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Some Afternoon Schnitzel


As the calm before the storm slowly ticks towards memory status, the critters invited me into the conference room for an early afternoon snack and a little pre-earnings powwow. While I'm obviously too disciplined of an eater to partake in the calories, I did find the conversation interesting and wanted to pass it along. It went something like this:

Toddo: First things first, I'm gonna be scooting near the bell today so this will be my last journal entry. Also, so you know, I originally scheduled phase one of my dentistfest for tomorrow at 4pm----which is obviously not going to work as I need to be here for earnings. So, instead, I will be taking a rare midday sabbatical at high noon and finding the roots of my canals. I'm hopeful I won't be out too long, and I thank you in advance for your patience.

Daisy: Well, Toddo, maybe if you weren't eating burgers all day you'd be in a better mood! I resemble that remark!

Hoofy: Easy, dear...I'm sure he didn't mean anything by it. Besides, life is good. The market has finally found some footing and, from the looks of it, there's a firm bid underneath. All we have to do is get through these next few days without any disasters. We've clearly turned the corner and...

Boo: (interrupting) and WHAT?!? And you can fall for the same goofy promise of better times? Let me ask you this, many times do you have to run into a brick wall until you realize... they're bricks! "Ohh, we held S&P 775! Oooh, the VIX ticked at 50!" Come on now...until proven otherwise, rallies are simply opportunities to make sales and lighten up. Seriously!

Snapper: Man, are you one bitter critter! Look at the three trading metrics, Boo: fundamentals, technicals and psychology. Analyst expectations are low enough now that companies can "make" these reduced numbers. All they have to do is offer any type of visibility and it'll be perceived positively. And, you're so quick to mock the technicians...but IF we can manage to rally from here, the "successful retest" camp will be out in full force buying stocks. Lastly, you could almost see the psychological sea change unfold last week, and if there is any upside'll be one scared bear!

Sammy: The turtle has a point, Boo. You've gotten quite chubby this year and, with the indices down as much as they are, you can bet the gorillas (read: institutions) are itching to make a stand.

Boo: Yeah, you know what Sam? You're right! And while we're at it, let's pretend the bubble will end with a nice U-shaped recovery! This is Minyanville, not Fantasyland! (smile) Has World peace broken out? Is there no longer geopolitical risk to the tape? Have we forgotten about Brazil? Am I the only one to see what's going on?!? Toddo, a little help?!?

Toddo: (finishes chewing) Boo, you know my (humble) thought here...I've laid it out ad naseum for all to see. Still, we must acknowledge that we're all just pawns in the Minx's game. Could the market rally? It could, sure....our goal, when trading, is to assimilate the crosscurrents and have them adequately reflected in our risk profile. I may sense that this is yet another trap door for the tape, but discipline trumps conviction and we must remain open minded as we digest new inputs. One thing for sure, the next four sessions are gonna be nutty as we head into the October expiration. Get your rest tonight and balance yourself with the important stuff. That's the most profitable trade of all.

Sammy: Well said,'re a lot wiser than you look!

With that, the Menagerie got up, filed out of the conference room and headed back to the trading desk. There was 20 minutes left in the day and the decisions they made would dictate the positions they woke up with. All metaphorical imagery aside, it was time to focus and make some serious decisions.

Choose wisely and, more importantly, have a most peaceful night.

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