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Random Thoughts


Eat your heart out Keira Knightly!

  • Parliament? Big Ben!

  • Am I being penny wise, bullion foolish?

  • I nibbled on my first schnitzel of IBM defined risk downsides early this morning. It's like a MOG (half man, half dog) except it's half hedge and half spec. Minyans know that I've accumulated a SunMicro (SUNW) position and wanna put it away for a rainy day (If you missed the thought process, here it is). I've also been eyeing IBM as the next potential bellweather breakdown (under $80) and wanted to wait for the dust to settle (read: clear out the pressers and let the stochastics become a bit less oversold) before dipping my toe. There is clearly "tracking risk" so, for all intents and purposes, this is more of a pairs trade than a hedge. I'm long SunMicro common and IBM spring puts against it.

  • Mike Tyson was ahead of his time!

  • Chatter that the terror alert was being raised swept the street this morning. It has since been denied (by a government spokesman) but the price action speaks to a potential fragility. From a structural standpoint, the compression (that Succo and I so often discuss) hasn't kicked in yet. That doesn't mean it will (or won't), it simply means that Minyans should be respectful of the prospect of increased volatility. We've seen it in other asset classes and I continue to believe it'll roll into equities.

  • This is my type of woman!

  • Cape Fear ? Hardly. The VXO is up 12% but has barely been Bar Mitzvah'd (13).

  • Vibes from Snoop Tony Dwyer of FTN Midwest Securities:

    • The PHLX Semiconductor Index (SOX) is up 55% from our initial bull push when the fundamentals looked abysmal (Sewing Up the SOX – 09/14/04).
    • Over the past three months alone, the SOX is up nearly 30% on dramatically improved fundamentals
    • There are times the fundamentals and stock prices can move in opposite directions.
    • The significant outperformance relative to the market and to the S&P Info Tech Sector suggests a period of correction/consolidation may be rapidly approaching
    • History suggests the money doesn't necessarily leave Info Tech (where we are still very positive), it just rotates to other areas such as Communications Equipment

  • As I think the "metals and energy vs. tech and financials" dynamic is in the early innings, I wouldn't characterize myself as bearish on the former complex. Just...prudently patient. I'm carefully watching my former friends and, in that vein, will note that SSRI, which was up 5% earlier, has giving back most of pa nub.

  • My grandfather taught me to take the high road as it's less crowded and offers a better view. But he never mentioned whether I could scribe some memoirs while soaking in the scene.

  • "After all the anticipation of the New Year and the onslaught of market predictions, February tends to be a quite month. When measuring the range between monthly highs to lows, February ranks as the second least volatile for the S&P 500 dating back to 1970 (June is the lowest). February generally is a pause that generates a modest oversold condition to fuel the next rally that extends into May. Usually, the month inches higher during the first half but tends to sell off as President's Day approaches where a trading low occurs. So far, January is managing to hold on to its positive status giving the widely followed January barometer a positive indication for the year. We should not forget that market lows tend to occur in the fall during the second year of the election cycle." Lehman's technician Jeff DeGraaf

  • I'll be traveling to the left coast tonight with the critters as they revisit Hollywood. As such, and with much regret, I'll be out of the 'Ville and away from my screens tomorrow.

  • While I respect (expect) some jockeying this afternoon (ahead of Beeks), I would be surprised to see Snapper unless market internals improve. Keep that in mind as contra-hour approaches.

Good luck Minyans.


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Position in JPM, SUNW, IBM
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