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Random Thoughts: Respect the Crowd, But Don't Defer


Traders everywhere are using January lows to shape strategy.


The following vibe posted this morning on the Minyanville Buzz & Banter and it provides a good context for the rest of our Random Thoughts:

Hey Now, You're an All-Star, Get Your Game On, Go Now...

The first hour of the week is behind us--thank goodness!--as bulls and bears continue to stare. What I'm seeing, consistent with the action on Friday, is a wishbone of sorts as the N's peer higher and the S's steer lower. Which critter is gonna wear Converse? Good question, let's noodle aloud.

  • The Matador Crowd is quick to note the flip switchage by the homebuilders and the continued traction in the semis and beta. Toss in some decent action by the drillers and autos--not to mention the double bottom in the S&P and higher low in the banks--and they're quietly confident as they await the stimulus package signage and the monoline bailout to hit the wires.

  • Boo's Crew will offer that the banks are only as good as the last tick and they're taking it on the chin today (BKX -2%) following the latest shoe that is AIG (AIG). Factor in softer industrials, 9:5 negative breadth and the pattern of lower highs and they'll make the case that rallies are made to be sold and the worst of this story remains untold.

  • My take? We could see a combination of these two views, one that allows higher prices in the near-term but trouble brewing on the horizon. I'm not making big tape bets right here, right now, as I'm seeing conflicting tells. I will say that if I take upside shots, I'll likely dabble in four-letter land while downside pressage will be old school. 'Cause that's how I roll.

As always, I hope this finds you rockin' in the free world.

And, well, here are the rest of our Randoms!

  • I'm a card-carrying member of the anti-fur club and you know my take on trophy hunting (give the deer a Glock and call it a sport). There are places we should draw the line, however, and this might be it.

  • Every trader I know is using the January lows as the level with which they'll shape near-term strategy. I see it-trust me, I see it-but I've always been suspect of levels that oh-so-many people are watching at the same time. Respect, don't defer.

  • While I'm keeping some Apple (AAPL) (with trailing stops), I let some out into the opening jig. I know we're supposed to let our winners run but ten points in less than three sessions warrants some duck feeding as a function of discipline.

  • For what it's worth and so it's said, I hope Roger Clemens is cleared in the steroid scandal. It doesn't look good for the Rocket but if one is truly "innocent until proven guilty," I am withholding judgment for the time being.

  • Keep in mind, when weighing the addition of Bank America (BAC) and Chevron (CVX) to the DJIA that there isn't a whole lotta index juggling (read: buying) associated with this.

  • Say it ain't so, Chloe! Jack Bauer won't be back until next January. Dink, dink, dink… that's a bummer on a number of levels!

  • I nibbled on a few Blackstone (BX) calls--I know, miso crazy!--with one eye on defined risk (under $17.25), the other eye on the 50% retracement from the highs and the Third Eye Blind.

  • We've got a three day spree ahead of us and alotta folks are extending that on either side of the ride. Keep that in the back of your keppe in terms of liquidity and movement.

  • Does this mean that, at 38 years old, I'm no longer a boy toy?


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Position in AAPL, BX
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