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Randoms: Trading Banks the Udder Way


The early shine fades from the financials.


Editor's Note: The following was posted in real time on our premium Buzz & Banter (click for a free trial). It's being shared here for the benefit of the Minyanville community. See also An RX for Banks.

To the Beat of the Rhythm of the Tape - 10:03 am

When it feels like the world is on your shoulders and all the madness has got you going crazy, don't blast DeBarge--you'll be dating yourself. Instead, take a deep breath and compartmentalize the multitude of crosscurrents in the marketplace rather than trying to swallow them in one lump sum. That, my friends, is a recipe for overwhelmedness.

With that in mind, some Hump Day vibes as we fire up the front end of our weekly midpoint:

  • Our chief beef with yesterday's rally? In a word, "Tuesday." I still haven't figured out who originally coined Turnaround Tuesday (and I'm too humble to assume I was at the forefront ten years ago), but it's a nonsensical notion that works time and time again. That, along with my chosen stylistic approach of hitting and quitting, is why I punted my rentals into yesterday's lift.

  • As discussed, my sense is that the market will see a harsh downdraft before a second 20%+ lift later this year. The question is whether the reverse dandruff above S&P 875 first needs to trigger to spur the blur and fry the fur. That uncertainty, at least in here, is why I'm letting the market speak to me before passing judgment.

  • Levels of lore today? NDX 1300 is noteworthy support (please see the short-term negative dandruff forming), S&P 800ish (if and when) and BKX 30ish (held anew yesterday).

  • Following yesterday's hot popper, the knee-jerk response by traders was to buy the opening for a fade higher (note the action in Bank America (BAC), Citigroup (C) and JP Morgan (JPM)). I, myself, passed on that as it seems a big pat after such a snazzy Snapper yesterday.

  • As a matter of fact, I nibbled on a partial position in the FAZ (downside crack) with a stop below $9 (gap fillage) that will trail should the bacon start shakin'. Pure day trade, particularly as I'm IN-n-OUT of Chicago tomorrow and I abhor blind risk.

  • I'll take the temperature after the first half hour noise passes but the tickle in my gut is that Boo wants to sniff the underlying demand to measure the bovine will. Early breadth (2:1 negative) supports that although the beta complex (Baidu (BIDU), Apple (AAPL)) trades dry out of the gate.

  • I'm getting my bearings following our weekly Wednesday ExCo breakfast so lemme jump and scale this Hump. Think positive, Minyans, and trade to win rather than trading "not to lose," and please do so within your means with defined risk when possible. It's trippy out there, but splendid opportunities exist if you're proactively patient. One step at a time.

  • Good luck Yo.

FAZ Times at Minyan High! - 10:56 am

  • Using a crayon, not a pencil, I've set my FAZ stop on the other side of 8-half (Friday's low). It's a partial position (about a third the size of my chips pushed on the table yesterday morning the other way) but that's where I'm at, right or wrong and always honest.

  • Why so tight? The closer we get to S&P 875, the more the moths will flicker towards the flame. Whether or not they get burned remains to be seen, of course.

  • In a perfect world, we catch the first wave and set our stop at our entry. When that doesn't happen? I look at my position and channel Jeff Spicoli.

  • Seeing both sides (always), note how quickly NYSE internals flipped to 2:1 positive. That, the lower dollar (a precursor to but no guarantor of higher asset classes) and the tone in beta, are the hooks for Hoofy to hang his hat on.

  • Is it too early for some Jane's Addiction? Nah, especially since I've got it in my head after wiping Chez Harrison's floor with Blue Steel Jr. last night in Guitar Hero. That, of course, was after I took the lad for some steak and the theater (said with a British accent). What a good kid--the apple doesn't fall far from the tree.

  • Check out our excellent subscription products and take them for a 2 week free ride.

  • Hopping... I'll be back.

Crosstown Traffic - 12:10 pm

I'm juggling more balls than a prepubescent Larry Bird--wait, can I say that?--but wanted to make sure ye faithful is keeping the FAS upside gap on their radar, which would trigger above $8.25 and potentially works to $9.75. This was born from the fugly Monday, lest your A.D.D. is kicking in.

Click to enlarge

I've got a defined risk bet the udder way but a snapshot of the tone, tenor and breadth leads me to believe I'll get stopped out. Nothing ventured nothing gained, I know, and setting stops removes emotions so I'll let the market, show me the way (every day).

Answers I Really Wanna Know... - 1:15 am

  • Was Bill Buchanan in bed with Tony Almeida?

  • Is the fact that nobody seems particularly concerned with the General Motors (GM) derivative counter-party risk in and of itself cause for concern?

  • While the day is far from over, is my current FAZ attempt another real-time example of why setting stops removes emotions?

  • Have I made it very clear that these ultra-juiced ETF's are nothing more than a short-term vehicle and my sense continues to be that we'll see a comeuppance in the entire product group?

  • And there aren't IN-N-OUT burger franchises in New York, why?

  • If we're to draw trendlines with crayons not pencils, couldn't Boo make the case that Apple (AAPL) could conceivably fall far from the earnings tree?

  • With vols so fat in front of a binary event, how do you shape an advantageous risk-reward in the name?

  • Do packets of ketchup ever go bad?

  • Do you enjoy concise economic analysis from the best and brightest? Then have you checked out The Lavery Insight by Jack Lavery?

  • Is Uncle Buck the most underrated movie of all time?


In memory of our fallen friend and trusted colleague, Bennet Sedacca, 100% of the donations made to the RP Foundation through April will be channeled to philanthropic endeavors consistent with the RP mission, working closely with the Sedacca clan in the distribution of those funds. We thank you kindly for your support as we strive to effect positive change in the lives of children.

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