Good Morning – RedlionTrader's First Call

Overnight Markets:

Morning links:

• Today's Economic Calendar
• Overnight Market Updates
• Today's Earnings Announcements

Around the Globe

Europe as of 7:51am EDT

• • DAX (Germany) +1.65%
  • FTSE (UK) +0.80%

Green around the globe

Today's Economic News:

Service PMIs up around the world, we would expect the same here in the US.

Quote of the Day:
It is not the size of the dog in the fight, it is the size of the fight in the dog!
–Anonymous

Current Breadth Readings: (click here to see all our breadth charts)

Since the theme for today is keeping the faith, I need to reread this column a few times today and stare at our long term trender that remains bearish.  We will feel better if both the signal and index begin to point downward.

ES SP500 Futures Comments:

Short: 1534
Long:  1490

Watch this video: http://bit.ly/100FjCQ

If it seems like I've been lost then let's remember. If you think I'm feeling older and missing those bullish ways. Well, then you should have read me much better, cause my past is something that never got in my way. Oh no.

Still I would not be here writing if I didn't have the hunger.

And I am not ashamed to say the wild bulls were my friends, cause I never felt the desire til the charts set me on fire and then I was short, yeah, that's why I'm, keeping the faith.

Getting tight in my Chinos here as we approach the 1542 stop zone that will max out my comfort on the trade.  As noted above the breadth charts have not turned against me yet, so that keeps me comfortable that most likely we are putting in a top at this time.   If you took the time to watch that video, Jason Leavitt who I have not heard of before, sums it up better than I can in words.  Thank you to reader Jim M. for sharing it with me.  It helped me keep the faith through yesterday's squeezing close.

For today, we like a short here at the 1532 opening area, but we lose our credibility if we just keep saying short, but 1532 has been a target short area and our last add zone in the trade that will have us 100% vested in the trade with stop around 1542.

What has me fearful in here is that we just might need that exhausted buying moment where bulls are so enthused they buy, buy, buy and shorts like me bail, bail, bail and ticks go +1000, +1000, +1000.  That type of move would require a price spike so I need to make sure that does not take me out.

So I moved that 1532 up just 2 for this AM to 1534 as the market top target for today.  This will be a follow through day requirement for the bulls since the goal post of yesterday's 1525 was taken down.  Now it is victory lap time for the bulls. That will be faith shaking if we get that today, what the bears don't need is a follow through thrust.

We also moved our downside sell-off target.    Up nearly 20 handles today, as long-term short we don't like that but we still think overall that 1400 target is doable but for now we are concentrating on improving our entries into the trade and if the market turns in our favor we will set the longer term downside targets.  It is a game of defense right now and staying in the trade.

US Dollar DX Futures Comments:

The dollar pulled back and beyond our 81.25 area.  We like it long again back up to the highs now, 82.50 area.

TLT Twenty Year Bond ETF Comments:

Bonds not showing us fear, but we are getting some short-term interest rate bumps.  We don't like the lower highs here but we will stick with the 120 target on the TLT. 

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A Social Experiment:

For you “below the fold readers”, I want to let you in on a little social experiment I want to do starting tomorrow.  I am in the middle of reading Nate Silverman's latest book, which I recommend.  Early in the book he introduces the idea of “hedgehogs” and “foxes”, an idea that if I remember right he borrowed.

The distinctions is that there are two major types of predicting personalities.  There are hedgehogs, which grab headlines and make strong standing predictions with little caveats and when wrong it was because of some un-seeable reason of even conspiracy.  Then there are foxes.  Cunning creatures that eat caveats on crackers, toast and just about everything.  Foxes see the world in shades of grade, hedgehogs black and white.

The concept is that television likes hedgehogs. They are clear, strong make good headlines and news albeit terrible predictors.  Foxes on the other hand come in and say: ”if this happens than maybe that or possibly something else.. , blah blah blah” .. you get it, not great entertainment.

I have assessed myself as a fox since I too like caveats and as an engineer tend to see the world as a complex chaotic system.   That being said, as a bear imposter for a week now, I would like for the rest of this week to become a hedgehog imposter too.  I am bored.

Starting tomorrow until Friday you will see more !!!! BOLD BOLD BOLD words in headlines and writing.  Now about 125 of you read this everyday via email.  That is not a lot.  Of that 125 I expect less that 1/2 will get this message here as it is pretty far down the page and kinda long, so that in itself will be interesting.

I am going to share my daily stats with you so you too, if bored can follow along: 

That is yesterdays's mailing.  I send out about 550 everyday.  About 23% opened the email, 12 of you clicked on something in the email and a whole bunch never opened.   I want to see if by becoming a hedgehog I can change these numbers a bit, so this is my baseline, which is inline with what I see daily and by the way a 23% open rate is not too bad.

Here is a link to Silverman's book, “The Signal and Noise: Why so Many Predictions Fail”

See you tomorrow with updated stats and my first day as a hedgehog.