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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.

Position in WFC, BAC, MS, YHOO

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.

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