Editor's Note: Todd posts his vibes in real time each day on
Buzz & Banter
We like to say the price action associated with options
expiration-which is tomorrow- manifests (through increased
volatility) in the days preceding the actual expiration.
That has played through this week, in spades;
Monday, the S&P lost 36 points
On Turnaround Tuesday,
they bounced 'em 22 points
they lost-yep-22 points
, to close precisely at Monday's close.
And true to form, in the early goings of Thursday, the
(INDEXSP:.INX) is indicating a higher opening.
I actively traded this stretch, as detailed in real-time on the
Buzz & Banter (
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consistent with my shared strategy
of navigating a short bias under
Yesterday, after punting all but 5% of my
puts into the weakness, I called an audible and reloaded on my
downside exposure, rounding it up to 50% of a full position.
With "my level" 50-odd handles away-too wide, through the lens of
risk definition-I'm focused on the back-test of the up-trend line
that has been in place since November, per the chart below, which
comes into play +/-
My plan this morning is to let the noise settle (the first half
hour of each trading session is crowded), gauge the tenor of the
tape and take a fresh look. Should market internals skew 2:1
positive, or if the financial complex demonstrates strength (
) reported; watch for the reaction to that news), I won't
rationalize my risk.
this morning that "loose grips" will likely reward the bears-and I
discipline over conviction
has rewarded me over the course of my 23-year career, and it only
takes a momentary lapse of judgment to give back hard-earned gains.
Good traders know how to make money; great traders know how to take
Those are my top-line vibes coming into the session-I am writing
this pre-market-and as always, we'll update our vibes
in real-time on the Buzz & Banter
as the market writes the script and Minyanville tells the story.
- Yesterday on the Buzz, I noted that the sub-sectors were
getting hit harder than the mainstay averages. While the S&P
was down 1.84%, the
(INDEXNASDAQ:NDX) off 2.4% and the
Dow Jones Industrial Average
(INDEXDJX:.DJI) 1.2% lower, the BKX was down 2.7%, the SOX was
off 3.4%, the OSX (drillers) minus 3.6% and the XAU 3% lower. As
this is a market of stocks and not a stock market, I thought that
warranted a mention.
The S&P is currently 2.8% below an
high; for purposes of perspective, the
is off 5.5%, the
KBW Bank Index
(INDEXDJX:BKX) is down 6% (from recent, not all-time, highs) and
gold is down some 30% from 2011 highs (and 21-26% since October,
depending on the day).
- Not saying history repeats-credit has yet to blink, but then
again stocks were off 20-25% in the first phase of the financial
crisis before credit confirmed the move lower. So, there is no
all-knowing indicator; just best practices in risk management and
patience in our approach.
- There are some relative winners out there-
), to name a few-and it remains to be seen if retail will be
snuffed out as well. In a finance-based global economy, consumer
spending is tied to the stock market, or that's presumably the
plan on the Beltway.
- The Old School folks, or what's left of them, would argue
is bigger than the market if the market is to remain free.
- The S&P held the 50-day (1542) yesterday, which is near
we flagged out of the gate
(1540). Below there, S&P 1540-ish becomes new-found
resistance for bears who are looking to roll down their
- Love and white light to our Boston brethren; know that our
thoughts and prayers are with you.