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Deal of Fortune


Let's try this again...

Since it costs a lot to win
And even more to lose
You and me bound to spend some time
Wond'rin' what to choose.

(Grateful Dead)

Good morning and welcome back to the slithery track. Yesterday's session was a round trip to flat as the Matador Crowd skipped their Monday at-bat. They started off firm with green piggies to boot but they couldn't secure the fat upside loot. When push came to shove and the dust settled down, questions remained for the bovine renowned. Can they hold the line at 1295 or will Hoofy turn tail and just try to survive? We'll know soon enough and we all know the drill as we dig in our heels for some thrills in the 'Ville!

Last week, while the Minx tickled five year highs--and all-time highs in select-sectors--the bovine appeared to be large and in charge. While a few Minyanville professors, including Jason Goepfert, cautioned against the vaunted pop & drop, most investors viewed the upside as a given, as evidenced by the lack of put buying. The anticipated acne, coupled with the potential for a lopsided lean, has opened the door for bull trappage as we edge into earnings anew.

To be sure, Alcoa led off the season with a solid hit and the fans are buzzing in the stands. The question, of course, is in how much weight the fundamentals will assume in our primary metric mix. With technical divergences emerging, structural issues perturbing (rates ratcheting higher) and psychology conditioned to buy dips, there is risk in deferring to this coming spate of corporate communication. Toss in the serendipitous alignment of DeMark sell signals, as highlighted by our own Pepe Depew, and both sides of the trade begin to crystallize.

While the cast isn't set in Red Dye--we must appreciate the potential for debt elasticity and spigots of liquidity--risk management will remain our greatest ally in our quest for capital preservation and, in turn, profitability. For my part, and as chronicled on these pages, I've tightened up my risk profile accordingly. While I may regret peeling out of my metal and energy holdings too soon (with the intention of buying 'em back lower), I've also pared extraneous longs (such as Pfizer) and have a handful of core longs (including SunMicro) vs. a spate of downside (defined) gamma in the financials.

I understand that many are mandated to trade and that my style may not apply to the stylistic approach of many Minyans. One of the subtle yet important distinctions in the 'Ville is that we're not dispensing advice, we're simply sharing our process with hopes that it adds value to yours. As I'll be spending the next few days with my family in Baltimore, I'm comfortable keeping my powder dry and "making 'em to take 'em" if an advantageous opportunity arrives. I've learned through the years that the Minx will be open for business on Monday and, alas, opportunities are made up easier than losses.

I'll chronicle my efforts on today's Buzz and chime in with some lunch time Randoms. For those who are scooting early for the holiday respite, allow me to offer my very best wishes some mindful QT with the fam.

Good luck today.

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position in sunw, financials
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