Good morning and welcome back to the flickering pack. On the heels of a fantastic night of ketchup with MV Professor Adam Katz and Happy Hour Honcho Cody Willard, I slink to the drink for another run of fun. The market waits for no one and nothing, we know, condiments included.
Out or respect for time—both yours and mine—I’m gonna tee it up and toss it out there. These are historic times and we’ll one day sit around a campfire telling stories about the 2008 tape.
When that happens, we’ll have the benefit of hindsight. Right now, we need the gift of foresight.
Strap Yourself in Goose!
My greatest strength is knowing what I don’t know. Stay humble, I’ve learned, or the market will do it for you.
What I do know is this: There is a massive disconnect right now between the credit markets and the equity space.
If credit can catch a bid and spreads narrow, we’ll see a fierce upside move that will rival anything in recent memory.
If credit doesn’t improve—or worse, continues to deteriorate—the DJIA could shave 1000-1500 points before most folks know what hits them.
The cynic would say “Great—you’re saying we’ll either rally or sell-off, that’s great value added!”
I would counter that the principal purpose of a trader—and by extension, my role in Minyanville—is to identify, measure and communicate risk.
The rubber band is stretched about as far as it can go. If it snaps back, it’ll poke Boo in the eye. If I snaps period, supply will fall from the sky.
See both sides, Minyans, and position yourself accordingly.
- Coming into this week, I offered that the S&P, INDU and Russell were all tracing out bearish "churning" patterns under respective resistance of 1405, 12800 and 735. That's still the case, noise aside, which makes the technical metric one of Boo’s clues.
- I'm hearing all about this wall of worry. I "get it" as it pertains to the sentiment surveys but don't see it anecdotally. The VXO is at 26, the S's have been up 3 out of the last 4 weeks and real fear seems to have dissipated, at least for equities (not so much in credit).
- Everyone always talks about what studs Issac and Doc were but something tells me Gopher was the man with a plan.
- There is a case to be made for the hyperinflation scenario—it's part of the probability spectrum—and I respect it, along with a potential relief rally if someone kick-saves the bond insurers. Hands over eyes, however, I don't like 'em and I wouldn't be me if I wasn't honest.
- I'm talking more than trading, so keep that in mind. Jab Jab Jab DUCK jab DUCK jab. That's me, somewhere between Chatty Kathy and AFLAC. It's not sexy but it's sustainable and in this environment, capital preservation is the first step towards prolonged profitability.
- Ever since Minyan Editor T-Woo blasted Mandy, I haven't been able to get her out of my head. Gimme bamboo under my fingernails, water-board torture, death by Shmoopie... anything except Barry Manilow!
- The Fed is officially all over the place. They claim to see growth "accelerating somewhat" in 2009 and 2010? They didn't see the sub-prime contagion while it was staring them in the face and they’re resisting the notion of recession to this day. How the heck are we supposed to trust 'em a few years out?
- Bada Bing, Bada Boom. Crude $100. Gold $1000. What does it say that equities aren't lifting in kind? Perhaps a decoupling of a different sort? Not sure, but interesting nonetheless.
- You know what I’ve seen a lot of lately? Reactionary chasers who are trading "not to lose" rather than trading to win. In my experience, that's a self-defeating mindset.
- Wouldn't it have been awesome if The Love Boat traveled to Fantasy Island? I woulda been so all over that!
- Am I dating myself? Or would it take some CHiPs and Family Ties footage to do that?
- You don't need to trade every day, you simply need to win a high percentage of the trades you make.
- OK Terry Woo, I'll lay off... if you PLEASE turn the volume down!
- Why can't I shake the sense that any monoline bailout will leave the equity holders of MBIA (MBI) and Ambac (ABK) holding a diluted bag?
- If the banks step up and bail 'em out, isn't that akin to taking money from your right pocket and putting it in your left pocket?
- Do anchovies get a bad rap?
- Are you watching Goldman (GS) as the tell of all tells?
- If the US debt bubble is bigger than Japan's was before its deflationary bust, why is everyone so convinced that we'll fare better than they did?
- Whatever happened to Linda Ronstadt?
No positions in stocks mentioned.