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Random Thoughts: Welcome to the Jungle

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If you're not careful, you could get lost out there.

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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 History in the Making? and Is the Obama Bounce Coming?


So Passes the Torch... - 12:25 pm

  • While hope isn't a viable investment vehicle, perception is reality for financial markets. Therein lies the thin line we must together walk as we fit together the pieces of this ever-changing puzzle.

  • I don't know about you but I, for one, am happy to see Hoofy and Boo reporting from the front-lines.

  • The flies in today's try? I'll give you a hint. They rhyme with "thanks" and they're down double digits across the board.

  • Drugs and hugs? Note the action in big pharma as the DRG attempts to break out of the bearish churning pattern.

  • We don't "do" rear-view mirrors in the 'Ville but my battle at Research in Motion (RIMM) $45 last week seems silly with the benefit of hindsight.

  • Setting stops removes emotion.

  • The most curious action on my screens? Crude and gold, which are shining bright despite the higher dollar It should be noted, however, that a broader measure of commodities--the CRB--is a percent lower on the session.

  • Lemme hop, Minyans, for there's a lot going on.


More Answers I Really Wanna Know... - 1:41 pm

  • Is Smita's "Long distance relationships seldom work as a longer-term commitment" vibe (referencing the potential for a near-term bounce in the banks) an instant candidate for Minyanville's quote of the year?

  • Are they really ruminating about a "financial-transaction tax" for traders?

  • If the USO was up a paltry fitty cents with crude up 8%, wasn't that a tell-tale sign to lighten exposure through the lens of "trading around" a position?

  • The Ruble was devalued for the 19th time in three months?

  • How 'bout a moment of gratitude for Willis McGahee and his family?

  • If banks trade to Fannieland (FNM), who's gonna wash the bottles as we fix the system?

  • OK, now what?

  • Y'all see Apple (AAPL) slipping through our aforementioned $80 level?

  • What, pray tell, will contra-hour bring?


The financial news you need to know before you know you need it? - 2:30 pm

  • Why does S&P 818 "matter?" Through there and we have a date with destiny at the November lows. If and when we get there, we'll need to keep close tabs on potential non-confirmations.

  • It slays me that someone opining that banks may be "insolvent" is considered news after the crash. And to think about how much pushback we got when we discussed it here... and here... and here... and here... and, of course, here.

  • Bank America (BAC) has traded in a twenty cent range since I slapped on my Del Griffith. It's that "dead zone" between execution price and the stop loss level that lends itself to over-thinking.

  • There will come a point when the bloom fades from the Rose Garden. The question, through the lens of "the journey vs. the destination" is whether Hoofy has a window of opportunity in the interim.

  • If everyone is partying on the Beltway, who is left to push the button?

  • No doubt, Ringo.


Thy Bacon Be Shakin! - 3:00 pm

Seeing the Art Carnage in the financials, I thought it might be useful to update our S&P vs. BKX chart given the correlation.


Click to enlarge


Therein lies the risk for the bottom nibblers in our midst. Note the two circles to the left--the top is the banks and the other is the S&P. As we continue to track it (the circles to the right), the top one is the S&P and the other lower circle is the banks.

See all sides, regardless of which way you choose to play.


If I knew the way, I would take you home... - 3:50 pm

I would like to take a moment to communicate with those who felt it necessary to lob grenades in the general direction of several Minyanville Professors. Granted, I've only seen two today but as that matches the grand total for the last few years, I felt it worthy of a comment.

Old school Minyans have readied for the societal acrimony we've long discussed but the reaction to news is more important than the news itself. Indeed, it's easier to write about "a socioeconomic malaise entirely more depressing than a recession" than it is to live it, particularly as the bear claws at those we love.

Just as bad seasons define good fans (go Raiders!), bad times define good alliances. Take me at my word, the importance of Minyanville as a community will grow in scope as we edge through this new world order. Please keep that in mind when communicating with those who give so unselfishly of their time. It's brutal out there, I know, but we've gotta stick together, now more than ever.

Some Random Vibes into the close:

In what can only be described as a Toddo two-step, I was stopped out of my SSO position and, upon further reflection, nibbled back at some front month calls. I'll toss an asterisk on this by saying "I ain't seeing much that bodes well for Hoofy" but it's a small bet and I'm alright carrying it for the time being.

Ditto Bank America (BAC), which I tossed on this morning with a $1 stop. I can list (and have listed) a litany of reasons why investors should avoid financials, including common stock holders being on the end of an increasingly long capital structure line. Still, much with Citigroup (C) at $3.75 (the first time), I'm sensing a mean-reverting bounce before they ultimately go where they're destined to go.

Again, and this is important, I'm afforded the opportunity to "take some shots" as a function of my oft-communicated cash hoarding posture. Many aren't in the same boat, I know, which is why I bristle when the word "advice" comes up in conversation. Play within your means and stay true to you. For just as Minyanville won't accept snappage for sounding the alarm in years past, we can't shoulder the blame for trades gone awry.

In the immortal words of the fat man:

There is a road, no simple highway,
Between the dawn and the dark of night,
And if you go no one may follow,
That path is for your steps alone

Fare ye well into the bell and may peace be with you.


R.P.

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Position in USO, BAC, SSO

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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