The Lesson from McGuigan vs. Pedroza
The market had become very extended and a solid drop today was seen. The S&P closed at 1229 which is annoying if you, like me, were looking at the 1230 level as important. If my idea about making a run higher is correct there will have to be sideways movement to work off overbought situation. Another bout of heavy selling will damage even the stronger names on the tape.
Amazon (AMZN) missed earnings tonight and that is going to weigh heavy. The Euro situation went from poor, to bad, to a total mess during the day today. Robert Sinn has the goods here:
Postcard From Brussels
Europe’s leaders have agreed that they can’t agree on anything substantive and that they will have an endless series of meetings to talk about things which they have already talked about.Indeed.
My three positions; AVA, TX, and SATS are still looking solid to me and holding above levels where I would sell them out. Tomorrow will be an important day so there is not much use going over things heavily with that in mind.
Instead allow me to use a boxing match from 1985 for a trader lesson.
In 1985 Eusebio Pedroza was the WBA Featherweight Champion. He had made 19 title defenses over 7 years all over the world. He was a true professional in every sense of the word and a future Hall of Famer. He accepted the challenge of defending the title in London against young Irish upstart contender Barry McGuigan.
At Loftus Road Stadium in London in front of a wildly pro-McGuigan crowd, Pedroza was knocked down in the 7th round and lost a unanimous 15 round decision. 19 title defenses and 7 years as champion were over.
Boxing observers were amazed as the fight went on at the calmness and professionalism exhibited by Pedroza. Both He and his corner kept their cool and tried their best to find a way to win a fight that they were over matched in. It was an amazing contrast to see as the crowd noise was deafening and the excitement was powerful, yet Pedroza remained collected through the entire fight.
That environment reminds me of right now. The noise and the pressure are running very high. Headlines are flying and it's easy to feel over matched by the market when companies blow earnings or the FED rolls out some new plan.
It's times like this that one needs to stay calm and execute to the best of their ability. Discipline is of paramount importance to navigate the current market. Professionalism and courtesy often go out the window as the reversals and volatility get more pronounced. Be in control of your plan and in control of your emotions. Be like Pedroza.
You can see the decsion read in the video below at the 4:35 mark:
Have a good night.