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The Gap Yap


He is not an animal--HE IS A FOKKER!


You were the girl that changed my world
You were the girl for me
You lit the fuse, I stand accused
You were the first for me

(The Gap Band)

Alright, Fokker, you win and I promise not to make any more Mask references. It's just SO easy to tool on you, and your pops gave me the green light when I saw him at Minyanfest. Maybe we should get YOU an assistant -- perhaps a carnie -- and this way you can let the schvitz roll down hill!

The early afternoon grind higher continues, and I want to bring up a few points. First and foremost, mind the gaps created by yesterday's opening in the S&P and NDX. These types of vacuums have a habit of "filling" over the course of time and we're tickling the lower band tag. Also, please be aware that a (European?) account has steadily bought the S&Ps all morning and has accumulated more than 4,000 . In case you're wondering, that's a LOT of futures.

The tea leaves are hanging tough today -- the breadth is strong, the dollar is fighting back and the bulls are once again beating their chests. I covered the meat of my exposure yesterday for fear of this type of reaction but, truth be told, I'm having a hard time subscribing to the upside. Maybe it's the meltage in the VIX (no fear) or the alleviation of the near-term oversold condition (from yesterday). I'm not sure, but I'm doing a bit less and taking my time.

When I reference my "underneaths," by the way, I'm talking about the (small) smattering out-of-the-money puts I own. For instance, if XYZ is trading at 36, I may choose to buy May 35 puts for a bone. If the XYZ rips higher, I'll only lose my premium and if it turns lower, my delta kicks in and I'll become short the underlying stock. That strategy achieves three things: It defines my risk, it takes advantage of the VIX meltage and it allows me to "spec" on the direction without putting too much cash on the line.

That's about it, my friends. I wish I could "sign off" on the "melt-up" thesis but I don't feel it. That doesn't mean it can't happen -- I've surely been wrong before -- but this is a forum for honest communication and you'll always get it from my gut. I respect the market and the powers that be and I'm not blindly fighting or stubbornly trading. I'm simply exercising patience and reminding myself that opportunities are made up easier than losses.

I hope this finds you well.
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