Freaky Friday Random Thoughts
By Todd Harrison May 19, 2006 9:09 am
While I think the "structure" is flawed, I don't see Boom Boom going down without a fight.
May expiration is upon us and, as thy opening bell tolls, index option influences will abate and all eyes will turn to single stock situations. What does that mean? If there was any "exacerbation" as a function of index paper (such as the large NDX put spread that was being covered a few days back), it'll likely lift. And, of course, we've got pin risk for those dabblin' in front month paper.
Blimey! This story just won't go away. Could London Bridge be falling down?
Scotto's vibes regarding the "synchronicity" of global markets fits, in lock step, with our long-standing discussions regarding "dollar devaluation vs. asset class deflation." The greenback, for those watching from home, is starting the day 50 bips higher.
How much of the recent metal equity slippage is due to a massive near-term offsides (on a trading basis) vs. the collective pffft! in asset classes as the liquidity (and risk appetites) are drained from the system? Tis a little of both, me thinks, with some Peruvian concerns tossed in for good measure. I have, as you know, been accumulating some defined risk calls in this complex (vs. other (financial) short exposure).
Remember our 3-D discussions from way back when? We've spoken on the dollar, we get the whole debt thing and, low and behold, here comes dervivatives. They're not "evil" products--in fact, they can be quite helpful in risk definition--but, like many things, they'll bite if you abuse them.
Yes, I'm still watching Weatherford (as a potential purchase) and no, I've yet to dip that wick yet. The wicks dipped on Wednesday, however, are a little soggy and somewhat waxy.
Poll Position! The following Buzz took place yesterday between 2:00 pm and 3:00 pm:
It's sorta slow in the city of critters so I've taken it upon myself to pose a question to those I hold in high regard.
"Gun to head, do you think the next 20 handles in the S&P are higher or lower?"
Dinmann : Flat (yes, I agree that this is, by definition, impossible)
Gilmartin : Higher
Miller: Higher, but not until next week and not without a dip first.
David (big time trader): Higher, with fingers crossed
Peter (big time trader):
Kass : UP!
Bennet: Down, test 200-day, up then down hard. (and yes, the 200-day is only 15 handles away)
Jeff (big time trader): Higher--even if this a mini-2000, nothing is a straight line.
Ray: (big time trader): Lower, but a bit higher first.
Alex (big time trader): Next 6 higher but next 20 lower.
Anonymous (big time trader): 10 higher, 100 lower.
Anecdotal? Yep, but as mis ojos son sus ojos, I wanted to pass it along.
What's MY thought on the poll? I think testage of S&P 1280 (on the upside) is likely--and agree that if we bungee to the 200-day (1257), we'll reflex higher. My gut response is "tell me what the dollar does and I'll tell you what equities do." If that doesn't satiate Minyan curiosity, I'll say higher.* Why? While I think the "structure" is flawed, I don't see Boom Boom going down without a fight. In short, my big picture vibes are the same (lower dollar or lower asset classes or both), I'm just not sure that the big picture has arrived yet.
How am I playing it? Decently, until yesterday, when my upside calls in the metal and energy space failed to offset the gains in my piggy puts. I'm pared, to a degree, but I've got more upside leverage if and when a metal equity snapper arrives. It didn't and, as such, I got dinged.
Television's JeffMacke® will square off against a chimp tonight on CNBC. You don't believe me? It's true, I say, and the loser has to shave (or grow) a head of hair!
A loyal Mountain Minyan just pinged me yesterday with the following vibe:"Toddo, just off the phone with Dick Arms, his 5 and 10 day indicators are the most oversold they have been since Oct 04. He sees a trade to the upside and is recommending covering shorts and going long for a short term trade (don't stick around too long.) He has had a hot hand lately."
And speaking of which, there's only 12 days left if you hope to catch the early bird. If you think this tape is tough--and you wanna spend a few days noodling with some of Wall Street's sharpest minds--lock your spot for the mountain trot and let's get it on! While the mornings will host the panels and presentations, the afternoons and nights will be all about the Minyan mojo!
Good luck today.
Positions in metal equities, financials
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