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Random Thoughts: The Fed Will Act, But From Where?

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If this keeps up, we'll get our surprise rate cut. The question, quite naturally, is from where.

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Editor's Note: The following is a summary of Toddo's morning Buzz & Banter posts. They are being reposted here so Minyans can follow his real-time thoughts and actions.


Bonnie and Vikram, Sitting in a Tree... - 8:47 am

I step into the 'Ville following my uber-early kick-boxing trainer and immediately pulled up the Citigroup (C) quarter. "My gawd," I muttered to nobody in particular as I read through the biggest loss in the bank's 196 year history, "fuuuuuuugly!"

I then checked to see where this piggy was trading and, low and behold, it was off a mere fitty cents. "Hey Pep," I shouted between gulps of my morning Jo, "If this pig is only off half a buck on this quarter, it's going higher... at least to $30, right?"

He agreed, for what it's worth, but the tale of the tape remains to be seen.

Welcome to Turnaround Tuesday in the Citi that never sleeps. Let the games begin!


Gate Sniffage! - 9:41 am

  • Green beans in the Red Sea? Applied Materials (AMAT), KLA-Tencor (KLAC), Intel (INTC)... the semis.

  • Add EMC Corp. (EMC), United Technologies (UTX), DuPont (DD), Altria (MO) and Amgen (AMGN) to that mix for schnitz and giggles.

  • Why do we point this out? If a stock (index) opens green in this muck, there is latent demand floating around. Latent? Uh, yeah, I think that's the right word...

  • Has the dollar dandruff started to flake? If so, that's prolly not good news for my ten themes...

  • I can't stop thinking of Twisted Sister... and I don't even like Twisted Sister.

  • Hey, is that Douglass C. Neidermeyer in that video?

  • The good news for Hoofy? If Snapper showed immediately, he prolly woulda faded just as quickly.

  • Deep breath and defined risk, Minyans, there's a LOT of trading left in this session.


Hit me again Ike and this time put some STANK on it! - 10:32 am

Snapper is sweating like a stuck pig--or piggy, as the case may be--as the first rally attempt got whack-a-moled. I offered in the earlier post that an immediate rally wasn't in Hoofy's best interest but, well, his interests would be well served if he can get his groove on today.

Why? A quick sniff of our mainstay proxies find mas support at INDU 12,800 and S&P 1405 on a closing basis. We're under those levels now (watch S&P 1380 as important intraday support) and tensions are starting to mount. Hey, you wanted to be a trader, right?

A snapshot of our tea leaves find 4:1 negative breadth (ouch), slippage in beta (see the 5% drop in Amazon (AMZN) but also note that Apple (AAPL) acts like it wants to rally), art carnage in the energy patch (-3%) and the requisite bloodletting in housing.

My sense, so it's said, is that we'll likely see a rally attempt and my eyes will spy Citigroup, Apple, Goldman (GS), market internals and our levels for clues in the fuse if and when it arrives.

If Hoofy can't recapture that DJIA level, however, the next support will arrive in and around 12,000. See both sides and keep your eyes open. This tape is not for those with weak knees or laggy discipline.


Answers I Really Wanna Know... - 11:04 am

  • Why am I suddenly starting to think of R.E.M.?

  • Is this the beginning of the (trading) panic, a.k.a. capitulation, phase?

  • I mean, you saw someone just lifted 50,000 SPY Jan 137 puts on the lows, right?

  • Speaking of which, is this the catalyst to get long the Raiders?

  • Do old school Minyans remember my Warren "You can't buy class" Sapp story?

  • Did you see the banks sitting directly on multi-year lows (closing basis) right here, right now?

  • Anyone wanna bet a buck that the "surprise" rate cut chatter starts making the rounds soon?

  • If we continue like this, isn't the odds on bet that we'll actually get one?

  • On expiration Friday, perhaps?

  • Can you feel the societal acrimony percolating?

  • Are you keeping your cool, holding it together, being good to others and better to yourself?

  • When are people finally gonna realize that Britney is sick and start treating her with more empathy and acrimony?

  • Have you put your laundry list together?

  • When, prey tell, do we buy back Schering Plough (SGP)?

  • Are EMC, DD, AMAT--and maybe, IBM (IBM)---speaking loudly with their steady green hue?

  • Hue? Hue?


But I Don't Wanna Puke! - 12:14 pm

I hear ya Marie, who does? While nobody likes to lose money, investors are grappling with the reality that they may lose all their stuff as well. The problem with cumulative imbalances is that downside regurgitation was simply a matter of time. The question, quite naturally, is whether this is "it" and, if so, how long it will last now that we've come so far, so fast.

Some midday musings for your perusal:

  • Citigroup only down fitty cents as an upside tell? That couldn't be more wrong. Or is it wronger? Geez, I can't even get the grammar right with regards to this pig.

  • The VXO is up 9% but remains well below previous pain fulcrums. Again, the muted lift could be a function of the monster liquidity injections but, geez, what if it's not?

  • Does January 15th have any sorta special ring to it? Like one of those days we won't soon forget?

  • Note that the dollar has been scrappin' back towards the flat line. I'm not sure what to make of it (if anything, in terms of "day to day action") but it's worth noting.

  • Does Snapper still have a shot? Sure, the market can do whatever it wants--particularly on a Tuesday in front of options expiration--and I'm still vibing a stiff lift attempt. Whether it holds is another story and, given our technical juncture, it's likely the story into the end of the session.

  • If this keeps up, we'll get our surprise rate cut. The question, quite naturally, is from where.

  • Leave emotion for weddings and funerals, Minyans, and practice what we preach. The definition of an investment should never be a trade gone awry.

  • God it looks like Daniel must be the clouds in my eye...


R.P.

WHAT'S THE BUZZ ABOUT? THESE INSIGHTS AND MORE IN REAL-TIME. CALL 212-991-9357 FOR A 14-DAY FREE TRIAL OR CLICK BELOW.

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No positions in stocks mentioned.

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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