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Random Thoughts: Is This Debt Unwind Just the Beginning?

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...maintain perspective and proactively position as the price action allows.

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  • Minyanville is proud to announce that Laurie Petersen has joined us as General Manager of Minyanville Family Entertainment. Please join us in welcoming Laurie to the 'Ville!

  • While I was feeling a Snapper on Thursday--and we got it--I scrunched my nose when I heard the media giggle that we were out of the woods. WE-the collective we-must remember that we're in the early innings of a multi-year debt unwind so maintain perspective and proactively position as the price action allows.

  • The 20% burp in the financials, coupled with the eye-popping run by high beta, begged reverse rotation (the S's over N's" we talked about at the end of last week). There is still headline (and downside) risk to the piggies but the "easy" trade, if we dare call it that, may have passed. The ripples remain the stain that may pain.

  • Am I buying the banks for a trade? Nope. I would rather let them rally and pick my spots to nibble anew on some puts into resistance (such as Morgan Stanley (MS) $60). And so it's said (again), if I was a longer-term investor, I would be using rallies to peel out of my exposure. There are better risk-reward dynamics out there.

  • We spoke about HSBC (HBC) last week and on cue, this pup failed faster than my Raiders' season. I didn't get my position on so when it rallies to resistance at $92, please wake Boo and I up.

  • If, by chance, you happen to have an extra copy of the Wall Street Journal, take a peek at the B-Section. You might recognize a Critter or deux!

  • Don't blame it on sunshine, don't blame it on moonlight, don't blame it on good times, blame it on boogie...

  • We all see the smelting in the commodity space---Geez Louise, gold down $30?--and we know that XAU 172 is old school support (from where we broke out). That level will provide defined risk for the "I love gold and you know what else? The harshest corrections occur in the context of a bull market."

  • Fair enough, but one of the reasons I've cooled on these names as relative winners (as opposed to consumer non-durables, drugs and United Health (UNH), for example) is that the emerging markets are bubbly and commodities are tied directly to them. Gimme some fear and loathing in that complex and, as Gisele would say, "I'll cross that Bridget when I get to it."

  • Seriously, when supermodels and rappers publicly speak out against the greenback, isn't a near-term rally in the offing? Silly and nonsensical? Perhaps, but the same has always been said about Turnaround Tuesday and Bonnie has earned quite the rep in the 'Ville.

  • So, the SIV superfund is starting to take shape, with Citigroup (C), Bank of America (BAC) and JP Morgan Chase (JPM) opting in. $75 billion though? That sorta seems like a Band-Aid on a broken bone.

  • The homies prolly have some "news is always the worst at the bottom" sentiment going on and yes, it could last for a while. Where be resistance? HGX 170, for starters, and HGX 185, likely for stoppers.

  • Hey--it's the Mondays. This too shall pass!


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!

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