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The E-Ticket Ride

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"Purple Raines" or "1999"?

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Riders on the storm
Riders on the storm
Into this house we're born
Into this world we're thrown


(The Doors)


The Hump Day jump continues to thump as the bears have been scared by a kick in the rump. The blink-and-ya-bought it pullback is old news by now as merger mania exacerbates the prevalent performance anxiety. The resulting run has pushed the Spooz and Nazz to fresh '04 highs and irradiated any short-sighted short-sided bets. All systems go? They'd better be, because if something comes along to spoil the fun, there aren't many seatbelts fastened.

We spoke yesterday about the necessity of catching moves versus rationalizing them. To be sure, the trader who caught the double in Google (GOOG:NASD) couldn't care less "why" it occurred, he (or she) only cares that the "P" is bigger than the "L" at the end of the day. Succo and I had this conversation last night over some schnitzel and he posed a good question. There's no doubt that someone nailed that trade but was it the same guy who nailed it last time? In other words, the results of the at-bat matter but properly executed mechanics will allow you to stay in the game. Chances are, the hitters who swing for the fences will strike out a lot more than they hit home runs.

So what are those mechanics? They're unique to each Minyan but I've found trailing stops and option strategies to be helpful from an execution standpoint and sector rotation to be useful on the implementation front. The "S's over N's" or banks over semis or energy/metal migration are all subplots in a bigger script that can allow for little picture wins in the big picture sin. I find this "granularity" to be helpful, particularly when the big picture punches are being pulled.

I have a bevy of underneath puts that will sprout wings and fly to heaven on Friday but have managed to offset that regret with a handful of situations and scalps in the energy space. I understand that most traders want Prince to perform at their holiday parties but I've never been very good at bandwagon trading (know thyself). With the tape this extended and the boat as lopsided as it is, I'm content to pick my spots and keep some gamma dry.

For what it's worth, my friends, and shared cause I care.

As always, I hope this finds you well.

R.P.

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