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Pot Luck


Capital preservation is the first step towards prolonged profitability.

  • I spent a few hours on the horn last night with folks I hold in high regard. What's the conventional wisdom? In a word, confusion. The takeaway, if there was one, was that fund managers are choking up on their risk bat, shortening their time horizon and looking for alpha bits (stock selection) as opposed to making big, directional bets. We can read into this a few different ways but for what it's worth, that's also how I've chosen to operate with my hard earned coin. Capital preservation is the first step towards prolonged profitability.

  • The smartest fundie guy I spoke with offered that things are definitely slowing (he pointed to Target cutting its same store sales forecast given a few weeks prior) but he has an eyebrow raised with regard to the (negative) sentiment. We agreed that the S&P complex has more room (on the downside) than their tech counterparts (N's over S's). When I pressed him for a thought, he told me that he's a "bear on a rally but a trader in here."

  • My sense--and this is pure gut, as was the vibe on May 10th--is that Boom Boom may try to pull a dove out of his hat when he hikes to the hill Wednesday and Thursday. I'm unsure if it'll have the desired effect (dollar negative, asset class positive) as that has more to do with psychology--and credibility--than policy. The "I's" (CPI, PPI) will go a long way in shaping his tongue, me thinks, so these odds will increase if the "reported" numbers are benign.

  • "The SPX has 9 consecutive lower highs. Over the last 30 years, this has happened just 11 times. The next day close has been higher 9 of 11 times. And what if we don't make a higher high tomorrow? The number of occurrences drops to just five and the 11th day in the pattern opened higher and closed higher each time." Jason Roney on yesterday's Buzz.

  • What else did I do last night? Well, I walked through the "room situation" for MIM3. With over 200 Minyans confirmed, space is (understandably) getting tight. Queen V and her working bees are bustin' hump to clear the Ojai bar so if you have an interest in attending---it's just what the doctor ordered as we try to make sense of this freaky landscape--you gotta lock your spot for the mountain trot. When I say there are a few rooms left, I mean--there are a few rooms left!

  • Looking for rays of sunlight in an otherwise dour landscape? Both the banks and brokers held tough in the face of an outright miss by Mama Citi. You don't have to twist my arm to be bearish on the big picture outlook for the financial complex but, hands over eyes---and as the reaction to news is more important than the news itself--the traction might be a source of upside inspiration. I did, so you know, make a slew of sales in my piggy puts mid-morning on a trading basis (corks please!).

  • Please make sure that your risk profile and time horizon are in sync. What does that mean? Understand that there are four frames to a market landscape--cycles, phases, trends and nuances--and don't get lost in translation. While sharp rallies are possible--and eventually probable--the big picture dynamic, in my view, is decidedly skewed to Boo's favor. And it's not a linear equation--asset prices could lift, big picture, but it's my contention that the only way that can occur is if the dollar significantly devalues.

  • As you read this, I am "in flight" to several high level out-of-town mind melds. Old school Minyans know that I don't like missing ticks (particularly during earnings season with big economic releases and minute-by-minute geopolitical developments) but I do what I must and I try as I might. This particular jaunt is a round-trip endeavor that will have me back in the big city this evening. Fare ye well, my friends, and maintain your perspective. It could be a lot worse and, in many parts of the World, it is.

  • Good luck today.


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Position in financials
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