Random Thoughts: Trading Banks on the Long Side

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 Breakfast With Beeks.


Juggle Dew - 9:34 am

TGIF as we power up for the final fifth of our Freaky Week, a roller coaster ride that is trying to tie a bow on some gains after the recent 15% slide in the S&P. The catalyst du jour is the GDP report, which beat expectations thanks to you, the tax-payer. There will be a whole lotta noise when thy opening bell tolls so keep your head up and your thoughts clear as we edge our way into a Super Respite.

Some top-line vibage:
 

• I enter today's trade with some upside exposure in the financials, including Wells Fargo (WFC), Morgan Stanley (MS) and the call options formerly known as Citigroup (C) and Bank America (BAC). 
  
  
• Nothing crazy size wise but I picked back at 'em yesterday following my sales into the spirited six-session 26% sprint. And yes, these are pure trades as we dance between the proverbial elephants. I don't wanna be an investor at the back of that line.
  
  
• Say Goodbye, Gracie, as Minyanville.com will look drastically different on the other side of Super Sunday. This is the first of many snazzy steps in the Critter Nation, an evolution designed to make ye faithful loud, proud and above the crowd.
  
  
• Sorry Phoebe, due to economic conditions, I'll only be allowed to feed you every other day.
  
  
• Corks and Forks? "When pressed for some vehicles while giving a radio interview last night, I offered that Research in Motion (RIMM) and Amazon (AMZN) were potential “bang for the buck” plays while "stocks banged up for good reason (financials, retail, energy) could also be considered.” January 23rd, 2009. 
  
  
• If Apple (AAPL) is only only up 30 cents with the rest of beta ripping, doesn't that speak volumes with regard to looming supply? Happy to try it, with a tight stop, against some other risk, just tradin'.
  
  
• I've got a massive meld schedule today, including biggies at 10:00, Noon and 2:00. I know, I know, but well, a Minyan must do what a Minyan must do. Fare ye well, hit 'em hard and for God sakes Joel, please get off the babysitter!

Look at Me, I'm A.D.D.! - 11:35 am

Can't you just imagine it? I was hosting a 10:00 conference call (I can do a lot of things, WebEx presentations aren't among them) as the ticks flicker, the critters bitter and my book shook from the ebb and flow. I'm off that call--and awaiting my noon tune--so lemme get some content out there while the gettin's good.
 

• Maybe I'm skewed in my view but I think the banks act pretty buff, all things considered. Wells Fargo (WFC), Deutsche Bank (DB), Goldman Sachs (GS) and JPMorgan (JPM) are green with envy while the big uglies (Bank of America (BAC) and Citigroup (C)) are down a quarter on each order. Considering the heavy futures and 2:1 negative breadth, I consider that a fairly constructive sign.
  
  
• As per my Gate Sniffage Buzz, I bought some Apple (AAPL) puts when the stock was up 30 cents (I've since scalped 30% as that was the "easy" trade). Why do I share this fare? Simple--you can learn a lot just by watching. 
  
  
• When Apple was marginally green when its friends were gagglin' higher, it was a tell-tale sign that supply loomed. Please note that I plan to be "gone but not forgotten" in this position by the time thy closing bell tolls.
  
  
• I know I'm way late to this but I stumbled across Arrested Development a few weeks back and I'm officially addicted. In fact, this (canceled) show prolly takes my own personal viewing bronze medal, after Californication and 24. Hey Vince, you better step it up!
  
  
• There sure seems to be alotta folks trying to take victory laps for "calling" this collapse. Funny thing is, I don't remember many of them ringing the bell when we were at all-time highs. Besides, nobody cares who was right then, we need to focus on solutions as we together forge a future. Back patting and glad handing isn't consistent with that mission.
  
  
• "No one can find a safe way out for himself if society is sweeping toward destruction. Therefore, everyone, in his own interests, must thrust himself vigorously into the intellectual battle. None can stand aside with unconcern; the interest of everyone hangs on the result. Whether he chooses or not, every man is thrown into the great historical struggle, the decisive battle into which our epoch has plunged us." --Ludwig Von Mises
  
  
• Discipline over Conviction, Minyans, the definition of an investment should never be a trade gone awry. 

Update on Aisle Five! - 12:20 pm

Through the lens of risk management over reward chasing, please keep half an eye on BKX 30ish as it's the uptrend off the recent lows. I'm trading these names from the long side, as you know, with some Apple (AAPL) puts against 'em at present, but I remain conscious of the risks as we put one foot in front of the other.

As it stands, I've got some trailing stops on Mother Morgan (MS) and Wells Fargo (WFC) (with a conscious nod that 20ish is acne on the former and, traditionally, a retest of a breakout is when you wanna initiate risk) and, for the big uglies (Citigroup (C), Bank of America (BAC)), my position size is such that if they goose egg (which I don't see in the near-term but is possible over time), I'll still be able to feed Phoebe.

Bottom line, you've gotta be in it to win it but now, more than ever, we must operate through the lens of risk management Financial Staying Power over reward chasing. Nobody is smarter than the market and our goal--is to find our way to better days and easier trades.

One step at a time.

In other, random vibage:
 

• I'm not touching the Bowl on Sunday as I wanna enjoy the game rather than root for my wager. I'll be pulling for Bill Bidwell and his Cardinals to finish their fairy tale but my gut is that Pittsburgh is too tough on defense. Gun to head? Steelers by ten.
  
  
• Man Smart, Woman Smarter? Either way, this is one of my all-time faves.
  
  
• Where the heck is Franklin Raines?
  
  
• In a perfect world, I'll go home smaller and taller from a risk standpoint. Then again, in a perfect world:
  
  
  • The Raiders would be playing on Sunday.
    
    
  • I would have hair inflation and weight deflation.
    
    
  • I could drain raindrop threes.
    
    
  • Jerry, John Candy, John Belushi, Biggie and Tupac would still be alive.
    
    
  • I would do what I love with people I respect while serving the greater good.
    
    
• Hey, one out of five ain't bad! Smile Minyans, less than four hours until our requisite two-day respite. Let's make 'em count.

R.P.