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Randoms: The Moment of Truth Approaches

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How will the market react to the latest bailout effort?

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  • I believe there is a "binary event" coming in the market next week as a function of and reaction to the latest bailout effort.

  • The bull case is that nobody believes it-whatever "it" is-will work following a string of serial missteps.

  • The bear case is that the cancer is bigger than the patient and mainstay indices have "churned" since November, working off the oversold condition as a function of time rather than price.

  • Either way, the time to be uber-bearish on the financials has passed.

  • What I'm wrestling with is whether we see a relief rally into the news or whether psychology is such that investors will scream "show me the money" before putting it to work.

  • Can you visualize that wrestling match?

  • I was stopped out of my upside bank bets yesterday (following a successful stint in the sector) but closed my eyes and bought Bank America (BAC) on the close.

  • This morning, as the stock got clipped for another 20% (which, to keep it in perspective, is less than $1), I doubled down (as discussed in real-time on the Buzz). Just trading, buying dips to sell blips and such.

  • I also bought Morgan Stanley (MS) back, purely as a function of "eyes" (it continues to trade dry). As per our recent stylistic approach, I've set a "trailing stop" on the stock which, given my entry point, creates some "upside for a credit," which is nice.

  • Keep water on your radar as it is a scarce commodity.

  • Why can't I shake the image of James Earl Jones when I read this submarine story?

  • It's a tough world out there, which begs the question, "What would John Thain do?"

  • "After hitting its Q4 numbers, Cisco (CSCO) disappointed investors advising Q3 will be down 15%-20% year over year. With a $90 Billion Market Capitalization and $30 Billion in cash, maybe Cisco should give up the equipment business and become a bank." --BTIG uber-strategist Mike O'Rourke.

  • Tired of getting whipped by the market? There's always this alternative!

  • As Minyans know, I've got two buckets-a long-term nest egg and a trading book. While the former remains in cash, I've moved 25% to a trading account should the market get waxed towards our perceived 2009 nadir of S&P 600. I think the next leg is higher-for a pure trade-but I've dusted off some bullets lest I'm wrong and wronger.

  • Kumquat may very well be the funniest word in the English dictionary.

  • More Water Works, for those keeping tabs on the global faucet.

  • I can't stop looking at the (fifth) screen to my right, which is a chart of the S&P. Please note the technical importance of S&P 800 and remember that the more often a level is tested the weaker it becomes.

  • The Hand is Back! Bloomberg is reporting that Treasury Secretary Tim Geithner plans today to hold his first meeting of the President's Working Group on Financial Markets, a panel coordinated in 1998 but spoken of only in hushed tones on grassy knolls until last year.

  • So you know and so it's said, I'll be out of pocket tomorrow as I've got some meetings to attend.

  • Howard Jones should have run for office!

  • Answers I Really Wanna Know:

    • Are you hearing this (unconfirmed) chatter regarding the possible easing or elimination of mark-to-market accounting rules?

    • If that were true, wouldn't the financials be leading rather than lagging?

    • Has money proven to be a false idolatry?

    • Were Britney Spears, Paris Hilton and Lindsay Lohan leading indicators of shifting social mood?

    • Rather than a straight sale (vs. the in-the-abyss buy) of Bank America (BAC), why not toss a tight trailing stop on that incremental exposure as we continue to 'trade around' the risk?

    • Are Goldman (GS) (+6%) and Mother Morgan (MS) (+10%) the definition of "you can learn a lot just by watching"?

    • Was my "shave" in Yahoo (YHOO) the textbook definition of "opportunity cost is the other side of discipline"?

    • Is Cisco (CSCO) the textbook definition of "the reaction to news is more important than the news itself"?

    • Do you see that Wells Fargo (WFC) has now filled the downside gap ($16) we've been eyeing?

    • What happens to your lap when you stand up?

    • How does Manny Ramirez turning down $25 million to play a game for a year fit into the age of austerity?

    • Why can't I shake this Hall & Oates tune from my crowded keppe?


R.P.

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Position in WFC, BAC, MS, YHOO
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