Random Thoughts: Do You Yahoo?
Jerry Yang and Co. have the biggest audience in the world.
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Gate Sniffage - 10:13 am
I hop into Turnaround Tuesday after a short respite to fix my hind quarter to find a crimson tide slip and slide. While I typically like to allow myself a few days to finger the tenor of the tape, I've placed a few chips on the early morning table. Among them:
- Yahoo (YHOO) calls. While it "looks, feels and smells" like dead money, I continue to believe that this company has massive franchise value and offers the next-gen digital television station the biggest audience in the world on one fell swoop. Personally, I like the fact that the "smart money" has sold out and given up--that, to me, makes the play entirely less crowded. How sure am I? Sure enough to begin a 50% position in April calls and take a breath from there.
Who could buy them? Of the five major media wagons--News Corp (NWS), NBC-Universal (GE), Viacom (VIA), Time Warner (TWX) and Disney (DIS)--my gut (and this is pure "I don't know nuttin', this is a pure gut feel sense'') is that the House of Mouse would be the most logical fit. I'll say this with two very important points in mind. First, this is not advice and second, I have a small position in Yahoo that has plenty of risk.
SPY calls. In part because it's Turnaround Tuesday. In part because S&P 1270 is the trendline from the July lows on a closing basis and in part because, well, it's Turnaround Tuesday! Stops on that trade will be set a stone's throw from here.
Some more Merrill (MER) calls. I had a small position since last Wednesday and I've doubled down for schnitz and giggles. Of all my positions, this is by far the smallest and the dog on the shortest leash ($23 is a level that should hold and I'm using it as my stop).
Trade I'm looking at:
Energy into crude $110: I've been patient (and I'll note that the driller stocks are NOT being patient) but this is a defined risk level I'm watching--and I've been watching--and it's one I'll play as we edge closer. When that happens, I'll be keeping a VERY tight leash on my long exposure as perception is reality.
Of course, I'll also remember that the historical correlation between equities and crude is NON-EXISTENT so I'll watch all of my risk with a grain of salt and a shake of pepper.
It's good to be home, Minyans--good luck today!
The Scratch N' Sniff - 11:30 am
Market internals are a flashing red "3:1 negative," much to President Tyler's Chagrin?
Of all my morning adds, the S&P calls have by far the tightest leash. The Yahoo (YHOO) calls are the longest dated calls. Everything else? In-between baby, as I patiently wait for crude $110 to arrive.
I don't disagree that there are dead men walking on Wall Street--the financial landscape will be vastly different when the recovery arrives five years out--the trick to the trade and quite possibly survival is remaining opportunistic (such as on March 17 and July 16) while staying realistic along the long, hard road.
Man, I felt like the biggest dope in the room in 2003! But you know what? I'm always early, which is exactly the same thing as being wrong if you're not there to collect your chips when your bet pays off.
Such was the irony of Fannie Mae (FNM)--I invested "multiple sixes" of my personal account on FNM $70-line puts for years and finally cried uncle the week before the wheels fell off the wagon. It would be funny if it weren't such an expensive lesson.
What's the lesson--the one I endured and now share with hopes that you avoid it altogether? Sync your time horizon with your risk profile. Without that, it's quite possible that you'll be right but end up very wrong.
I've been going back and forth with a gold bug debating the merits of the yellow metal. He cautioned me against "over-trading a bull market" and he may have a point--it certainly felt that way after I sold my long-term gold exposure December and watched it gallop higher without me.
I told him, however, what I said at the time--I still think there is a commodity super-cycle, I just think that we'll be able to buy it cheaper. I offered a "seven-handle" when it was north of a Geezer and I'm still sorta there. In other words, $700 wouldn't shock me.
Why? I'm a dollar bull, for a while at least, and that's a a 50% retracement since the beginning of 2003 (gold popped 200%, that would be a mere 100% gain). If nothing else, it could be a good level to start building long-term exposure anew.
OK, gotta jump on thy Truman Show. Which means losing the shorts (ice pack) and tossing on a pair of jeans so I can be "presentable" for the FBN audience.
Remember last Tuesday, the energy and metal equities acted well and preceded a pop in the physical, underlying commodities. For what it's worth.
As always I hope this finds you well!
Answers I Really Wanna Know... - 12:32 pm
- Is a breach of S&P 1262 (the fourth higher low) an intuitive stop loss on S&P exposure?
- How bout defining the risk in Yahoo (YHOO) to a trade below $18.50, which would be a fresh 2008 low?
- Why is U.S. Secretary of State Condoleezza Rice considering skipping the closing ceremonies of the Olympics?
- Aren't diets like trading in that we can trip but we mustn't fall?
- Was crude $112 "close enough" to layer into the counter-counter trend trade?
- Are the 3:1 negative internals closing the window for Snapper?
- Setting stops removes emotion?
- Are you again watching BKX 60 through the lens that "as go the piggies, so goes the smoke?"
- Has anyone ever seen a baby pigeon?
- Why oh why couldn't the Yanks pick up CC Sabathia as a year-end mercenary?
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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 firstname.lastname@example.org.
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