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Random Thoughts: Recess or Recession?


If you're getting bullish on upticks and bearish on downticks, give yourself a break and take a five-day weekend.

  • If you see me on all fours with a chew toy in my mouth, you'll know why.

  • So, who's to blame for the current credit conundrum? The Fed? Mortgage bankers? Credit-rating services? The carry trade? The consumer? The downtick rule? Hedge funds? Greenspan? Bernanke? Michael Vick?

  • There are plenty of sour seeds, much like the post-tech bubble corporate malfeasance witch-hunt. However, the more practical and positive mindset is that obstacles breed opportunities and we must focus on solutions.

  • So what are those first-step solutions?

    • Capital preservation is the first step towards wealth accumulation.

    • Live for today, save for tomorrow.

    • Stay out of debt (one of the first lessons Ruby taught me).

    • Make sure your money market fund is backed by treasuries rather than commercial paper blends (or, at the very least, understand the risks inherent in a blended backing).

    • Don't let the daily direction of the market dictate your mood. Net worth and self worth are-or should be-mutually independent.

  • When I awoke this morning and the S&P futures were massively higher, the initial fade (lower) was the "easy trade." Alas, the euphoria abated before the ticks began to flicker and I chose not to press 'em lower.

  • As discussed yesterday on the Buzz, I peeled out of 75% of my downside puts into the crimson slippage. Why?

    • I had out-sized short bets relative to my comfort zone.

    • Thin holiday ranks lead to higher volatility, which begs smaller trading positions.

    • It's consistent with my intention to "trade around" a short bias.

    • Know thyself--I'm tired and fried and in need of a respite.

  • I don't know about you but I, for one, get a little freaked out when our president mentions the potential for a nuclear holocaust. This isn't a political statement and I'm not downplaying the risks involved if Iran gets nukes. I'm just saying it weirds me out and, as most people who know me can attest, I'm weird to begin with.

  • Cheyne Capital and Barclay's both offered overnight assurances that they have sufficient cash to meet financial obligations. Fair enough and likely so. But as a wise man once said, "If enough people tell you you're drunk, you better go lay down." There are simply too many global hiccups after the multi-year belly up.

  • So, Pepe Depew has an eye tick now. Dude--get your own stress related physical reverberation! And while you're at it, pick up some flea collars. We can wear them on our wrist next to the Ruby Peck bracelets and fry those little buggers. Noice!

  • If you're getting bullish on upticks and bearish on downticks, give yourself a break and take a five-day weekend.

  • Successful trading is all about the quack count. If the ducks align, unleash the hounds. When they don't---like this morning when we had weak financials and fabu breadth--sit the hand out.

  • S&P 1457 (the 200-day) is the next best upside retest. I "see" it but I'm unsure if I'm gonna fade it. The thought of sneaking out of the city sans risk and resting up for the home stretch is gaining momentum in my crowded keppe.

  • Sell hope. Buy despair. And do it humbly.

  • The series of lower highs is a "take a step back" technical negative.

  • The Inquisition, here we go. The Inquisition, don't you know...

  • Answers I Really Wanna Know…

    • What does it mean that the S&P futes are holding their bid---with NYSE internals 2:1 positive--despite the grave danger in the financials?

    • What happens when the dollar index finally punks under 80?

    • If the dollar index drops another 33%--as it has since 2002--and the DJIA rallies anew, is it still in a bull market?

    • Where the heck is Beeks?

    • Is there anything better than Yankees-Red Sox on a August night with one of your best buds?

    • Are you trading and fading or pressing and guessing?

  • Nice plug Herb! No, not his hair (its au natural), his reference to Minyan Peter's Mailbag yesterday.

  • Recess or Recession? The former is today's business while the latter matter is a function of time. And--consciously referencing this in the context of green screens--I think a recession might be a favorable outcome given the structural imbalances in place.

  • Hoofy will offer that tapes that are strong all day (with 2:1 positive internals or better) tend to end that way.

  • Boo will point to the pink sprinkles in the piggies-from JP Morgan to Bear Stearns to Lehman to Morgan Stanley-and the potential for forced selling on a thin day.

  • Me? I'm listening to some fine tunes and respecting the message nestled within. If they jack 'em, I'll likely add some further downside exposure to respect the process. Fade 'em? I'll put a cork on my fork, hop the six train and enjoy the Yanks and Sox with Mr. Practical.

  • Deep breaths, Minyans---every day doesn't have to be the most important session in the history of the markets!


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