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Randoms: Grasping For the Easy Trade

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Spying the financials for clues to the fuse.

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  • Our long-time assumption has been that debt destruction is the only true medicine for what ails the economy as opposed to the artificial drugs currently being used to mask the disease. Dr. John Hussman evidently agrees.

  • Keep an eye peeled towards BKX 32.5, which is the shoulder of the bullish reverse dandruff pattern in the financials. In a perfect world, that level holds and we see further fundamental validation in the complex this week, pushing the index to initial resistance at BKX 40.

  • As trendlines are better drawn with crayons rather than pencils, I've re-initiated a small Apple (AAPL) put position with one eye on expiration (pin risk), the other on the September gap (works to $123ish) and defined risk (initial stop set above $125). And no, it's not an emotional effort, I'm simply testing the theory of relativity.

  • The most bullish thing on my screen? The relative traction in select financials, including American Express (AXP) (off the bullish Barron's story), Goldman (GS) and Citigroup (C), which is up a buff 15% (aka 40 cents).

  • The most bearish thing on my screens? Market internals, which find two red for each ahead in early Monday trading.

  • The most exciting thing on my screens? Jack, natch, although he won't grace us with his presence for another nine hours. Yeah, it's a bromance, but I'm man enough to be OK with that.

  • There is typically one "easy" trade each session. Today, that trade was fading (read: buying) the financials when they opened slightly above technical support (BKX 32.5) and slapping a trailing stop on the position (stocks typically "probe" the direction of a previous session's outsized move).

  • I tried--and missed--grabbing some upside financial exposure for a pure trade, grasping instead at dust left behind in it's tracks. You know what I did about that? Nothing, for I've learned that pressing after missed opportunities is the quickest way to turn a bad situation into something worse. Should BKX 40 arrive in a flash, it might actually be an opportunity to fade the trade the other way.

  • Maybe I've got Bennet on the brain but each and every time I watched Angel Cabrera at Augusta , I was reminded of our fallen friend. I thought it was "just me" until Minyan Peter pinged this morning to offer the same exact vibes. "In hindsight," he said, "Maybe 'Angel' was the giveaway."

  • Speaking of reverse dandruff, keep Visa (V) on your radar as it retested the right shoulder and held where it "had" to. Again, technicals are a context, not a catalyst, but it's most worthy of a mention as we find our way.

  • Have you checked out economic smart cookie Jack Lavery's latest weekly missive on the 'Ville?

  • Deep breaths, Minyans, there's a lot of trading left in the week as we together search for our heart of gold.


R.P.



In memory of our fallen friend and trusted colleague, Bennet Sedacca, 100% of the donations made to the RP Foundation through April will be channeled to philanthropic endeavors consistent with the RP mission, working closely with the Sedacca clan in the distribution of those funds. We thank you kindly for your support as we strive to effect positive change in the lives of children.

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