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Random Thoughts: Apple, Morgan, and the Raider Nation


Balancing the headlines as we edge over the hump.

I returned yesterday from a rare out-of-office lunch meeting (which still feels weird after all these years) to find the vibe we foresaw -- the EU ban on naked CDS -- coming to pass.

You know my take -- I offered that it could spur the herd higher, but not without the specter of counter-party contagion and the manifestation of unintended consequences -- and we saw that play out in real-time yesterday. Still, and just one guy's humble opinion, I remain of the view that rallies should be faded (sold) under S&P 1250, with a conscious nod that expiration (this Friday) will exacerbate volatility.

Other than that, Mrs. Lincoln, the game remains the same. Earnings continue to jockey for mind-share. Apple (AAPL) was the lead snowball in last night's avalanche. As shared yesterday on the Buzz & Banter -- try it; there's a two week FREE trial -- the Cupertino Express may well be in the "denial" stage of the denial-migration-panic continuum that defines all investment cycles (with regard to whether it will continue to be the same company after the passing of Steve Jobs). Remember, great companies don't always make for great stocks.

The financials should remain on the radar as well; Mother Morgan (MS) and US Bancorp (USB) were the lead dogs there, and the reaction to news will be more telling than the news itself. Along those lines, please be careful trading the headline numbers as there are all sorts of accounting noises baked into these numbers. Let the dust settle as we reconcile the year-over-year carnage (bullish on the margin) with the recent rally into these numbers.

Speaking of noise, the overriding catalyst for the market at large remains headline driven, with the speculation surrounding the European "solution" front and center. Yesterday, there were numerous fits and starts as reports surfaced of a $2 trillion deal, which was quickly denied, before a $1 trillion rumor surfaced which was quelled shortly thereafter. I'm reminded of an old school Minyanville axiom: The ability not to trade is sometimes as important as trading ability.

Random Thoughts:
  • Carson Palmer to the Raiders? I was there for the Todd Marinovich disaster and suffered through JaMarcus Russell -- but I really like this trade despite the price tag. The passing of Al Davis could be the catalyst for a deep playoff run and Carson Palmer has raw talent and a huge chip on his shoulder. Just Win Baby!

  • Minyan Aaron asks, "What's that N's over S's chart look like longer-term?" Great question. I've pulled back the aperture five years to take a look, and it's still pretty stretched.

    Click to enlarge

  • Did I sense a Turnaround Tuesday lift? Yes. Do I think it should be faded (sold)? Yes, but you have to make that decision for yourself. I don't think we'll get any resolution this weekend and the more it lingers, the worse it is for the market.

  • How do you get the political will to address a crisis? When it becomes a bigger crisis. That, and the brewing social mood storm, suggests caution is warranted.

  • Of course, European banks are trying to circumvent a broader political "solution." The problem with needing to raise $1 trillion is that everyone knows the asset sales are coming. Sell when you can, not when you have to.

  • Yesterday I hopped around to make meetings, meet deadlines and take calls. By 6:30 PM, I found myself racing home to give RJ a kiss before she went down for the night -- the most important meeting of my day. Balance and perspective will serve us all in good stead. Enjoy the journey, Minyans. By the time we get to where we want to be, the adventure will have already ended.

  • Good luck today.


Twitter: @todd_harrison

Follow Todd and over 30 professional traders as they share their ideas in real-time with a FREE 14 day trial to Buzz & Banter.

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