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Random Thoughts: Will This Rally Stick?


S&P 900 a level worth watching.


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 The Emmy Award Winning 2008 Minyanville Festivus for Children's Education

Monday Morning Quarterback - 8:30 am

Pop Quiz!

The biggest week in Minyanville history concluded on Friday and the founder & CEO spent the weekend:

A) Partying like it's 1999.

Quietly absorbing the moment with family and friends.

C) Meetings and media, you gotta strike while the iron is hot.

D) In bed, trying to fend off this nasty bug that seems to be going around.

If you picked D--weekend in bed and hacking like mad--scream "winner, winner chicken dinner!" Crazy, eh? Sorta like a reminder from above that nothing is more important than your health.

Here's what I'm thinking about tape-wise as we power up this five-session set:

  • We mused last week that S&P 818 was an important level through the lens of a higher low into year-end. Minyan Editor Terry Woo noted that on Friday's Buzz and got long the SSO for a trade. Way to hum, Yo, little baby is all grown up.

  • I was reminded of my Outside the Box: 5 Surprises into Year-End this weekend. Not because of the reversal of fortune or retail therapy--both of which seem to be playing out--but because I continue to hear chatter of a Chinese Yuan revaluation. I know, it's been "denied" but where there's smoke, there's usually fire.

  • My book? As discussed in real-time last week, I've got some Research in Motion (RIMM) and USO calls, along with a token amount of Boots & Coots (WEL), DXO (although these double juiced vehicles scare me) and a "mentally marked down to zero" place holder in Dryships (DRYS).

  • On the pure trading stuff, I'll make some partial sales into this opening rip as a function of discipline although I'll again say that this rally might last longer than most folks think (S&P 1150).

  • The one that got away? Yahoo (YHOO), which was a downright steal as a hat size. I continue to believe they've got the best television audience in the world at present.

  • Lemme jump, friends, and thanks once again for the latitude last week. The Minyanville community is a pretty special bunch.

Gate Sniffage! - 9:56 am

  • The first fade is the easy fade, don't you worry anymore. Keep your eyes peeled towards our tea leaves when the probe arrives as they'll offer valuable clues as to whether this will stick or, like me, get sick. You know the usual suspects--breadth, banks, beta, the dollar...

  • S&P 900 is a level to watch. While I respect the risks (credit, redemptions), I'll again note that alotta folks seem to doubt this rally. If it sticks--and a close above S&P 900 would speak volumes--you could see performance anxiety unlike anything since the days of Bob Dole.

  • Fair Warning: I'm about to suck down my first Theraflu of the day. Between that and the early morning television hit (my name is my word), I'm thinking that, other than partial sales of my existing longs, I should prolly take it easy on the risk today.

  • Red beans in the green sea? Amazon (AMZN) (can't blame it--it rocked last week), Triple Nipple (MMM), Pulte Homes (PHM), Campbell Soup (CPB) and the semi-caps (Applied Materials (AMAT), Novellus (NVLS)).

  • Funny, I was reading Barron's yesterday and thought to myself, "Self, Freeport-McMoRan (FCX) is $16 and change? Therein lies a decent baby in the bathwater candidate." Sure nuff, it opened 15% higher.

  • Pep was all over the likelihood of "public works program" at the beginning of the year and he got more push-back than MV editor Matt Theal at his senior prom (which may have been last year, for all we know).

  • Bottom line, we'll see massive government spending--I believe 80% of the GDP during the Depression was government spending--and it'll come out of our pockets.

  • And to think, the "pension crisis" hasn't even hit the front pages yet...

  • Horror stories about into year-end. I'm hearing them from all sides, including some of the most talented traders I know leaving the business altogether. The youngin's who are asking my advice? I tell them "If you have the passion, go for it, but understand that 1) you're swimming against a massive tide and 2) the business will be entirely more austere than anything we've ever seen. The models and bottles days are over, and it'll be a long time before Svetlana smiles again.

  • One step at a time, Minyans, and we'll get there. Together.

Answers I Really Wanna Know... - 10:31 am

  • Are you watching this battle at Research in Motion (RIMM) $40?

  • Will we look back at this level with a scrunched nose if and when RIMM tries to fill that $20 upside gap?

  • What's the world record for being hot, no cold, no hot, no cold in the span of five minutes?

  • While I can "see" a rally back to S&P four-digit land, why do I wanna just flatten out and take my modest gains?

  • Theraflu?

  • A fool and his money being lucky enough to find each other in the first place?

  • Winky Wright standing on my shoulder saying "hit it, quit it, sit it?"

  • Are we gonna see a seismic readjustment by the time 2009 arrives?

  • If the banks hold this bid, is the writing on the wall for today's upside squall?

  • Here comes the probe?


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