Random Thoughts: The Minyanville Metric-Check
Lining up the ducks as earnings arrive.
Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.
We enter today’s episode of the world’s wildest reality show to find—drum-roll please—the S&P sitting pretty directly below the all-important 1370 level.
Remember, past resistance is future support; if we approached this level from the other direction—as we did, say, on Tuesday—it would be support. Instead, given the technical violation (as per the chart found here), it is now viewed as resistance.
Of course, technical analysis is but one of our four primary metrics. The other three—fundamental, structural, and psychology—are evolving as we speak.
The state of fundamentals will take shape during earnings season (the market is a forward-looking discounting mechanism, so a fair share of 'good' news is already baked into the cake). Google (GOOG) reports tonight, and JPMorgan (JPM) and Wells Fargo (WFC) will announce their rear-view tomorrow.
Structurally, it comes down to where you stand on the punch bowl debate, which is subject to change on a whim, as evidenced by the latest verbiage from Federal Reserve Vice-Chair Janet Yellen.
Through a psychological lens, we must determine if this is migration in a bull phase or denial in a bear phase—and yes, this will vary as a function of time horizon.
I continue to actively trade (in real-time on our Buzz & Banter; click here for a free trial). I'm operating with the same parameters (with a stop set above S&P 1370, drawn with a crayon) and hanging on to my 'underneath' (read: out-of-the-money) puts in the Nasdaq.
Against that, I have 'house money' defined risk upside call options in Research in Motion (RIMM) and scattered 'situations' that are too illiquid to openly discuss. I am also warming up to a particular situation, but I owe it to our Buzz readers to share it on that platform first.
What else? I sleep-eat, I'm a good 15 pounds overweight, I dig felines, and I'm losing my hair at an alarming rate. We're talking full disclosure here, as that's how we roll in the 'Ville.
- After covering most of my exposure late Tuesday, I nibbled anew on the short side contingent on a tight stop above S&P 1370. Should that trigger, I won’t hesitate to cover up; good traders know how to make money but great traders know how to take a loss.
- Note Spain, which is taking another 2% haircut this morning following yesterday’s feeble bounce. Again, the IBEX 35 is trading at levels last seen in March 2009, while the S&P has doubled over that same period. If I had to make a trade, it would be long Spain-Short S&P dollar neutral but I don’t, so I won’t.
- The NDX 50-day is 75 handles to the downside, while the 200-day moving average is 106 points lower on the S&P and a whopping 344 handles lower on the NDX. Sometimes a little perspective goes a long way.
- And finally, on a housekeeping note, I have a few meetings tomorrow morning before playing hooky to attend opening day at Yankee Stadium. That may be selfish but it’s been a hairy few months and balance—something I strive for daily—is nine innings away from the weekend.
- Fare ye well, and remember, profitability begins within.
Follow Todd and over 30 professional traders as they share their ideas in real-time with a FREE 14 day trial to Buzz & Banter.
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 email@example.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.