Sometimes you feel like a nut.  Sometimes you don’t.

Trading is a funny game.  There are times when you feel you’re missing the boat and others when you see the seams on the ball.  Yesterday, despite leaning relatively long, I grinded out marginal gains and, under the “know thyself” rule, pared overage exposure while adding some financial puts for balance.

One name I didn’t touch was Yahoo (YHOO), a stock I’ve been playing from the long side for the last month.  I’ve long believed that in a digital “input-output” world, the company's eyeballs were valuable assets.  I said into this week’s earnings—and again after I doubled down on the other side of the 10% haircut—it’ll monetize its audience or someone else will.

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• Hit me again Ike, and this time put some STANK on it!  Do you really think it’s a coincidence that Steve Ballmer lobbed this news into the marketplace the morning after Google (GOOG) earnings?  The battle lines are drawn and the stakes have just been raised.
  
  
• On my signal, unleash hell!  Speaking of lines in the sand, guess where this pre-market M&A jig has taken us?  Das right, near S&P 1405, which we’ve been eyeing for quite some time.
  
  
• Sigh… that was, of course, until Beeks screwed up one of the easier fade opportunities in recent memory with this morning’s payroll data.
  
  
• Hoofy and Boo lay some lumber on the Superbowl!
  
  
• While the latest lift saved the tape from it’s worst start in history, it was still a tough year, er, month.  That doesn’t bode well for those who subscribe to the January effect.
  
  
• Fed Fund Futures are pricing in a 57% chance of another 50 bip snip at the March 18th meeting.  Big Ben has used more than half his bullets and we all know where the last one will point.
  
  
• Into yesterday’s bell, I scooped a snivlet of Citigroup (C) and Bear Stearns (BSC) puts, which were my first grabs on the back of the FGIC news.  I was more of a hedge than a spec but I’ll likely add to that side of my ledger given the pop into resistance.
  
  
• I’ve said it before and I’ll say it again.  Lay off Britney.  She’s a sick woman and deserves more empathy than acrimony.  As someone who has experience in the matter, I’ll offer that mental illness is the most misunderstood ailment in society.
  
  
• You can learn a lot just by watching.  I continue to hold Elan (ELN) and Schering Plough (SGP) on the pharma side, having paired Merck (MRK) as part of my risk reduction program into yesterday’s bell.  I wanted to trim exposure and I simply wasn’t digging how it was trading.
  
  
• Please note that there’s a massive binary event for Elan this summer and part of my play is a rally into that.  I’m quite aware that this stock is about to fill a long-held gap so I’m factoring that into my process as well.
  
  
• Is a rock a stone or is a stone a rock?  Seriously?
  
  
• Will this proposed megamerger help the psychological metric?  Absolutely.  Will it trump the structural metric?  Not indefinitely.  That’s the thing with cumulative imbalances.  They’re cumulative.
  
  
• Fare ye well and hit ‘em hard, Minyans, we’re almost there!

R.P.


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