The simple truth is that it's difficult to have too much conviction as there is a strong case being made in both Matador City and Red Dye Junction.
Run, run, run for the roses
The bigger it opens, the sooner it closes.
Meddle, meddle, friend of mine
All good things in all good time.
Please allow myself to introduce....myself. As we enter the final fifth of our freaky week, I'm gonna hop, skip and jump through a handful of thoughts in an attempt to lend value and perspective. I will start with some vibes I shared on yesterday's Buzz as they encapsulate both sides of my brain and, by extension, both sides of the current trade. I scribed them at 1:00 in the afternoon, when men were men, sheep were nervous and the S&P was dangling precipitously near 1240ish. To wit:
Should I stay or should I go now?
If I go there will be trouble
If I stay it will be double
Alrightee then, after a morning that was nuttier than Austin Power's coffee, I've finally found a seam to breathe. The obvious question that's flickering behind my tired eyes is "what now?" I've shared my actions in real-time, for better or for worse, and I'm currently leaning long for the first time in quite some time. I understand the reputational risk that I assume by sharing that but lemme 'splain Lucy.
A pure "read" of my eight screens is the definition of fugly. Levels are broken, breadth is nosty, the dollar is strong and we've still got room before the multi-year trendline comes into play for commodities (CRB 325ish). On top of that, I'm uber-aware of the structural risks, emerging market drag, compression in the marketplace and the likelihood that hedgies are in trouble (and could be forced to sell into the bell).
So why the hypocrisy? A combination of select faves getting stretched lower (metals and energy) and a sense that the we'll toggle rather than tip. The caveat, of course, is psychological prickage, which is a possibility, but it likely won't arrive in a 'straight line.' If I'm wrong, I'll own it and, truth be told, the thought has crossed my mind. However, I like the names I own and will exhibit discipline in the ones I rent.
And, as always, I'll do the best I can to lend insight to your process by sharing the reasoning behind mine. Good luck.
Now, I'm a big believer that it's better to be lucky than smart and Snapper aside, making that bet was a low probability affair. Still, as we saw some snazzy short covering into the late afternoon, I made some token sales (of my overage) as a function of discipline. The laggards, unfortunately, were one of my bigger sector bets--the metals--and, through objective eyes, they traded as if there was some forced selling in play. I'm still there and I'm anxious to see what Merrill's upgrade of Newmont does for the jitterbugs.
The obvious 'bigger picture' question, naturally, is whether 'that' was the bottom. It's a good question and one that I'm not smart enough to know for sure. Through ursine eyes, Boo will point to the plethora of technical damage (we rallied right back to the S&P 200-day), continued structural smoke, fragile emerging markets and stagflation* (simultaneous inflation and deflation). Hoofy, ever the optimist, will point to the spike in the VXO yesterday (above 20), the ability of the banks to hold BKX 108 (positive confirmation) and the recent good news in the oversold semiconductor space.
I'm still 'there' on the long-side lean and, in the interest of full disclosure, will make some sales into opening jig. The simple truth is that it's difficult to have too much conviction as there is a strong case being made in both
A Quick (I hope this isn't too political and I don't wanna ruffle any feathers) Mailbag:
Toddo, In my humble opinion, the killing of another human being is not something to be proud of, it is not some trophy to hang above the fire or to sip bubbly in after a day of hunting. While I am bursting at the seams proud of the men and women that risked everything to save the many, I would have preferred if our leadership read the list of those that died unselfishly for our country. To lead requires unselfishness not obsession with the selfishness of power. Sorry for the rant, Minyan G.
This is somewhat sticky but I'm gonna try to dance into this answer without offending too many folks. As a context, and as many of you know, the scars of 9/11 run deep for me as I was there and experienced things that have forever shifted my psyche. I love my country, despise terrorism and support the men and women who bravely defend our freedom. And while I didn't support the war, I'm conscious that we'll never know the other side of that trade. This is the world we live in and I'm simply trying to roll with the punches, as harsh as they may be.
I will admit that the coverage of the killing isn't sitting right with me. I "get" the whole point of making an example out of an evil man but there is something amiss with showing "before and after" pictures on television or mocking the belief system in the morning papers. We, as a culture, may not believe that virgins await martyrs but there are those in the world who do. And as New York continues to have a bulls-eye on her back, I can't help but wonder if we're stirring the hornet's nest. I hope I'm wrong--for the sake of us all.
And finally, some (less sticky) randoms to finish up this morning vibe....
Minyans in the Mountains III is two short months away and we've still got some rooms available for ye faithful. As we sold out Ojai last year (and we're humbly expecting the same for Vail), I wanna keep it on your radar as I expect a mad dash as we edge closer. And please know that we've added DODGEBALL to the sports roster this year, which is either the very best--or very worst--decision we made yesterday!
The critters are looking forward to welcoming Minyan Doug Kass this morning as he hangs his hat at MVHQ for the day. Grandma Koufax would be proud!
Wanna peek into the future of the financial service industry? Hey, it sounds a lot like The State of the Art!
And finally, it's been a hairy and emotional week for everyone following the flickering ticks. We've got one more session to leave an impression before we grab our Entourage and enjoy the requisite two-day respite. Stay lucid, think sharp and be mindful that we'll have alotta time to think about our risk over the weekend. The last thing we want to do is regret emotionally strained decisions.
Good luck today.
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