Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Random Thoughts: Can We Trust This Excellent Adventure?

By

The question we need to ascertain is whether or not the worst is behind us in the near-term...

PrintPRINT

As Bill & Ted party on, the rest of us are left to wrestle with whether we've seen the start of the year-end rally. Surely, with doom and gloom splashed across BusinessWeek and the Economist, the abyss isn't catching anyone by surprise. The question we need to ascertain is whether the worst is behind us in the near-term or if this lift is a gift that should be traded in for a tree.

While I haven't traded 'em particularly well (always honest), I did flip my lid and began operating from the long side last week. I've picked my spots and took some shots---some worked, some didn't--and entered today's session with scattered longs, including Schering Plough (SGP) and Pulte Homes (PHM). Both of these--and, in fact, every long side try I've attempted in the last week--were and are pure trades as I attempted to position for an oversold bounce.

Now that we've got it---and conscious that it may, in fact, continue--I've balanced my stylistic approach. That includes trailing stops on my longs, laundry lists for my shorts and patience by and large. It also includes some strategic short-side tries with defined risk and uber-short leashes.

In short, the last two days may have, in fact, been the "easy" trade. Imagine that!

The final stretch of 2007 is going to be a humdinga with month-end flows (redemptions), year-end performance anxiety, looming shoes (credit), Fed help (December 11th), false starts and massive agendas. So it's said and so you know, I don't think Boo's done by a long shot as the structural imbalances will percolate for a long time. That, to me, is intuitive. The timing, as always, is the trick.

As for today, the critter compass is pointing to the moon, Alice, but trap door potential exists, particularly if S&P 1450 and DJIA 13K shift overhead (in that order). I expect a test at a point and we'll keep close tabs on our tea leaves when and if that arrives.


Interesting times indeed.


Random Thoughts

  • Don "don't call me snow" Kohn-you know, the Vice-Chairman of the Board of Governors of the Federal Reserve System-made comments this morning that are fueling hopes of further rate cuts at the December 11th meeting. "We will act as needed to foster both price stability and full employment," he said in a statement.

  • It's interesting to note, however, that the dollar is HIGHER on this news, which is precisely the opposite of what one would expect if rates are heading lower.

  • And you saying there's no deflation?

  • Hey, there's my 5% rally in Citigroup (C)! Grrr…

  • While I was sniffing around on the short side in gold this morning, I didn't pull any triggers. Sure nuff, there it goes... down $17... along with crude, which is off 3%.

  • "Asset class deflation vs. dollar devaluation" isn't an all day, every day thing but it IS a lens that has proven quite valuable over time. Keep that commodity action front and center, Minyans, as I don't view it as a bullish element for equities.

  • My sense is that financial stocks will remain dicey, crowded and frustrating as we weigh the specter of rate cuts vs. the looming shoes that are sure to drop. Perhaps there are better battles to fight.

  • Note to self: when we get through the December tri-fecta of MV Kids, The Exchange and Festivus, take some time off and recharge the batteries!

  • Never underestimate the power of a random act of kindness. For instance, a kind gentleman named Jamal works in the coffee kiosk across the street and has served me coffee with a smile for the last three years. I invited him up to MVHQ to see what we do and his glow resonated as I walked him around to meet the troops. It takes five minutes to "do something Joel" and the effects will last a lot longer than we could ever imagine!


R.P.


Holiday Festivus is here! Come join us and support the Ruby Peck Foundation For Children's Education at an old-fashioned Southern-style hoe-down in the heart of New York City on December 7th. Click the image below to learn more!

Positions in SGP, PHM, SPY

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 todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE