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Brown-Eyed Bears

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A day late when the dollar's short!

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Delilah Jones was the mother of twins,
Two times over and the rest were sins.
Raised eight boys, only I turned bad,
Didn't get the lickin's that the other ones had.


(Grateful Dead)



The midday fray is underway as the traders trade and critters play. The eye-popping movement in the metals has to be the lead story as gold is gettin' smelted for $16 and silver is off 10%. After last week's crude spill and fixed income thrill, equities and the greenback are the only asset classes not to embark on a sharp mean-reversion trade. Yes, stocks started the process Tuesday and the dollar is sharply higher today but if they follow their friends, there will be more meat to the bone.

Along those lines, and with that in mind, I slipped both legs into my metaphorical bear costume this morning (50% conviction on the short side). The imagery was a function of a few evolving observations--crude reversed 3% higher, the semis reversed back below the 200-day, breadth remains laggy and S&P 1140 "seemed" like an intuitive destination. The tape has been relatively dry since that try (and the brokers remain firmer than a college cheerleader) but we can trade seven ways 'till Sunday as long as we're disciplined. In that vein, I'm using an S&P 1188 soft stop (not to be confused with soft soap) as that's where we broke yesterday.

A few things to monitor as we trudge through the sludge. The ability of the Minx to keep the flickering ticks rotating (rather than migrating) will dictate whether yesterday's move was a hiccup or part of a broader regurgitation. Thus far, the semis are a simple source of funds and that money is finding a home in beta (nets and nuts), pharma (DRG and BTK), the trannies and select financials. The mainstay tell of late has been the breadth and it's thus far....uninspiring but not problematic. The internals work best when they're lopsided (2:1 either way) so keep 'em on your radar for skewage either way.

I'm jammed like Smuckers today so lemme hop. Before I go, I want to remind ye faithful that sharp pullbacks are par for the course in the context of broader trends. If you've been watching the energy names or metals with distain ("I can't believe I'm not involved!"), you should be jacked that they're coming in as they are. That's not advice to act (these decisions are yours and yours alone) but it's important to remember that the goal when trading is to use prices to your advantage.

As always, I hope this finds you well.


R.P.
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No positions in stocks mentioned.
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