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Hump Day Hop Scotch


With the dollar on the lows (-45 bips), alotta asset classes are rallying in kind---except equities.


"My fellow scientists and neuro-surgeons, ladies and gentlemen. A few short weeks ago coming from a background, believe me, as conservably and traditionaly grounded in scientific fact as any of you, I began an experiment in... incredulous as it may sound... the reanimation of dead tissue."

Dr. Frederick Frankenstein

  • The action with traction of late is in commodity land as the metals have been the definition of volatility. I've been active in this complex, as discussed on the Buzz, including a short side schnitzel into the FOMC, premature evacuation into the weekend, a long-side toe into Pan American Silver on Monday and a round of purchases in the yellow metal calls and common yesterday. For purposes of communication, and in the interest of full disclosure, most of the option exposure is a "pure trade" with trailing stops.

    Why? Simple--I'm not smart enough to know if the correction has more room, as Dr. Marc Faber and Justin Mamis suggest, or if the 25% correction in select metal equities over a three day span is a classic example of the axiom that the sharpest corrections occur in the context of a bull market. I did nibble on some long-term holdings--in defined risk stocks like GoldenStar (GSS), which is one of Laurie's faves--but it's a small position relative to my book. So, net/net, I'm "there" on the long-side but the lion's share of the risk is defined and I'm actively trading it both ways.

  • Speaking of the metal action, did the following take place on Monday between 9:00 PM and 10:00PM? I'm no conspiracy theorist (unless you count Princess Di and TWA Flight 800) but I always like to hear this chatter. Maybe President Logan and Christopher Henderson had something to do with it?

  • We've been talking about the "haves" and the "have nots" for a long time. Here's a lil' anecdotal evidence (courtesy of Minyan Nancy in Washington ) as we edge our way to a two-class fray.

  • Roll Call! The weekly Investor's Intelligence survey finds a jump in bullish sentiment to 46.3% from 44.3% prior and a drop in bearish sentiment to 25.3% from 26.8%.

  • The banks and brokers were the birds in the punch bowl yesterday as they never found sponsorship and weighed on the collective psyche. If my humble vibe that energy and metals are the leaders of the new world is correct, we must expect Rotation Station to migrate exposure away from tech and financials. Still, as they remain THE proxy of smoke, choke or anything that's broke, we've gotta monitor the action carefully. Particularly as we edge through debt-laden, derivative-woven, finance-based, globally-connected machinations.

  • "Watch out for potential 'island reversal' in NDX-QQQQ While not admitting to be a tech stock expert, I know a potentially nasty technical setup when I see one. In this case, see the chart here for an 'island reversal' developing in the NDX. An island reversal is defined by Bloomberg as a 'pattern on a technical chart in which a reversal in market trends is interrupted by gaps that mark a number of trades on both the up and down sides.' If we break this trend line I have drawn, we've effectively 'trapped' 6 to 7 months of buyers of tech. In other words, they are in a losing position and become a source of supply. if this occurs, it could begin the downside move (or accelerate) we envision. Not advice, but worth watching." Professor Bennet "I don't even know a Neil" Sedacca on yesterday's Buzz.

  • Mad Monkey, that funky junkie! Mad Monkey, Monkey, that funky junkie! Holy cow, stop the presses! We got word late yesterday that Television's JeffMacke ® will be gracing the CNBC airwaves later this week. No great shakes, you say? This is different, Minyans--this time, he'll be picking stocks against a monkey. That's right, friends, our resident retail sage is turning tail--literally--and taking on a critter! I'm torn on my allegiance as Jeff is my brother but critters are, well, they're at the root of all Minyans! It pains me to say this but, as it stands, I'm gonna have to back the chimp on this one. I can't shake the feeling that, when the dust settles, Macke will humbly turn to the camera and say "I haven't taken a beating like this since I put a banana down my pants and turned the monkey loose!"

  • I posed this question during the late day fray yesterday and it warrants a repeat as we train our eyes to read the tape. "You want another perspective on today's market? With the dollar on the lows (-45 bips), alotta asset classes are rallying in kind---except equities. This may be telling but, alas, I'll tell you tomorrow."

  • Finally, and as there are only nine more trading sessions left in May, I must remind Minyans to take a good, hard look at our upcoming Minyans in the Mountains financial retreat. This puppy is gonna be one heckuva humdinga, featuring vibes from the very best human capital on the Street. You wanna talk big picture with Jeff Saut or Michael Santoli? How bout technicals with Steve Shobin or John Roque? Maybe derivatives are your thing, which is coolio with John Succo or Bernie Schaeffer. Perhaps you wanna explore DeMark analysis, which is pretty cool given that Tom DeMark will be hosting two afternoon sessions. Got a gold bug? Greg Weldon and Laurie McGuirk, who is traveling all the way from Australia, will be happy to swat some thoughts around. Or, perhaps, if you're simply looking to share thoughts the heaviest hitters on the Street, including Todd Deutsch from Galleon, Dr. Quin Mallette and Dave Perlin. Whatever your fancy, we aim to tickle it--including Minyan Golf, Minyan Softball, Ranch Parties Galore and a whole lotta smiles. Take a chance and take a trip, Minyans, you won't be disappointed!

  • Good luck today and I'll see you on the Buzz!

  • R.P.
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Position in metal equities, PAAS, GSS, financials
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