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Freaky Friday Random Thoughts


This is the big leagues and we play in pain.

  • Beazer Homes (BZH) painted the tape--and tainted the paint--last night when they opined that they see "no housing market improvement the rest of the year." We spoke earlier this week about the notion that stocks, as a leading indicator, may have baked this snake into the cake. Beazer is off 52% from the January high and I'll be watching this pup for the reaction to this news and as a homie trading tell.

  • Be careful for what you wish? GDP came in softer than expected (2.5% vs. exp. 3%), which will embolden the "light at the end of the tunnel" camp (read: end of the rate hike cycle). That could boost the tape in the near-term (note the dollar flipped the crimson switch) but we're walking a very fine line with regards to future growth and consumer moxie.

  • The key to the equity tape? Shocker, Fokker---it's gotta be the financials. The BKX stochastics are toppy and sloppy while the brokers (XBD) probed and paused at multiple June tops and both the 50- and 200-day moving averages. As the highest weighted group within the S&P--and as a proxy for all things smoke--you need to keep a mindful eye on these issues regardless of where you choose to traffic.

  • The hammered Trannies, Russell and Retailers are also mainstay tells as we fit together the Friday puzzle.

  • I punted my trading exposure in the metal arena into yesterday's opening giggle. Why? A 10% jump from Monday's lows (I didn't catch it all) and a mindful nod to my "make 'em to take 'em" approach. I continue to have some metals stashed away for a shiny day and added a spate of autumn piggy puts to my mix to arrive at a balanced posture (with powder in my pocket).

  • Next resistance for the flickering ticks? Let's call it S&P 1280 and NDX 1510. Mr. Valentine has set the price.

  • I opined on yesterday's Buzz that, with the VXO back near Bar Mitzvah territory, I've flipped back to the buy side in option land. I'm generally more comfy with long gamma but there are times---like when the VXO was up 75% in two weeks in June--when I'm a better seller (or, at the very least, punt my paper).

  • While it's true that we're getting ready to edge into the traditionally slow slither that is August, any nibbles will be "out month" such that I lock in these levels when traders return to their turrets. (Please click here to read Professor Succo's excellent six part tutorial on derivatives)

  • The stealth rally in the dollar yesterday occurred in lockstep with the giveback in equities. Coincidence?

  • One week from tonight I'll be heading to the hills to ready for our fantastic Festivus. Thirteen short days from now, 230 of your fellow Minyans will join me for three days of shared learning, network co-joining, leisure activities and--lest we forget--massive ranch parties. While Vail Cascade is SOLD OUT, we've still got a few spots left. Come on now---pull the trigger. Some trades are just meant to be taken!

  • The Nasdaq Composite recorded the second consecutive outside day with lower close. As you would suspect, this is a fairly rare occurrence. Ironically, it's happened once a year since 2000. The prior occurrences were: 6/23/00, 3/21/01, 9/18/02, 6/20/03, 1/23/04, and 1/04/05. On the following day, the index saw both sides unchanged but closed lower each time by an average -1.23%. The close 3 and 5 days later was lower 5 of 6 times. Professor Jason Roney on today's Buzz.

  • As ye faithful know, I've been battling a rather nosty bug late this week and, unfortunately, I've downticked overnight. I'm gonna give the ol' college try today but please excuse sparcity on my part. I've always followed the rule of thumb that "this is the big leagues and we play in pain." However, given the massively important milestones in my midst, my sense is that discretion (in the form of bed rest) may prove to be the better part of valor. Whatever the heck that means!

  • Fare ye well, my friends, and let's end this freaky week with some jingle in our jeans.

  • R.P.
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position in metal equities, financials
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