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Where Wolf?


As go the financials, so goes the tape....


The Wolf came in, I got my cards
We sat down for a game.
I cut my deck to the Queen of Spades
But the cards were all the same.

(Grateful Dead)

While few people respect the downside more than I do--I've been conscious of the imbalances for quite some time--I'm wary of the "first move is the false move" post-FOMC phenomena. And while I personally prefer to jockey the meat of my long side exposure between energy and metals, I remain of the view that the tape won't fail until the financials show signs of strain. Yesterday was a dent, not a downer, and they'll be front and center on the Hump Day radar.

I've been active of late---trading, not exercising--and have manicured my risk profile by cleaning my sheets and focusing on some core positions. In the interest of full disclosure, complete honesty and real-time financial education, I'll share some of my current positions and the thought processes behind them. As there are a slew of new Minyans in the 'hood, I'll remind ye faithful that our mission is to provoke thought rather than shape it. So please don't take this as advice--your risk is for you and you alone, for better or for worse.

Intel: I initiated a position last week as the stock got hit on the Microsoft pushout. The thought process was simple--they were "throwing a lot" at the Mother Chip and its ability to absorb news (while twisty oversold)--coupled with defined risk below the 2004 double bottom ($19.65)--made it an attractive risk/reward. I fully expected further number cuts--which we got--but pared the position a a bit (near my cost) when it acted laggy in a strong tape and I got incremental data points that the quarter will be awful (understanding, of course, that this sorta sentiment may in fact be bullish). I now have a digestible position with a stop below $19.35 and an earnings report a few weeks away. I've yet to decide if I'll ride this puppy into the (potentially binary) event but we'll cross that bridge when we get to it.

Pfizer: I bought back at some Pfizer yesterday as it gave back some of its meaty gains (following its 30% sprint off the December lows). If the reverse dandruff holds true, $24.75 (the left shoulder) to $25 (the 200-day) should be a decent entry point. And I'll again apologize if I've been a bit terse of late--I've had a really stiff neck since I swallowed that Viagra and it got caught in my throat!

Drillers: I nibbled anew on the Texas tea plays on Monday as I watched the OSX tickle 203. My names of choice include Weatherford Intl (WFT), as it seemed to be basing after a winter run and Nabors Industries (NBR), as it looked to be breaking out of a base following a winter correction. I will also draw your attention to this chart of crude COT data, which I find pretty interesting.

Metals: I've been trading around core positions in this complex for a few years now, getting a bit more active after I opined in Ojai that energy was gonna toss the leadership baton back to thy precious ones. It certainly did--the XAU rallied 66% into the end of January before I serendipitously slipped out of my metal holdings. I've since built back some cores and have "traded around" them in the context of a long-term bullish thesis. And, while perhaps I'm over-thinking (read: overtrading), I've parceled out of some silver equities recently in favor of some ketchup in gold shares. Silver Standard (SSRI) and Newmont (NEM) are among my favorite vehicles of choice (although there are other, less liquid, metal plays).

SunMicro: I accumulated a large position (for me) in early January after President Fish, the former founder and CEO of JWalter Thomson's digital arm, weighed in on Minyanville. The stock is up more than 20%--albeit from a low base--but I wanna hold this rather than trade it. With the recent push through $5, alotta institutions will be able to own this name (according to many charters, stocks under a finski are taboo). Morgan Stanley upped this pup this morning, adding another 4% to the once (and future?) proud tech giant. And, so you know, a LOT of sell-side firms remain cautious on the name and are sweating out these gains.

And finally, as time is slippin', slippin', slippin' into the future, lemme end today's opener with some vibes from my good pal Snoop Tony Dwyer of FTN Midwest Research. The following Buzz posted yesterday afternoon, once the hugs and handshakes subsided.

Being John Malkovich? As we always strive to see both sides of every trade, I wanted to share the fare that Snoop Tony Dwyer and I discussed over lunch. I've known Tony for many years and yes, I've seen him rootin' tootin' bearish at times (much to Daisy's chagrin). Alas, that's not the case now--far from it actually--as he offers the following thoughts:

  • His current year-end target for the S&P is 1440 but thinks there is "lotsa room" for an upside revision.
  • He is allowing for a near-term correction but believes investors should look past it.
  • He senses that U.S investors are starting to cool on the prospects overseas and will rotate money back to the states.
  • He likens the current juncture to 1995 in terms of valuation and thinks we've absorbed the brunt of the negatives.
  • He thinks the time to be very bullish on the commodity plays was a few years ago and his smarter contacts have sold into this latest lift.

Fare ye well, Minyans, and let's be careful out there.


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position in sunw, ssri, nem, wft, nbr, pfe, intc
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