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Riding the Rally with Morgan, Goldman

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The plan: Selling the two titans on an up open.

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Greetings from New York, where it's nice to be home.

Calling bottoms interests me not at all, but you'd have to be blind not to notice the improved mood over the last week and a half. Attribute it to whatever you'd like, but we've turned that frown upside down, and the market is smiling along with us. How am I playing it? Same as I have for as long as I can remember: looking for opportunities and booking gains on big moves when I'm lucky enough to get them.

I may look back in a year's time and rue this: But being long both Morgan Stanley (MS) and Goldman Sachs (GS) going into today, the former as a trading play for months, the latter on the time-honored "stocks that rip through $90 go to $100" trade, I probably don't have to tell you that selling an up open in the 2 titans has been the plan since roughly the instant I saw the cover of Barron's on Saturday.

For whatever it's worth, and we'll get to miscommunications in a moment, I only sold half the previously large-ish positions. Morgan is up 50% in 5 days; I don't much care if you think we've bottomed forever or for now, I'm not booking part of a move. That simply isn't how we trade around these parts.

Here's what I'm watching as I ponder ways to bridge the gap between "free market" and "D.C. micromanaging bonuses everywhere":

  • A second pass at my last word on the somewhat baffling anger regarding Sears (SHLD) is here. Herb Greenberg, when he was a journalist, once had a "hostile react-o-meter"; apparently Herb passed it down to me when he left writing.

  • Speaking of both hostility and struggling retailers, saw a lot of shoppers and met a lot of viewers yesterday when I left Target, loaded my 6-year-old and jammed cart worth of products - only to find one of my tires completely flat.

    Not to brag or anything, but it took me less than an hour to work up an enormous sweat, bite my tongue several hundred times in the struggle to not teach my daughter a lifetime's worth of curse words, and figure out how to jack-up a jam-packed car with a kit you could fit in your pocket. "At least Target seems to be having a good day," I thought, as I eyeballed my bloody knuckles and drove home at about 15 mph on a tire that would be more appropriate for a Schwinn than a station wagon.

  • All that said, despite riding the rally, I'm doing so without retailers; Wal-Mart (WMT) remains the one name in the group I'd consider as a long, though I do think there are some signs of life in the consumer. I just think there are more signs of life in Apple (AAPL), Mosaic (MOS) on the dips and General Electric ( GE), where I'm long both the common and (all but worthless) puts.

  • Why GE? When a heavily shorted stock gets long-feared bad news and the ever-mysterious "they" can't break it any lower, it's time to think of it from the long side. When GE got downgraded last Thursday and broke through the prior day's highs, I got long the Mothership of CNBC. In the interest of full-disclosure, I've never at any point in my life been a snake oil salesman.

  • Standard & Poor's (a division of McGraw-Hill (MHP)) was one of the sponsors of my debate with Burton Malkiel, making it only natural for me to open my talk by thanking them for great event and "apologizing for repeatedly calling for the abolishment of the 3 major credit ratings agencies." (Moody's (MCO) and Fitch being the other two.)

    I'll give S&P this: They have a better sense of humor than certain retailers I could mention.
Positions in MS, GS, AAPL, GE

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