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Freaky Friday Potpourri: Bowing to Blind Risk


Are the markets in a pause, or could we traverse lower?


Editor's Note: Toddo is out of the office this morning tending to some necessary business. The following vibes were shared on yesterday's Buzz & Banter and a modified version is being shared for the benefit of ye faithful.

With the official results of the stress tests upon us (not to be confused with the coordinated leaks this past week), some supply sorta made sense given the recent run, right? The question is whether this is the pause that refreshes or we traverse lower to S&P 875 (past resistance, current support) which would be a truer test of tenor of the tape.

I entered Thursday with negative bets in place (got a bit nicked a bit on the Hump) and doubled down into the hot popper higher (my vehicles were the S&P, Apple (AAPL) and financials). When the tape got smacked lower into the afternoon, I unwound my market exposure and took other risk off the table, including Apple (although it feels like it can fall further from the tree).

My thought process was two-fold. First, trades are made to be taken. I still foresee the "W" but the timing of the Widow's Peak remains to be seen. I will say that I'm inclined to trade from the short side when S&P 950 is within spittin' distance, all the while keeping an eye on the greenback for breakage below DXY 83 (potentially asset class positive).

The second reason is entirely more selfish, in a selfless sorta way of course. I have an appointment downtown this morning to reclaim my identify and I've heard horror stories about how long it could conceivably take. As I hate blind risk, my inclination was to err to the side of prudence so not to stress while toe tappin' on long lines.

Bigger picture? You know my thoughts-sometimes right, sometimes wrong but always honest. I simply wanted to share my current and future risk profile as communication is the key to any healthy community.

Random Thoughts:

  • While S&P 900 is a nice round number for the bovine to make a stand, I'll again share that the reaction to S&P 875 will be a more telling test with regard to the Pop & Drop component of our recent analysis.

  • While looking for proof that I am, in fact, me (birth certificate, social security card, etc), I came across the thousands of emails that were sent to me in 2000-2001 once Ruby took ill. Unbeknownst at the time, that gracious outreach was the genesis of the Minyanville community.

  • We don't "do" acrimony in the 'Ville. Please keep that in mind when communicating with the professors who so generously give of themselves in the interest of effecting positive change through financial understanding.

  • You see where the NDX stemmed the slide, right? Precisely at the 200-day moving average. I still haven't figured out if traders follow technical analysis because it works or if it works because traders follow it but either way, I would venture to guess there are "sell stops" on the other side of NDX 1380, which would seemingly set up a straight shot to acne support (NDX 1300).

  • Remember Minyans, opportunities are made up easier than losses.

Some Answers I Really Wanna Know:

  • Remember when they banned short sales in September and we drew the analogy to Pakistan's Karachia as a script of what to expect?

  • And when we vibed that it "worked" to S&P 9-11, everyone was like "Dude, you're way too bearish?"

  • It's taken a 37% rally to get back to that chilly figure?

  • A little perspective goes a long way for bulls and bears alike, eh?

  • Given the growing chorus of a coming pullback, does that mean we won't see one or it'll be entirely more massive than a mere correction?

  • Manny Ramirez was suspended 50 games for failing a performance enhancing drug test?

  • Would that punishment pale in comparison to the Code Red blanket beating A-Rod will get from his teammates if they can prove that he 'tipped signs' to opposing teams?

  • Will I see you on the Buzz & Banter?

  • Why do I get a strong sense that we haven't heard the last of the "He said, she said" over the Bank America (BAC)-Merrill Lynch marriage?

  • What if Ken Lewis drops the bomb that there was also additional arm-twisting involved in its purchase of CountryWide Financial?

  • What if CTU subpoenaed the phone records between Hank and Ken prior Bank America's marriage to that massive mortgage lender?

  • Do you think Angelo Mozilo ever called Dr. Cohen?

  • Would we be wise to remember that the dollar and asset classes can both trade lower (but not, in my view, trade higher in sync)?

  • Will this be my song of the summer?

Good luck, Minyans, and I'll see YOU over on the Buzz!


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