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Random Thoughts: This Volatility Ain't Constructive


Dow experienced 1800-point pop from Friday afternoon to Tuesday morning.


Editor's Note: The following was posted in real time on our premium Buzz & Banter. It's being shared here for the benefit of the Minyanville community. See also Truth and Consequence and Traders Take Your Mark.

Gate Sniffage! - 10:00 am

  • Green Beans in the Red Sea? Biotech (Amgen (AMGN), Biogen (BIIB), Genentech (DNA)), select banks (JPMorgan (JPM), Wells Fargo (WFC)), certain semis (Intel (INTC), Broadcom (BRCM), Altera (ALTR), Xilinx (XLNX)), Apple (AAPL) (on the upgrade), Coca-Cola (KO), Sears Holding (SHLD) and Lowe's (LOW).

  • Despite the fright--NYSE internals are 8:1 negative--the reaction to news, as it stands and don't blink, is a ray of light.

  • I'm a buyer of vacation in size. I have no idea when, where or how, but this Minyan needs some serious spiritual refocusing.

  • What else did I buy? Some January QLD calls, with a stop below the previous low, and another layer of EEM and BHP Billiton (BHP). The goal to successful trading is to view prices as an opportunity rather than a hindrance.

  • This particular pup remains to be seen (Cooper's chart scared the sprinkles out of me) but I'm nothing if not honest and I'll always share my fare in real-time.

  • Lemme limp, er, hop. I'll be back.

The Moment of Truth (and Consequence!) - 10:58 am

  • Remember, there's voluntary thrift and involuntary thrift.

  • This is your friendly Minyanville reminder that expiration looms large on Friday and that'll exacerbate volatility in the days preceding the actual expiry.

  • Remember, Hank has a thing for bunnies into these structurally significant settlements.

  • Peeking around the corner, should a "higher low" establish, I will set my sell-stops below those levels as we trade ahead.

  • 165,000 more reasons why we might wanna get in our mouse and drive away from NYC for a spell.

  • Speaking of Mac, I was at a dinner a few years ago with him and his gal Mila. You wanna talk about feeling old? It's crazy--I remember Uncle Buck and Home Alone like they came out yesterday but M&M aren't kids anymore. Not by a long shot.

  • I said to "my brother" last night that the first coupla hundred points lower was a gimme after the 1800 point pop from Friday's low to Tuesday morning. From there--or coming up 'here' as the case may be--it's make or break. See both sides and allow for a margin of error in your approach. Nobody is smarter than the market.

  • 1800 points. It's tough to paint that volatility as 'constructive' regardless of your directional bias.

  • I've layered into lion's share of this particular trading try in and around here. There's no putting lipstick on the pig--my starter positions were initiated into yesterday's downside reversal (higher than where we now are)--but they were effectively placeholders.

  • There's more 'there' there now but I've still got plenty of powder to add into weakness if I should so choose. Once more, this is with the trading bucket of my book as my longer-term stuff remains 100% in cash backed by t-bills.

  • Note the higher dollar as per our earlier discussions.

  • The risk, again, is that the cancer is bigger than the patient. The reward, potentially, is that the (thus far) shallow improvement by the credit backbone will shift the psychology of the equity thermometer.

  • So, Delta (DAL) is buying Northwest (NWA)? I wonder how MC Ren and Ice Cube feel about the deal.
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Positions in QLD, EEM, BHP
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