draw your attention to the S&P (INDEXSP:.INX) trend channel that's been in place since the spring low.
  • If we break here-and note there was already one false breakdown earlier this year-a technical picture points toward Nasdaq (INDEXNASDAQ:NDX) 1350, as shown on the chart below.
  • Emotional markets are whippy markets; you don't have to see it, you just have to respect that it's in motion. And remember, my friends, emotion is the enemy when trading!
  • Q4. Get used to saying it. It will define the year for a lotta folks, and I'm not just talking money. Social moods and risk appetites shape financial markets. It is that simple, or it was until the Grand Experiment began.
  • Was this week's slippage a healthy retracement-and we bounced right where we had to-or was yesterday a pause that lent credence to the "denial" phase of the bear case?
  • I entered today's session with Facebook (NASDAQ:FB) (bought yesterday on the Buzz at $20 and a stop below recent lows), I have some NDX December out-of-the-money puts (bought when the underlying was trading at QQQ (NASDAQ:QQQ) $68.30) and I nibbled on a snivlet of Google (NASDAQ: GOOG) puts yesterday with the stock trading around $760).
  • In other words, I'm playing the alpha with some gamma and rocking to the beat of the steady drip of theta. Αν αυτ? ε?ναι ?λληνες να σας If that's Greek to you, check out this six-part series on derivatives written by one of the best option minds to ever play the game.
  • There is gonna be a fair amount of volatility coming our way-way more than a VXO (^VXO) 14 would seemingly indicate.
  • Oh come on, take a free two-week trial to the Buzz. It's awesome, and it's our best actionable trading content in real-time.
  • We've secured the same bands for Festivus 2012 to benefit The Ruby Peck Foundation for Children's Education. If you like Journey or U2-or helping less fortunate children-this is the gig for you! Please join us in giving back and have a great time doing it!
  • Have a great weekend; you most certainly earned it!

Twitter: @todd_harrison

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Position in GOOG, QQQ, FB.
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