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Buy Panic, Sell Euphoria?


Right now we seem to be between the two.


Hello from New York, where I'm on the verge of leaving for Las Vegas with Mrs. Jeffmacke to celebrate her birthday. All I can say is the Dow was 3,000 points higher when we started planning the trip. If you think putting a vacation party together is tough, trying placing endless phone calls inviting folks to feel free to not attend the party if the tape has them, rather understandably, completely freaked out. "So... How are, um, 'things'?"

Here's what I'm watching as images of having the entire city to myself this weekend cross my mind:

  • Just glanced at my screen and saw Wynn Resorts (WYNN) down 7.77. I'm feeling lucky (to be in cash).

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  • Buy panic, sell euphoria. Lather. Rinse. Repeat. Right now, we seem to be somewhere in the middle.

  • Coca-Cola (KO) beats and goes up a couple percent. Pepsi (PEP) misses and spritzes Hoofy's head right off his shoulders. That's the risk reward set-up for 2008, in a nutshell.

  • Bear markets make traders and cowards of us all. You may be a "buy and holder" but with this volatility you're going to see, and possibly even get, 20 – 40% moves in a day or two. That's a year's worth of gains, folks. I don't like taxes either but a) I like them more than losses b) my taxes now all go towards buying stock, regardless.

  • The most hypnotic thing about financial TV during bear tapes is the prices. Ford (F) 2.38... Rio Tinto (RIO) 158.00 (down from $500+ last summer)... Cisco (CSCO) 17.25... Long, short or indifferent, if you pay attention to stocks day to day, those prices are simply jarring.

  • To paraphrase my friend Dennis Gartman, bull markets react strongly to obvious news while bear markets do the opposite."The tape is reacting poorly to bad retail sales." Such observations are the least hypnotic, most negatively jarring (but inescapable) parts of bear market financial TV. Find me someone, anyone, who thought today's retail sales would be good. Now that would be news.

  • Trying to pick a bottom in commodities or ags? Pull up a 5 year chart of any random homebuilder (I picked Pulte (PHM) for no reason at all). The other side of Bubble Mountain has some great trades, some huge drops and is a triple diamond slope, in terms of getting out with your femurs and portfolio intact.

  • The USO crude oil ETF is $61?! I shouldn't be going to Vegas, I should be going to church to give thanks for getting out of that alive.

With that, I'm off to put my kids' school funds on green at the roulette table. Reckless, you say? Calling the bottom in Potash (POT) is reckless. Putting Dartmouth on Green is just good karma and good math.

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No positions in stocks mentioned.

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