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Random Thoughts: Engine Room, More Scream!


Hang in there this 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 The Road Less Traveled and Save and Rate Cut.

The Dew Screw! - 9:34 am

  • Minyan Kirk notes that in September 2001, the S&P was 24% below the 50- and 200-day moving averages. Today, we're 25% below. That's an interesting data point with a conscious nod to something pep said last month. Technical indicators, by definition, don't work during a crash.

  • I've been deluged with emails and phone calls from folks asking if they should pull out of the market. My response is consistent with what we've said from day one in Minyanville. It's impossible to offer blanket advice to a faceless audience as each person has a unique time horizon and risk profile.

  • What I have said--and understanding that many folks aren't in the same position--is that, as a function of my most cautious stance (100% cash in my long and short-term bucket), I'm in a position to put some money to work. That may or may not be the right approach but it's what I'm doing.

  • At question is social mood and risk appetite, which shape financial markets. While difficult to gauge, we're somewhere in the last trifecta of denial-migration and panic.

  • And yes, I've reminded myself of something we've long discussed on Minyanville. The stock market crash didn't cause the Great Depression, the Great Depression caused the stock market to crash. It's called a process of price discovery for a reason.

  • I offered yesterday that I would likely pare some risk into the bell as I traded around my posture. Even still, I continue our journey with two legs in the bull costume (50% conviction). I will slip an arm in (makes 75%) near the opening (S&P 960), with a conscious nod that 'straight up' is too easy. Sometimes right, sometimes wrong, always honest.

  • Good luck, Mon Frere and remember, it's always darkest before the spawn.

Gate Sniffage! - 9:44 am

  • Green beans in the Red Seas (I'm talking about the actual opening)? American Express (AXP), Altera (ALTR) Xilinx (XLNX) (most of the semis, actually), Biogen (BIIB), Deere (DE), 3M (MMM), Honeywell (HON), Boeing (BA) and Qualcomm (QCOM).

  • Coops DeVille was "bang on balls accurate" (come on, it's from My Cousin Vinny) that a gap higher was destined to fail. While a gap lower is no guarantor of a rally, it was a necessary precursor of one.

  • Hamster Wheel, More Steam! I'm literally writing--and trading--as fast as I can. I understand the "one arm in the bull costume, makes 75% conviction on the upside" came out after the opening but it was penned before the opening (Minyans know I don't fib).

  • As I trade around my core thesis--and I've made sales vs. those buys--the arm comes out and both legs (50%) remain in.

  • Actually, lemme post this before I become "After the Fact Jack."


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