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The Tuesday Dew

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Widening stops or trading smaller sometimes helps shave the edges from these sorta sessions.

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  • Snakes on a Rig? Iran's military attacked and seized control of a Romanian oil and gas rig in the Persian Gulf this morning. In the nightcap of their global snubbage double-header, they'll likely reject the EU-led offer of incentives aimed at having them halt their uranium enrichment efforts.

  • Hoarding of natural resources? That's called "nationalization" if it's within your own borders (which, in and of itself, is a growing trend). But seizing an asset that doesn't belong to you? Some would call that an act of war.

  • What does that mean? Maybe something, maybe nothing, but maybe--just maybe--it's proof positive that the disconnect between perception (VXO 11) and reality (geopolitical landmines) is a catchable chasm. For my part, I continue to layer into gamma-laden option positions which, so you know, don't have to be directional bets in and of themselves (think married puts or stock replacements).

  • "Oh you are nuts. N-U-T-S - nuts!" Swiftus, History of the World. I've entered Turnaround Tuesday with two legs in my metaphorical fur (50% conviction on the short side) and defined risk (stop above BKX 114). The rub? A large part of my ursine motivation was the potential break of the mulityear trendline in the CRB (which, in my view, would tip the scales in the "asset class deflation vs. dollar devaluation" debate).

  • Of course, commodities bounced smartly yesterday and put Boo's zest to the test. I began eyeballing (and will continue to eyeball) CRB 338ish, which is both the (previously broken) 200-day and the July low. If we again bounce within this zone--and the greenback continues to slip--it could again toggle the collective tether to the upside.

  • That may not be today's business as the dollar is gigglin' green (+55 bips) in early Tuesday dew.

  • Toll Brothers (TOL) reported earnings this morning and the stock is trading slightly higher. Personally, I wanted to see Robert Toll toss in the towel as the ultimate capitulatory signal. It woulda been full circle from his brash comments in early '05 when he got on CNBC and proclaimed that the shorts were gonna get crushed. The stock, of course, proceeded to lose more than 60% of its value from the subsequent high, proving yet again that we need to stay humble or the market will do it for us.

  • It's thin and thinner out there as market players make the most of the rest of their summer. That begs the obvious question--what the heck are we doing here? It also begs that we respect the potential for whippy and trippy tapes and adjust our style accordingly. Widening stops or trading smaller sometimes helps shave the edges from these sorta sessions.

  • Good luck today!



R.P.

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