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Surviving Tape Turbulence: Caveat Emptor


Apple and Google are down, Ambac and MBIA are ones to watch, and how about a spike in volatility?


The following thoughts from Toddo appeared earlier today on the Buzz & Banter and is reprinted here for the benefit of ye faithful.

Lunch Meat! - 12:04 PM

  • Watch S&P 1275, which was the low both yesterday and this morning. I would imagine that there are a fair amount of sell stops below that zone. If we break, the S&P 1240ish zone we've been discussing will come into play.

  • Keep an eye on Grandma Goldman (GS), which just gave up pa nub.

  • I know thy golden rule is "let your winners run and cut your losers." Even still, with the BKX up 4%, I've paired my exposure in that complex.

  • I'm going for that whole "precision hits" thing for the time being while picking and grinning some of the "on thy heels" sectors (pharma, consumer non-durables).

  • Ambac (ABK) and MBIA (MBI) should be on your radar regardless of whether you're trading 'em.

  • I'm picking out a thermos for you. Not an ordinary thermos for you...

  • So, I awoke at 4:00 AM today unable to sleep. Perhaps it's that antennae we keep talking about. Or maybe it was a snoring cat (leave her alone, she's old). Either way, I schlepped to the gym for an early morning schvitz in my continued quest for balance and health.

  • Man, talk about A.D.D. I wrote this 20 minutes ago but forgot to post it. Better late than never, I s'pose. As always, I hope you're hitting 'em straight.

Leggo My Eggo! - 12:33 PM

  • Editor 3-Peat just pinged to say "With the banks and homies acting this well, can you imagine how bad the tape would look if they failed?" I responded, "Can you imagine how much they would be up if the tape turned?"

  • Is my money where my mouth is? Sorta--I pared my exposure in the financials (after snazzy back-to-back Snappers) but I've still got exposure in the homies, pharma and consumer non-durables after rotating some risk.

  • The most bullish thang on my screen? The banks, natch, and the fact that NYSE internals are only slightly skewed Boo.

  • The most bearish thing on my screen? Prolly a tie between the action in energy (getting drilled) and the fact that the VXO is up a measly 8%.

  • Hey, my 12:30 is here! Wasabi! I'll be back...

Now That's What I'm Talking About! - 1:19 PM

Jeezums, let's see. We've got Google (GOOG) down $60, er, $55, er, $60, Apple (AAPL) off 20%, the drillers spilling for a dime (10%) each, cats chasing dogs, Yankees hugging Red Sox, Raiders kissing Bronco's---it's THAT nutty out there! Some straight-laced thoughts:

  • Rotation, Rotation, Rotation! You don't need to sort by sector to see it. Out of tech, into the beaten down banks and homies. It's a great trading tape although I prolly shouldn't say that out loud.

  • The one element that I wanna see, through a capitulatory lens, is a spike in volatility. The VXO is up 12%, which is nuttin' honey. That's the last piece of the puzzle in my eyes.

  • Levels of Lore? S&P 1440ish, which is still 40 handles away, and NDX 1700, which is right here, right now. Draw them with a crayon, not a pencil, but see 'em either way.

  • You're money and you don't even know it! I'm alright picking up babies in the bathwater (pharma and consumers). Not babies in a Mike Peters and Trent Walker sorta way but I'm long bunnies and short bears for a trade in the context of a much broader, drawn out malaise.

  • Caveat Emptor? Yeah, always, especially with potential liquidation looming. With a conscious nod to that dynamic---and understanding that we've been eyeing this evolution for years--I wanna take the other side of conventional wisdom. That's how I roll, Yo.



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