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Random Thoughts

By

Define your time horizon before initiating risk.

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  • After paring a slew of shorts into Friday's close, I balanced my book near the opening by A) making further sales of my financial puts and B) adding a dose of tech exposure (Yahoo! and Sunw). This was a pure "risk manicure" in the context of trading (as post-expiration excesses are alleviated). How far can the Minx bounce? S&P 1275, NDX 1705 and BKX 103 should offer some clues.

  • I've still got some gamma on but that, too, was pared considerably following last week's 25% volatility pop. As it stands, the VXO is off 8% to start the week.

  • Gnome, Gnome on the range...

  • "The 1245 level on the SPX will prove crucial in our minds, because it is the level from which the bears' push in December was thwarted and reversed. Under that level and our trend indications begin to deteriorate." Lehman technician Jeff DeGraaf

  • I made a serious commitment to myself this weekend that I am gonna start a healthier lifestyle. And I will, as soon as we're done with today's lunch print from Jackson Hole .

  • "The U.S. Dollar Index is testing trendline support (basis .5x3 long-term PnF chart) that dates back to the December 2004 low. A move to 87.50 will violate this trendline and break a double bottom. Late on Friday, ECB officials noted that "rates were a bit low for price stability." The suggestion is that rates may need to rise to limit inflation in the Eurozone." Pepe Depew on today's Buzz

  • Ford Tough? Note the autos as they squeeze higher. I was talking about these stocks with one of my brother's buddies in Baltimore this past weekend. "They're not auto companies," I offered, "they're banks. Pure and simple."

  • Nurse Nosty!

  • NYSE Internals have stayed sticky green (2:1) during this latest probe lower.

  • Europe is hangin' tough as the stateside ride tries to absorb this supply.

  • Markets tend to drop faster when New Yorkers have no shorts.

  • While we were skinnin' pigs and beating Broncos, Kobe was sizzlin'. Sizzlin' I say!

  • At least he had his George Michael CD!

  • Defining risk removes emotion. Find your levels, define some risk and trade to win. Never--never--trade 'not to lose'.

  • Professor Succo and I will be giving a Town Hall Chat this Thursday at UPENN (4:30). Any interested area Minyans are welcome to attend. Just let us know.

  • As a general rule of thumb, I tend to add new option positions in the "out" (rather than "front") month.

  • Lotsa earnings in this week's pipe. Keep that in mind as you shape your risk profile.

  • And fare ye well.


    R.P.

position in sunw, yhoo
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