There's no crying in baseball and there's no rationalization in trading...
I am yours, you are mine
You are what you are
And you make it hard
Good morning and welcome back to the flickering pack. There's a lot going on in the City these days as we dig in our heels and noodle the maze. With Dubya eyeballing Iranian President Mahmoud Ahmadinejad from afar--don't you love Haz-Mat sirens in the morning?--geopolitical tensions, coupled with posturing ahead of tomorrow's FOMC meeting, will be the order of the day. Toss in a slew of imminently anticipated acne--we're a stone's throw away from technical validation in the S&P and the DJIA--and you have all the makings of a stress sandwich.
As we're all up to our eyes in information, I thought we could cut to the Vinnie Chase and begin our spin with a Minyan Mailbag. This particular pup comes courtesy of Minyan Ken from Bahston, who shot me an inquisitive look in response to my late day Buzz. For those not Buzzin' (hey--get Buzzin'!), I offered that we may have seen a short-term bottom in the commodity space. "Whether it's a bounce (in a broader deflationary trend) or something to write home about remains to be seen. And yes, my sense is that a weaker dollar would accompany that move."
"Ok-- so now i am truly confused--on one hand you call for a potential short term bounce in CRB, and to get there you see a dollar decline, yet you offered a few weeks ago that equities could follow the commodity suit lower, resulting in a higher dollar. You can't have it both ways brother."
My response to him was quick and dirty: time horizon. As I told him, and as I'll tell you, I didn't get the break I thought we'd see in equities when the CRB broke. While that colors me wrong (in my September paper), I may simply be early. Indeed, I slapped on a fresh position last week with some long calls in the metal and energy space (January paper) and a slab of fresh puts in the financials (March paper). The thought, from where I sit, is three-fold. First, they're disconnected on a trading basis. Two, vols remain dirt cheap and three, this gives me some flexibility to "trade around" the position (with gamma).
Potentially, as I said to Ken, we could see a Snapper (back towards the trendline at CRB 330?) in the commodity space, coupled with marginal new highs in the indices (littered with non-confirmations, as per Jeff Saut) before the wheels fall off the wagon. There's no crying in baseball and there's no rationalization in trading--I'm simply trying to adapt my risk profile to the current state of the tape. If and when we get that move higher, I'll make sales on my long-side exposure to position myself for a subsequent downside move. If we don't get to see the Matador Crowd turn the screws to Boo, I'll be represented in the financials. So that's where I am--right or wrong, for better or for worse and 'til expiration do us part.
Before I shoot over to the Buzz, I'll offer that perception is reality when it comes to economic numbers. On the heels of this morning's weaker than expected PPI, the knee-jerk reaction is "ding dong the Fed is done" as futures jerk higher. Goldilocks may creep to the forefront of our collective mindset; but be careful, Minyans, we're a short shift away from slowdown concerns. I can't tell you when they'll arrive but when they do, the blonde ambition may fade faster than the Red Sox Nation.
Good luck today.
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