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Open Wide!


...while we always wanna hear what's being said, please be independent in thought with regard to what you listen to.


Into the great wide open,
Under them skies of blue
Out in the great wide open,
A rebel without a clue

(Tom Petty)

Good morning and welcome back to the turnaround shack. With September 11th in the rear-view, it's time to define some forthcoming clues. Yesterday was a mindful anniversary, a day to reflect on what was, what is and what will be. While I dug deep to share some thoughts that had heretofore remained untold, it was Billy Meehan's heartfelt missive that stopped us in our late day tracks. If you missed it, please take a gander as he aptly captured so many emotions and left us with hope in our hearts and tears in our eyes.

Turning our attention to the flickering ticks, we've seemingly entered a critical juncture for the tape. Minyans are well versed in the notion of asset class deflation vs. dollar devaluation and, as an extension of that, we've now experienced the "first domino" that is the collapse in commodities. When we noodled the five year trendline in the CRB a few weeks ago--and the potential implications for equities--the script had yet to be written. Now, with crude at its lowest level in five months and gold scolded to levels unseen since June (and sitting on its 200-day), we will indeed see if there is meat to this bone.

Over the last few weeks, I've tried to map out both sides of the ride. From Boo's perspective, he was looking for this very break in the CRB as a precursor of a nasty, watershed decline in equities. Now that he's got the first half of that equation---the CRB is down 11% in the last month--all eyes are on the equity brethren to see if they can decouple. Conventional wisdom and mainstream media still points to lower crude each and every time stocks rise (it's left unsaid when they trade in the same direction) so, while we always wanna hear what's being said, please be independent in thought with regard to what you listen to.

Hoofy, for his part, was looking for leadership in the homebuilders after their organic 2:1 splits this past year. They've acted well given the horrific news in the sector, but a quick glance at the charts finds that the HGX is sitting in the same spot as it was three months prior. He's also looking for jig in the internals, which has been sporadic at best, and stabilization (rally) in commodities, which we've yet to see. Finally, he's keeping a very close eye on the financials as the money center banks have been the definition of Cliff Branch.

So, which critter will have the final laugh? My gut--and I've got a big gut these days--says that the pain trade is to the downside and the commodity action is offering a sneak peak at coming weeks. I don't have a massive bet on (if I did, you would know), opting instead to keep my deltas neutral, trade my gamma and keep plenty of powder dry. I did add some select metals to the longer-term side of my pad yesterday (Golden Star (GSS) among them) but, truth be told, I'll coin more shekels to the downside as a function of my autumn options. We'll see soon enough, Minyans, and as always, we'll see together.

Good luck today.


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position in metals, financials, gss
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