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Stream of Consciousness: Making Sense Of Today's Twists and Turns


Everything you've read today is in the context of a pure trade. Some work, some don't. Discipline over conviction.


This is the latest stream of consciousness in today's twisty turns, originally on the Buzz & Banter and reprinted here for ye faithful. Also, see Random Thoughts from earlier for the rest of today's vibes.

Weebles and Wobbles - 1:56 PM

"Teetering" is a word that comes to mind as we watch the Turnaround Tuesday turnaround for the third time today. Freddie (FRE) down 32%, Lennar (LEN) and KB Homes (KBH) off a dime (10%) each, credit concerns running rampant. Indeed, this is either "it" or the gut check to end all gut checks.

I've been pinging one of the smarter money managers--a fella who has his finger on the pulse of the market machination--and his comments were consistent with what we've been discussing in the 'Ville for some time.

"Even as I try to look away," he said, "I am forcing my brain to pay attention. Imagine the masses of investors who remain in denial. They can't grasp the magnitude of what we're seeing. They're looking at the averages, still up for the year, and have yet to act."

I agree with him that the lower dollar has masked the pain. Indeed, we've been watching the measuring stick for a mighty long time. The question I'm wrestling with is whether we've arrived at the desert storm or if we're nearing a short-term oasis for a trade.

I've set stops in an effort to remove emotion and yes, I'm still there (I was thisclose to cutting bait). Looking at the tea leaves, my trigger is a matter of time (note the negative breadth) but this tape has more swings than a Hedonism vacation and there's alotta trading left in this session.

All eyes on the FOMC minutes at 2:00 PM EST. Discipline over conviction, please, no matter which way your chips are stacked.

Curious and Curiouser - 2:15 PM

  • Alrightee then, zero hour on the FOMC minutes and... my Bloomberg crashes. You almost gotta laugh. Almost.

  • Headlines including a cut in the growth forecast (1.8%-2.5% from 2.5%-2.75%) and calming, soothing words on the taming of the shrew (inflation).

  • Yada, yada, yada. Why? Because Fed credibility is the single biggest issue for the markets. We've been offering for years that they've been in a box and that doesn't change as a function of position.

  • So, what does the market do? Rallies, for starters, as traders scramble, ramble and gamble. We've since seen a slew of supply and how the tape digests this latest wave may well foretell the rest of the holiday week.

  • There is a Chinese quote that states "May you live in interesting times." And so it is, even as we approach the most American of holidays, we're importing proverbs.

  • How bad do you want it? I've yet to get stopped out as I watched (rather than acted upon) the headlines. It's thinner than Kate Moss on Atkins out there and I don't like trading vacuums.

  • Yes, I see DJIA 13K and BKX 91 but the close is more important than the noise. Besides, my particularly stops are set to my underlying positions. It may not matter when the dust settles but hey, sometimes right, sometimes wrong and always honest.

  • Hopping... I'll be back, win, lose or draw.

Oil of Oy Vey! - 2:53 PM

  • There was nothing bullish in the FOMC minutes, which is sorta ironic as there was nothing bearish when we were at the highs.

  • A few Minyans have asked whether intraday prices or the close is more technically pertinent. Different strokes for different folks (as a function of your stylistic approach) but closing levels are "in the books."

  • I feel like a moth in a lightbulb factory today.

  • Hands over eyes (positions), I will note the the paltry 3% move in the VXO isn't what Hoofy wants to see on a day like this.

  • When in doubt, wait it out...or trade a little in between.

  • I don't know what to make of this, entirely, but many of the traditional bulls I know are now bearish and most of the bears I know are now bullish.

  • I've always said that, as traders, the destination isn't as important as the path we take to get there so perhaps they'll all be right (or wrong).

  • Rule of Thumb: If you're having trouble breathing or staring at each and every tick, you're likely positioned too big.

  • "Toddo, Just a heads up. If the DJIA closes below 12,845, it signals a Dow theory sell signal (confirmation of Transports breaking below Aug Lows). Minyan Matt

  • Tell it! This last hour is gonna be pretty pretty pretty pretty interesting (think Larry David). Especially as chatter abounds that there is gonna be (another!) government rescue package announced tomorrow. I don't put any stock in that (we don't do rumors in the 'Ville) but it may be one of the reasons that the market is holding a bid.

  • Hey, we have a ton to be thankful for regardless of whether we close up 5% or down 5%. Seriously. Keep it in perspective as it could be worse.

  • Fare ye well into the bell.

Banana Peels and Group Squeels - 3:20 PM

  • I'm all about being a contrarian (as you likely know) but I've got no interest in being a hero. So, while I've yet to elect my stop (based on individual levels), I'll likely pare some exposure into the close (given DJIA and BKX 90 levels are now overhead).

  • Again, everything you've read today is in the context of a pure trade. Some work, some don't. Discipline over conviction.

  • Why am I sticking to move rather than layering in and building positions? A few reasons. One, as we've been highlighting since the summer, the lower highs and lower lows beg selling rallies to buy dips (rather than buying to selling). I'm trading against the grain today but that's long as I'm disciplined.

  • Why try, you ask? The media is suddenly awash in negativity and I've heard the word "bankruptcy" 100 times today. I don't disagree with the conclusion, mind you, I just think that it's gonna take some time.

  • Why am I staying tight? The current levels of fear, as measured by the VXO, are nowhere near previous pain fulcrums and I could argue that the news is as bad or worse than it's been.

  • And the dollar has yet to rally. Not sure if that's a cause or an effect but the fact that the dollar AND equities are lower is disturbing. Not only on a trading basis but also on a human basis.

  • I count almost 300 articles in the Minyanville database that discuss the notion of stagflation. Just in case you wanted to do some homework over the holidays (this one is particularly good).

  • I've gotta jump and juggle as I watch Baidu (BIDU) flip the downside switch. Good luck in the muck, Minyans, and be the ball.

The longer you wait for dinner, the better it tastes... - 3:44 PM

No, not the Thursday feast--although my mouth is already starting to water--we're talking about the long awaited Snapper. Man, I almost can't see my keyboard through the hair follicles that are sprinkled across it!

Consistent with my last Buzz, I've made some token sales as a function of discipline and, as it stands, I'm holding some upside exposure (particularly with DJIA 13,000 and BKX 90) back underfoot. You gotta earn every dime in this tape, that's for sure. And while I continue have concerns (grave concerns, is there any other kind?), I'm trading. Just trading.

I'm juggling more balls than Meadowlark Lemon so lemme hop...and dribble. Have a mindful night, Minyans, and I'll see you in the ayem.


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