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Random Thoughts


Trading within the trend---or waiting for your trade--is a recipe for longevity.

  • Minyan Michael asks: "A couple of years ago you mentioned a "savvy operator" that predicted an echo bubble that would surpass the 2000 highs. I think you, me and everyone thought this was laughable. Do you recall who thought this and what is his current position?!

    Minyan Mike, I don't remember what I had for breakfast this morning! I vaguely recall such a conversation and while I don't remember laughing, I certainly didn't embrace it. I will offer, however, that bubbles have migrated rather than echoed. From dot.coms to housing to debt (oh my). How long can they shuffle? I'm simply not smart enough to know.

  • The S&P/VIX ratio is back at levels that have accompanied past market tops.

  • Please keep a close eye on the US Dollar. The DXY (+30 bips) is probing both the 200-day and the five year downtrend. IF (big if) this pokes through, it could act as a further headwind in the "asset class deflation vs. dollar devaluation" thesis. I know, you've heard that before (when commodities broke their five year trendline) but this is another piece in that puzzle. I did, in the interest of full disclosure and forthright communication, pare a bit of my commodity stock deltas (selling some calls and offering a bit of common against 'em)

  • If you missed Pepe Depew's NBR interview, click here, go to the "on-air" button on the top bar, click on "streaming video" then click on "Street Critique." He's the devilishly handsome fellow with the steady demeanor.

  • Centex (-4%) is weighing on the homies today. We spoke about "trading longs" vs. "comfortable longs" yesterday and I, for one, am happy to be watching this battle from the sidelines.

  • Weatherford (+4%) popped through that downtrend line we discussed yesterday (in place since May). I have made some sales, which is more a function of the dollar than the drillers.

  • One name I've yet to touch is Golden Star (GSS). My cost basis is "in and around here" and, while it won't be immune to further gold swoon, I'm comfy with the current risk/reward. If my opinion (or the tenor of the metals markets) shifts, I can always slap a trailing stop on some of my exposure and remove emotion.

  • Will a watched top ever boil? I know alotta traders who Neil Younged their careers by trying to catch a cusp. Trading within the trend---or waiting for your trade--is a recipe for longevity. And if you're gonna fade 'em, baby, please define your risk.

  • Hey, I figured out how to make the energy and metals rip---make some sales! If that greenback continues its green sheen, I'll prolly continue to parcel out of exposure. So you know, Minyans...


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position in wft, gss
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