Randoms: Running to Stand Still
The market fights to regain it's balance.
Editor's Note: The following was posted in real time on our premium Buzz & Banter (click for a free trial). It's being shared here for the benefit of the Minyanville community. See also A Thirst for the Truth.
Minyan Mailbag: SPX 666 last Friday likely was not our bottom - 9:35 am
Just wanted to pass on a tidbit from a research note I received regarding Friday's S&P 500 intraday low of 666. Basically, the historical track record of Friday bottoms hasn't been very good. And based on the past 21 bear market lows, dating all the way back to 1929, there have been only two occurrences on Fridays, while twelve have occurred on Tuesday or Thursday. In fact, the note goes on to say that the most likely day for a climactic bottom is a Thursday in either October or March (44% probability).
--Minyan Hayden P
Great point! The twist, I suppose, is the notion of a trading low vs. a market bottom. I would be very surprised if 'that' was 'the' low (absent a significant dollar debasement) but we'll play the hand we've been dealt.
For me, I came in flat in my trading account after selling the merchandise added last week (when it felt very wrong) and I wanna keep my risk leash tight into the weekend. In my long-term account, I'm still leaning against S&P 600 for 25% deployment and if we don't get there--and my greatest cost is opportunity--so be it.
Capital preservation remains a necessary precursor to wealth accumulation.
Gate Sniffage! - 9:53 am
- Great, like we need this to worry about?
- Minyan Linda brings up a good point. If we, er, they suspend mark-to-market in here, does that hurt the banks by removing potential "mark-ups" in the future (which we'll likely see at a point as we navigate the path to the ultimate destination)?
- Deflation knows no allies on an absolute price basis. This we've said, now it's happening. And it's happening in a big way.
- Red Beans in the Green Sea? American Express (AXP), Home Depot (HD), 3M (MMM), IBM (IBM), pharma.
- While Big Ben chimed against the suspension of mark-to-market, he left the door open for manicuring existing guidelines. And I quote, "I think given what's going on in the world, we should look to identify the weak points of mark-to-market and try to make some improvements on a more expeditious basis."
- See the lower dollar, which is a necessary precursor--but no guarantor--of higher asset classes.
- And note that crude is lower despite that. In the interest of forthright communication and full disclosure, I nibbled on some USO puts yesterday afternoon (you can learn a lot just by watching) but it's a quick schnitz (read: pure trade, held for sale).
- Get your skis shined up, grab a stick of Juicy Fruit. The taste is gonna move ya...
The Minyan Entourage! - 10:17 am
Why are pets the only ones that understand me?
Trade, don't Chase Vinny.
Through the lens of "the reaction to news is more important than the news itself," keep half an eye on UBS (UBS) following its bigger than expected loss and "extremely cautious" 2009 outlook.
The takeaway from this morning's segments on Yahoo Techticker? Among other things, offering public thoughts--however right, wrong or honest--is a thankless task in today's day and age.
The populous opinion is rarely the profitable one, as evidenced by our against-the-grain bearish take into all-time highs, fading (selling) crude $145 and, more recently, the constructive stance into S&P 600. I have to believe that if you do the right thing long enough, someone will eventually take notice. I'm in not talking about being right, I'm talking about doing it right.
There's no shame in admitting it's hard, there's only shame in pretending it's not.
As I told C.O.O. Ike this morning, when he asked me how my day was yesterday, "Made some bank, not as much as I coulda but I've learned never to complain when you end the session green. Truth is, with three (count 'em) massive projects in our (behind the scenes) midst, I'm a moth in a light bulb factory... and through the lens of discipline, that begs doing a bit less."
And to think, I thought this whole Minyan thing would be a relaxing lifestyle shift when I stepped down from big money management!
Always honest, Minyans, and know that I'll clear that plate soon 'nuff. Hope this finds you well.
Learning to Fly? - 11:15 am
Next up on the catalyst calendar? High Noon March Madness, natch.
Note to self: The Orange always do better in the big dance when they trip early at the Garden. Make us proud, but don't hurt yourself boys.
Tea Leaves? Market breadth is steady, Eddie, with two winners for each sinner. So, we check that box.
The dollar? Lower, which is helpful (but not omnipotent).
Leadership? Banks and brokers up 4-5%.
Technicals? Technically speaking, we've got room to S&P 800.
Mechanics of the swing? Trailing stops for moi as I keep loose grips on the handlebars (less bumps that way).
As I said to Monsieur Task at the NASDAQ Marketsite this morning, my recent long side exposure (into Friday, Monday and Tuesday) was "stopped out" against Armageddon. In other words, If General Motors (GM), General Electric (GE), Citigroup (C) and the rest of the lot failed, my P&L woulda been the least of our concerns.
The scary thing (amongst others) is that in hindsight, that might have been the easy trade.
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at email@example.com.
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