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Riding the Rally


How to maintain both optimism and caution.


A Minyan with the unlikely name of "Tom Cruise" writes:

Dear Professor Macke,

You were breathless and even glib on last night's
Fast Money. I've nailed this pattern for the last 20%. ["Tom" has apparently been pretty dang good].

Even I think there was a lot of fluff in the breakout over 805 on the S&P 500. It reminded me of the old days at Dow 14,000, when viewers simply "had" to be in the market. I think there should be more caveats and less breathlessness, but maybe it's just me.

Dear "Tom Cruise,"

As a regular viewer of the show, you should know 2 of my long-standing rules for Fast Money:

Rule Number 1:

Take the other side of whatever the prevailing opinion is. If Pete called the sky blue, I'd insist it was red. From dispute comes clarity. Last night, the side of the table to Dylan's left was cautious. I was giddy to offset their enthusiasm, to celebrate the near-500 point rally and to emphasize that we had crossed -- and remain -- above oft-cited technical levels.

I wouldn't know how to do "glib" at gunpoint, but if you can't be happy after catching nearly 20 points in a day on Goldman Sachs (GS), then you seriously need to rethink your life.

Rule Number 2:

Be painfully honest. When you're right, be guardedly happy. When you're wrong, being masochistically self-abusive. I'd been open about buying stocks into the rally, and we rallied. Not only that, but we rallied to a point that left a natural stop (810-800 on the SPX) just below us. Perfect. All those things being the case -- and remaining ever-aware that Mr. Market hunts and kills hubris -- pretending to be sad last night would have seemed quite phony.

In other news:

  • I sold partials in Apple (AAPL), Morgan Stanley (MS) and Goldman Sachs (GS). I tried to remain as joyless as possible.

  • Stocks are acting well, considering the action yesterday. If that makes you sad, or even worse, angry, it's time to re-assess your book.

  • Respect the action, folks. You may think a lasting pullback is overdue. You may believe, as I do, that at least pausing just north of 800 is the best thing for the tape. Your thoughts matter not a whit compared to those of the tape.

  • I'm also still long Mosaic (MOS) and Potash (POT). The latter is near resistance. The former is trying to break on through to higher levels. Either way, some pruning will be in order into the closer.
Positions in AAPL, MS, GS, MOS, POT

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