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Random Thoughts: Will the January Lows Hold?


Critters are waiting for the real Turnaround Tuesday.


Editor's Note: The following content was posted in real time on this morning's Buzz & Banter. It is being republished in the hope that this stream of consciousness will help Minyans everywhere.

Do the Dew! - 9:05 am

  • It's a gorgeous morning in Gotham, which sorta makes all those cold dark dreary winter days worth it. It often takes bad to appreciate the good. For weather, in the markets and fer sure life.

  • Bonnie can you hear me? Bonnie? Bonnie? Keep your eyes peeled for an 80's style singer as we eyeball the January lows. Those are, lest you've been nappin', S&P 1310 and DJIA 12,000 on a closing basis.

  • BID WANTED? Yeah, for the Buck! It's anecdotal, I know, but given the widespread panic and the punky price action--not to mention my (always early) vibe that the dollar could surprise alotta folks on the upside--it's worthy of a mention.

  • Just remember that, through "asset class deflation vs. dollar devaluation," we should be careful for what we wish.

  • I want to be more bullish for a trade given the mad rush to cut estimates in the financials, the negative gross margin guidance by Intel (INTC) and the general malaise that is omnipresent. We must dance with who we came with, however, and I'm not talking about Baby. I'm talking Winky. But I'll lead, Yo. Jab jab jab.

  • Good luck Minyans. Let's do this.

Banking on a Bounce - 9:51 am

There's a quiet storm brewing in Matador City regarding the bull case for the banks. The stiffening regulatory environment, as the story goes, has caused them to write down far more than the otherwise would. "Mark-to-markets work both ways," said Hoofy as he rubbed the grill marks on his arse, "The back half of the year will be chock full of pleasant surprises."

Could it happen? Sure. It's a valid, albeit completely unknowable, hypothesis. The credit unwind is akin to a 15-round fight, of which we're in the first or second round. There will be flurries, clenches and fancy footwork both ways. See both sides, Minyans, regardless of whether you agree with them.

Some Gate Sniffage:

  • Note Goldman (GS), Morgan (MS) Merrill (MER)... yeah, that crew. They're trying to turn the tide and skin Boo's hyde. I did, in the interest of full disclosure, fade (read: buy) some Morgan Stanley calls into the opening abyss. Pure trade and defined risk (below $40).

  • Their cousins across town? Big Beta has yet to participate in the bounce, highlighted by the continued lethargy in Google (GOOG). Crazy, eh? When this puppy was trading north of $700 in December, price targets were going up across the Street. Now you can't give it away. Watch it both ways, particularly if it confirms the Goldman traction.

  • Breadth is bunk but I wanna watch it after we chew through the first half hour. It's quite noisy out there and it has nothing to do with T-Woo blasting the Dirty Dancing Soundtrack.

  • Homies. Traction. Broken Clock. Twice a day.

  • Look at Apple (AAPL).

  • Where's Stiffler's Mom?

  • I heard Terence Trent D'Arby at the gym this morning and I had to smile. I miss that dude.

  • OK, enough fluff. Lemme hop. Keep one eye cast towards the January lows, the other eye on your positions and the Third Eye Blind.

Psych One, Psych Two, What Do You Know? - 10:30 am

So you wanted to be a trader, eh? As the tape scrapes towards the January lows, you can feel anxious anticipation spreading throughout the Street. Will we hold? What if we fold? Does Google (GOOG) have the black lung, pa? Yeah, alotta questions... let's see if we can scratch and sniff some answers.

  • Trader Toddo bought that second dip, this time focusing his attention on big beta. A little Baidu (BIDU) here, a snivlet of Apple (AAPL) there. I'm operating under the auspice of defined risk across the board and yes, I'm quite conscious that an air pocket likely awaits under the January lows, if and when.

  • And I'm equally aware that when we discussed the massive move that awaits, the water pistol to my keppe triggered a downward dog respond. And man, while we're on topic, downward dogs are killer on the hammies!

  • The longer market breadth finds two red for each stock ahead, the less confident I'll become on Bonnie and Snapper sitting in a tree. Ditto any slippage in Goldman (GS). With Google acting as it is, the market can ill afford this double edged sword.

  • When it slows down, remind me to discuss why on earth I would pay good money to have a Bulgarian black belt beat the crap out of me at 6:00 AM. He's lucky I don't lose my temper or it would be game over.

  • Man, what would I do without risk? Other than relax, that is?

Winky Who? Winky You! - 10:51 am

File this either under "You can learn a lot just by watching" or "Dude, you're in hope mode."

Either way, the single most interesting thing to me these last fifteen minutes is that the S&P futures slipped to the lows of the session while big beta momo names such as Apple (AAPL) and Baidu (BIDU) suddenly found sponsorship.

Whether it's an opportunity to lighten up remains to be seen but I wanted to share the fare for those who care.

Breadth and Goldman (GS). You see 'em, aren't making Hoofy feel warm and fuzzy. T-minus 8 handles from the January closing lows...

Answers I Really Wanna Know... - 11:37 am

  • If I woulda told you in October, when the stock was near $50, that Citigroup (C) would be flirting like a teenager by March, where would you have guessed the S&P would be?

  • Can we put in a sustainable low with the volatility measures (VXO, VXN) marginally higher?

  • Did I pick the wrong year to quit smoking or what?

  • Where did P.J. Soles go?

  • Is Goldman (GS) the single best tell into the afternoon dwell?

  • Geez, crude is back below $100. Must be bullish, right?

  • Am I allowed to bite my lip on the DBA (agricultural ETF) puts yet?

  • Wow, Applied Materials (AMAT) is up 5% as a solar play?

  • Why do I get the sense that by the time Baby was done with Johnny Castle, it was he who was rocking back and forth in the corner?

  • What's a matter, Francis? Lose your sense of humor there?

Duck, Duck, GOOSE! - 12:45 pm

The collective exhalation arrives as the January lows hold and attention shifts--don't blink--to a successful retest. Man, traders are funny , eh? I love 'em, I hate 'em, I love 'em, I hate 'em, I love 'em! Sorta reminds me of my ex-girlfriend!

Some quickie vibes as I push the hair back into my keppe...

  • Remember those fades (read: buys) from the morning abyss? I've made some sales into the green winkage in Apple (AAPL) and Baidu (BIDU) as a function of discipline.

  • I should prolly sell some Mother Morgan (MS) as it's never a good idea to cut your winners and keep your sinners. It's not that big of a sinner, mind you, but the mechanics of the swing are more important than the results of the at-bat.

  • Yes, Bonnie could come on strong and trigger a sigh of pleasure relief that would friggin' kill a horse. Market internals aren't improving, however--still 3:1 negative--so I'm factoring that into my process.

  • Jeezums. More swings than a Hedonism vacation.

  • How the heck is one expected to, say, go to the bathroom with a tape like this. Hey, that's it! Trading turrets with built in urinals! Yeah, that's the ticket! We can even put in a dual flush function for those sessions where we get caught.

  • OK, that joke just cost me three points. Lemme hop!


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Position in AAPL, BIDU, MS
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