The Rubber Match
Hey Tony--put the milk down! If you mess with THIS bull, you'll get the horns!
Once there was a silly old ram
Thought he'd punch a hole in a dam
No one could make that ram, scram
He kept buttin' that dam
Well, my friends, here we are, Freaky Friday with the score tied two all. If today's rubber match is anything like the rest of this bipolar week, we may have to get a bigger office for all our personalities! Down Monday, up Tuesday, down Wednesday, up Thursday--let's just call it Boofy the confused cross-dressing bull/bear and get it over with!
I've been spending a lot of time recently trying to wrap my arms around the beast and I wanted to "think out loud" for a moment. If this column is to be a true extension of my mindset, I've got to express some pangs that I've felt lately. I continue to feel that THE rally, if it's to occur, must start at lower levels--preferably below the October lows. This would allow Tony's intermediate ducks to quack in unison while, at the same time, provide the despair necessary for a tradable bottom.
With that said--I respect (not defer to) the price action and there's been a constructive tone this week (even on the down days). One could argue that there are sellers above but we must also acknowledge that there's been buyers below. Further, I'm unsure if the sell-off can occur until the emotional types bite the forbidden fruit on the buy side. Am I talking out of both sides of my mouth? I would prefer to look at it as "seeing" both sides to the market. Bottom line--I want to be very tight on the short side and will flatten out if our first stop is elected.
Out of respect to my initial (bearish) thought process, it's unlikely that I'll trade from the long side (bull costume) if I'm stopped out. That's not to say that there won't be trades on the long side--that just means my stylistic approach won't morph from "short to cover" to "buy to sell." See the subtle difference?
The most likely scenario, if stopped out, is that I'll flatten, move to the sidelines and look for a more compelling entry point (either way). This approach does a few things for me. First, it removes emotion. I've identified a point of action and defined my risk parameters. Second, it enables me to utilize my tactical methodology--when unsure, step aside and wait for a more advantageous risk/reward profile.
Anyway, that's what I'm thinking this morning--now lemme quickly run through the morning news. Lehman Brothers nudged up numbers in Intel in front of next week's mid-quarter update, Monty undressed the gap, NVLS was "there" but had some cautious commentary and, obviously, the geopolitical rhetoric is fiercely dominating the wires. The GDP also came out 'better' and that's given a nudge to the collective sentiment. Watch for the University of Michigan confidence number at 9:50(exp79.1, 77.1 if the basketball team shaves a couple of points) and the Chicago PMI at 10am (exp.52.5).
Watch the banks as the chieftain tell (BKX 725 is huge), the Semis off Intel (these levels big), retailers (WMT 49 is resistance), the macro tells (took my eye of the "easy" crude $40 first time fade trade), MSFT and GE (sentiment), the internals and, naturally, our levels.
More importantly, there's only seven hours left in our kick-ass charity auction and YO!, Mr. Joisy is $12,250 bid and looking snazzy. We'll be monitoring this action all day and after the close, we'll announce the lucky winner--so stick around! Daisy has been hittin' the gym (she looks udderly awesome!) and told me that the winner will get a special surprise. Man, she's milking this for all it's worth!
Have a fantastic day, Minyans--hit 'em hard.
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