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Lunch at the Ivy? Fabulous!


Good morning and welcome back to the uphill climb. With the three day respite in our rearview mirror, it's once again time to saddle up and ride the Minxy trail. Last week was a wake-up call for the blind ambition crowd as the "Who's who" in techland, when asked about their future, basically tossed up their arms--and, in some cases, their cookies! Now, with the overbought condition worked off and the break-out scenario two stones throws away, the tug-o-war is poised to continue.

My big picture thesis hasn't changed since I began writing in July of 2000--I feel we're in for a multi-year bear market that will ultimately drain the financial system of available money (deflation). While I believe this to be the inevitable (and unfortunate) scenario, I'm conscious that, among our Minyans, there are day traders looking to capture nuances, hedge fund managers playing trends, macro funds gaming the larger phases and, of course, individuals trying to make sense of the business cycle. If you try to digest the moving parts all at once, it's overwhelming and, often times, self-defeating.

Identifying a frame with which to trade is the first step to successful money management. If you're active and play the intra-day ticks, don't worry about where we are on the cyclical curve--worry about the news flow and supply/demand in the market each day. Conversely, if you're a long-term investor (20 years or more), stop watching the tape like it's the last day it will ever flicker across your screen.The more you can focus your effort on your particular needs, the more productive your financial energies will have been spent.

I immerse myself in flickering ticks on a daily basis but, as you know, also have strong feelings about the macro backdrop. The difference, and I'm careful to make this distinction, is that my big picture belief filters down to my trading as a function of style. In other words, I've developed a predication to pick spots on the short side and identify price points (and instruments) that are an extension of my view. I won't, however, blindly short the brokerage stocks (for instance) even though I believe in my heart that they'll all be teenagers. That would be a "cycle" bet instead of a trading with a cycle "bent." See the difference?

The trick, of course, is to step ahead of the curve and identify when the stormy seas will shift the market's course. Through the last few years, it's paid to stay short--but there was big money to be made during the bullish phases. After three years of dreadful action, however, the short side is no longer novel and, by extension, it's become more difficult to fade conventional wisdom (which has been the money trade). As such, and because I believe that the trading dynamic will get worse before it gets better, my current style is to stay nimble, tactical and disciplined.

This promises to be an action packed week in more ways than one. Beeks will kick off festivities with the 8:30 release of December housing starts (est. 1.68m) and that will be followed by a steady stream of earning's releases. After last week's major upsets, corporate America needs to make a stand if the Minx is gonna find some traction. It's playoff time, baby, and the winners move on while the losers go home

Finally, and as a function of the Raider's huge win on Sunday, I'll be operating out of Minyanville's west coast digs this week. I've been waiting 19 years for the Silver and Black to get back to the dance and, while the critters are making their way through the Hollywood foo foo scene (LeBron who?), I'll be glued to my screen(s) and navigating the beast. When the bell tolls on Thursday, however, I will be turning all available energy to the Raider Nation as we get Timmy his ring.

It just continues to continue, my friends, and as always, I'm glad you're along for the ride.

Good luck today.

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