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Random Thoughts: Dusting Off the Bull Costume


Surveying the long side.


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 Mickey Mantle Won't Pay Our Rent.

Monday Morning Mess Around - 8:54 am

  • On Friday, we noted that the path of maximum frustration was that we just spent hundreds of billions of dollars of taxpayer money against the wishes of the constituencies and the markets continue lower.

  • That has indeed played out and the trillion dollar question becomes "Is this the necessary shake-out, fake-out needed to usher in near-term capitulation before a sustainable trading rally unfolds?"

  • With S&P 1080 (and most likely VXO 70) upon us--we've been eying if for some time and now know that it's a Fibonacci retracement level--I'm watching that level as a potential pivot point (for a trade). Odds are, for what it's worth and so it's said, that lift--IF it is to occur--will be the second rally attempt off the lows.

  • My vehicles--if I choose to deploy some of my short-term trading powder--would likely include some of the beaten down drillers and, perhaps, eviscerated big beta. And yes, any and all risk will be defined as the mechanics of the swing always trump the results of the at-bat.

  • That's not a call for a bottom (we've got a ways to go) but given the growing sense of Armageddon--coupled with my sense that we'll soon see a coordinated global rate cut and the regulation of credit derivatives--the seeds of a Snapper may be sowing with Turnaround Tuesday right around the corner.

  • Or they'll just pull a Russia and shut down the capital markets. But they wouldn't do that, right?

  • One step at a time, Minyans, as we fit together the ever-changing pieces and operate with the mindset of risk management over reward chasing.

Gate Sniffage - 9:39 am

  • Potential vehicles--if and when the time is right--include Weatherford (WFT), Transocean (RIG) and Apple (AAPL). This is NOT advice, Minyans--where you stand is a function of where you sit.

  • Remember, stocks are thermometers but credit is the backbone. You can jog with a fever but you can't run without vertebrae.

  • Again, "straight up" may well be too easy. The tone, tenor and "panic" of the second probe lower is prolly where we'll see the whites of their eyes (if, in fact, we're to see them at all).

  • When in doubt, wait it out. Opportunities are made up easier than losses.

  • Under $925, gold--for all it's swings and things--will put in a third lower high, which is bearish. I've tried my hand on some GLD puts to start (again, NOT advice and defined risk)

  • Breathe, Minyans, and let's do this.

You can have a big dipper. Going up and down, all around the bends... -10:07 am

Alrighty then, with Peter Gabriel watching carefully, we edge our way into the Monday fray. Given there's SO much going on, we're gonna immediately defer to the bullet format for Minyan media consumption:

  • While I said--and feel--that the second dip will define this trip, I've entered a toe into the Matador City pond. Partial positions (and I can't say this enough--not advice) but my circle smirks include the QLD (QQQQ ultra-shares), Weatherford (WFT), Transocean (RIG) and a smattering of GLD puts.

  • Now? I wait. Time and price are the ultimate solution for what ails us but it also applies to my near-term stylistic approach.

  • The risk? You know the risk--we've been mapping it for years in Minyanville and it exists regardless of my particular positioning. Credit markets freeze, capital markets seize and the process of price discovery persists.

  • In the midst of my Sunday work-a-thon, I broke to watch some football and Wonder Boys, at the suggestion of a friend. Twas a nice respite from reality.

  • While I've been notably cautious since last year--and all but screaming from rooftops entering September--I'm clearly more constructive for a trade as evidenced by my morning nibbles. That doesn't mean I'm right but it most certainly means I'm honest.

  • One leg in the bull costume, or 25% conviction on the long side for all y'all old schoolers in our midst.

  • As always, I hope this finds you well.


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Positions in WFT, RIG, GLD, QLD
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