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.
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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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