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Random Thoughts: Can We Bank on this Rally?


Is going long the financials crazy enough to work?

  • The first fade (lower) was the easy trade today as the market tries to find its footing following yesterday's rather rude presidential welcome.

  • Hoofy, ever the optimist, would offer the following:

    • The initial probe was absorbed with market internals holding steady.

    • The financials are clinging to 5-6% gains.

    • The master beta stocks, led by Google (GOOG), are scratching higher.

  • Boo, more of a realist, notes the following flies:

    • With S&P 818 above, we have an intuitive date with destiny at S&P 740ish.

    • The correlation between the S&P and BKX (banks) continues to scrunch noses.

    • The S&P 2009 nadir may be closer to S&P 600 than S&P 800.

    • The homebuilders and semiconductors are getting beaten with an ugly stick.

    • General Electric (GE) (-3%) just lost Bar Mitzvah status.

    • Apple (AAPL) $80 is a level of lore (past support is future resistance).

    • The disparity between credit and equity remains problematic.

  • There's always a bull case and always a bear case. The residual grist is what you'll read about in tomorrow's Wall Street Journal, but to fully understand risks and reward, you need to see both sides.

  • Heck, that was the genesis of Hoofy and Boo in the first place and the critters have come a long way, Emmy in tow.

  • Has it really been five years since I first tossed out "The Vision of Minyanville?"

  • What did I do this morning? I awoke, fed Phoebe, made myself a Nespresso, monitored world markets from my home office, showered, skipped my shave, skipped the gym (going after the close), checked some emails, dressed casually and headed into the hallowed halls of MVHQ.

  • Oh, you mean trading wise? Consistent with the thoughts shared this morning in "Will The Banking Industry Survive?"-communicated in real-time on the Buzz & Banter-I bought some banks, including Citigroup (C), Wells Fargo (WFC) and further Bank America (BAC).

  • As discussed, these are pure trades in the context of broader, oft-discussed concerns. I'm "buying dips and selling blips" and keeping a particularly tight risk profile as I dance between these rather angry elephants.

  • The risk? Total system failure. Again, it could-and some would argue should-happen but they likely won't go down without a fight. My simple hope is I haven't out-thunk a skunk that I've smelled since they were trading at all-time highs.

  • Domo arigato, Mr. Roboto, Mata ah-oo hima de...

  • Negative energy is wasted energy but respect is a commodity in this environment and that must be earned through actions, reactions and-dare I say-a semblance of proactive foresight.

  • We don't "do" acrimony in the 'Ville and as an extension, I pride myself on maintaining perspective as I chew through that "other" thing called life. Still, I've gotta tell ya, it takes a fair amount of effort not to be "hardened" by what's going on in this world. To quote the baker in Crested Butte (MIM1!), "Life isn't just cream puffs and powdered sugar anymore."

  • Why, you ask, are people so pissed off? According to this report, the Wall Street bailout--thus far--has exceeding the total cost of all wars combined. Given that we're still at war--and still bailing out-- this is one rat race where there will be no winner.

  • The anecdotal nugget of the day: I've received numerous e-mails from people (respectfully) telling me I'm nuts for taking a stab on the long side of the financials. Many of them, so you know, offered similar concerns the other way when we were punting 'em in 2007. Maybe something, maybe nothing but worth sharing with ye faithful.

  • And finally, please note that my weekly syndicated vibe wasn't postured as a political statement as much as a call for awareness. As society is a sum of the parts, we need to rebuild our country from the inside out. While our current course isn't optimal, we've still got a chance to affect positive change.

  • One Minyan at a time.


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Positions in BAC, WFC, C
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