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The Stiletto Tape

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She cuts you once, she cuts you twice
But still you believe
The wound is so fresh you can taste the blood
But you don't have strength to leave

(Billy Joel)

Hey Snapper...lay off the juice! The opening spike was the closest thing to panicked buying we've seen in a long time and, consistent with my individual style, it begged taking some exposure off. Again, each of you has a unique approach to the market and my method of trading is surely different than yours. Still, I will always offer my thoughts with the hopes that it adds value on the margin.

The Dow Jones has now rallied over 500 points in the last 24 hours and that should be incorporated into our brew. The traders that missed Snapper are surely reaching for exposure and while we must respect the prospect of emotional buying, understand that true risks remain. The Wolverine confidence number came in at an abysmal 80.4 (expectations were for 85.5) and it's hard to put a positive spin on that. Surely, if we hold our gains, pundits will point to the fact that we rallied in the face of bad news and we "held right where we had to" (double bottom). As you know, my "sense" is that this is "A" rally and not "THE" rally (scenario "B" from yesterday), but when trading, you must assign a probability to all outcomes and structure your risk profile accordingly.

Opinions aside, the internals are firmly positive and our seminal sector bases (banks, semis) are (thus far) holding their gains. I would also keep a sharp eye on bonds, as we've picked up a lot of chatter with regards to an allocation. I have zero edge on whether the alligators are actually in the house-but I do feel that if bonds start to rally, it may quell equity sentiment. Other groups to keep an eye on today are those darn Utes (UTY) (they've just turned lower) and the retailers ("consumer" sentiment).

Deep breaths, mon frere, the markets only been open for a bit more than an hour! I know these swings are emotional, but do yourself a favor and check emotion at the door. The critters, on the other hand, are quite excited and wanted me to thank you all for the tremendous support we've received to date. If you'd like to get pinged when a new column is posted, send an email to JournalAlert@Minyanville.com and they'll take care of it. More importantly, prayers and peace to the good souls in Virginia and Maryland. My brother Adam lives there with my two precious babies, Maia and Bradley, and I'm sending my love to you during this trying time.

Hope this finds you well.

R.P

Short DIA

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