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A Bone to Pick

By

May peace be with you!

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So the kids they dance and shake their bones,
And the politicians throwin' stones,
Singing ashes, ashes, all fall down.
Ashes, ashes, all fall down.


(Grateful Dead)


The afternoon cruise is a crimson red bruise that has woken the bears from a mighty long snooze. While pockets of green have appeared on my screen, it feels like young Boo is jacked up on caffeine. "Blame it on what you want for this spill," he said from his perch up high in the 'Ville, "but before I'm done flippin' bulls on the grill, the Minx will be force fed a most bitter pill!" It's dicey for sure so deep breaths one and all as we roll up our sleeves and get ready to brawl.

Today's action brings to light a few precious points. For one, it is a textbook example of why I have been obsessed with Citigroup (C:NYSE) as the most important stock in the equity universe. It's a simple matter of extrapolation--it leads the banks, the banks lead the S's and the S's typically dictate the tape. We noted how the stock broke multiple levels late last week and with Sandy's Wheel now testing $45 (past support/resistance), it continues to be a key to the vault.

We must also note the liquidity--or lack thereof--that is weighing on emerging markets, small caps and, well, pretty much everything else. I know we were talking about Carrie's dirty pillows for a while and, in my view, that's clearly been the driver of the asset class morass. And while it's got a LONG way to go if it is to fully unwind, the fact that the mainstream press is finally picking up on it may mean that a respite is due. It's anecdotal and nonsensical, I know, but coupled with some looming technical levels (S&P 1077), it could usher in a spate of short-covering.

The question we must all ask ourselves is what our strategy is if a) we don't get a bounce b) we get a feeble bounce or c) we get a vicious snapper. If any of the above mentioned scenarios would be a death knell, then you're clearly positioned too aggressively. The goal is to assign a probability for each and allow for a sufficient margin of error. More importantly, you want to have a cogent strategy such that when that time (or price) arrives, you're a step ahead of the crowd.

Stay on your toes into the close as chatter regarding "forced selling" is making the rounds. I have no insight regarding whether that's true but we've lived through it before and we'll surely live through it again. Markets tend to exacerbate their price action both ways--it's just the nature of the beast and the combination of the financial mechanism with human emotion. Be on the ball, Minyans, and trade to win.

As always, I hope this finds you well.

R.P.
position in c

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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