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Random Thoughts: Is This Rally Real?


After the Fed speaks, the volatile market will too.


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 How Realistic is a North American Currency? and A Tale of Two Tapes.

Holy Guacamole, can it be any busier? On top of an insane amount of information assimilation, wild market volatility and a slew of folks kicking the critter tires, I feel like a U2 song.

I mean seriously, given the amount of time and effort we each put into our daily routine, isn't the journey supposed to be somewhat enjoyable? That's my mantra, this you know, but sometimes Atlas simply has to shrug.

Some top-line vibes as I suddenly realize the FOMC is front and center:

  • As Minyans know, I've been trading around the financials from the long side since last Wednesday. The BKX is up 26% over the span of those six sessions, which may lead one to believe that I'm happier than a clam sandwich. Yes, I've profited but no, it hasn't been a grand slam. Opportunity cost is the other side of discipline and one I've readily accepted.

  • Do I think they have room? Yeah, I do--with BKX 40 an intuitive resting spot--and, after punting my SSO and Bank of America (BAC) into the opening pop (executions were $23.90 and $7.69, respectively), I'm picking and grinning, depending on the moment. I have, so you know, nibbled back at some risk in this complex, partial positions that allow flexibility as a function of price.

  • My sense--and it's just that, a sense--is that we'll witness a test, perhaps after the FOMC, which will offer some better entry points for those so incline. I'm still in "buy dips to sell blips" mode with a conscious nod that 26% is, well, 26% and I'm operating through the lens of "risk management over reward chasing."

  • In terms of stylistic approach, I've slapped trailing stops on my reinitiated risk lest we see the MOAR (mother of all reversals). In terms of the probability spectrum, that is a viable, albeit not probable, scenario. See all sides, as always

  • We've been talking about the dry eyes of Mother Morgan (MS) and I'll draw your attention to her acne above $20. This was the one that got away, in terms of my chosen vehicles this past week. Well that and Wells Fargo (WFC). And Research in Motion (RIMM). And... wait, that's wasted energy. Never mind.

  • I've been called a lot of things over the course of my life. "Fat" as a frustrated kid. "Best looking" in high school. A "piss boy" when I interned at Morgan Stanley in London. "Top Gun" when I navigated a $400 million hedge fund. "Crazy" when I left it all to birth Minyanville. "Misunderstood," by my close friend's wife who is trying to figure out why I'm not yet married.

  • The one thing I haven't been called? "A traitor," at least until this morning when 400 people weighed in on my syndicated weekly missive over on the MarketWatch message boards. Someone once said that people are so thirsty that in the absence of water, they'll drink the sand. I'll offer that they don't drink the sand because they're thirsty, they drink the sand because they don't know the difference.

  • Dude, if Ming the Merciless zoned in on the earth right now, he would flip his ship and jet to another galaxy!

  • What happened to "Toddo TV?" Well, we still do it on occasion but worry not-soon enough, you'll have more me than you can shake a stick at. I'm no narcissist (although I do have a club 'Narcissist Now,' which I'm the only member) but I wanted to communicate the vibe as many Minyans have inquired.

  • I was long Jo, short Blair for a long time but I'm thinking for going the other way for a trade.

  • I've got a Rick's Cafe Casablanca themed party next week. When the heck am I supposed to find an outfit to wear to that? Hmm... hey, I've got it! I'll raid Charlie Mangano's closet and snag the original duds!

  • And no, not that Rick's Cafe. The one from the movie. Jeez!

  • You know what the prevalent mindset in the market is these days? Too smart to buy 'em, too scared to short 'em. That, in part, is why buyers are higher and sellers are low. It's also why taking the other side of that reactive reasoning is the best way to bank coin.

  • You wanna see a real-time example of how "field position" matters into earnings? Check out American Express (AXP), which is up 16% since yesterday despite profits tumbling 79%. Good news that isn't great is sold in overbought markets (stocks) while bad news that isn't an outright disaster is usually bought, if only for a trade.

  • The issue for the broader market--as recently discussed--is that the oversold condition created during the autumn swoon is being worked off as a function of time rather than price. That doesn't mean we can't rally (through our window), it simply means we don't have the bungee to gasp at.

  • I wonder if Angelo Mozilo ever took Dr. Cohen's advice?

  • The caveat of owning equity in the financials? You're at the end of a very long line.

  • On the bright side? Only a few more days until Mercury Retrograde finally gets out of our craw!

  • The leaders coming out of a crisis are never the same as the leaders entering the crisis.

  • That's GREAT news for upstart entrepreneurs and niche organizations. This may be a "backwards industrial revolution" but make no mistake, there will be profound winners in the new world.

  • I know, I know, but you gotta look on the bright side. The other side is just too darn depressing. Respect it, but don't be consumed by it.

  • And smile. It could be worse. It could be raining!


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