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Random Thoughts: Rotation of the Rally


Out of one thing, into the next.


Editor's Note: The following was posted on the Buzz & Banter in real time. It's being shared here for the benefit of the Minyanville community.

Gate Sniffage! - 10:14 am

Now that we've got some kind vibes going, how are we gonna put some jingle in our jeans? Patiently and with discipline, natch, as we sniff out the next leg of our trippy journey. Some Hump Day vibage:

  • The most frustrating aspect of today's syndicated column? I wrote it Monday but it wasn't syndicated until this morning. The set-up is still there (above S&P 1250) but timing is everything, eh? Either way and anyway, my hope is that Minyans benefited from the bull costume imagery on Monday.

  • In a perfect world, the tape will test--and hold--the aforementioned level and offer a defined risk set-up for the next best trade. My chief beef with that is that the world is far from perfect!

  • I came thisclose to buying some Continental (CAL) puts into the underbelly of resistance ($16) until I saw what might be reverse dandruff (also known as ffudnad esrever). When in doubt, sit it out. That's what I always say.

  • As we edge past the first half hour (I always like to allow that to pass before fingering the pulse), NYSE internals are 2:1 negative. Outside of Fannie (FNM) and Freddie (FRE), that's the single biggest fly in the bovine try.

  • I would, however, also note that Ambac (ABK) is 8% higher on earnings (a 400% gain since the July low).

  • For all ye tech bulls, NDX 1850 is newfound support and can be used as a bovine backstop as well.

  • Baidu (BIDU) is sitting near double-secret support (50- and 200-day at $325 and $320), which is also an interesting set-up. I would be wary of that gap to $300, however, if those levels break.

  • Watch American International Group (AIG) for the "reaction to news" which is always more important than the news itself.

  • I'm eyeing the QLD anew, so it's said, with a stop below the NDX level. So you know.

  • I'll be back--have a great HUMP Minyans!

Answers I Really Wanna Know... - 10:42 am

  • While NDX 1850 is nice and tight support, is that a head and shoulders formation in the QLD?

  • How much of the wild and woolly swings in crude are a function of massive derivative whippage underneath the surface?

  • If these levels are so compelling, why isn't insider buying more prevalent?

  • I mean, after topping out at $5.3 billion in February--the highest level ever, according to TrimTabs--it's been trending steadily lower since?

  • Or are insiders not expected to see the turns?

  • And why do I think of John Chambers every time we have this discussion?

  • Wouldn't a pullback--and a fourth higher low above S&P 1250--be the most bullish development today?

  • Are you watching crude $120 as a near-term toggle?

  • Should we be looking at the General Mills (GIS), Heinz (HNZ) and Campbell (CPB) of the world as they'll likely capture the commodity decline in their margins (by not passing the cost savings through to consumers)?

It's Alive! - 11:30 am

  • With the exception of some Apple (AAPL) calls and upside QLD exposure--just trading--I've been relatively quiet today as we digest yesterday's stronger-than-a-mule's-breath move.

  • Again, while I sold my trading exposure into yesterday's lift, I'm generally constructive on the tape.

  • What does that mean with regard to my stylistic approach? Buying dips rather than selling blips as long as S&P 1250 holds.

  • While there are surely mad two-sided opps in the financial space, I've put that complex on my personal restricted list for the time being. When I dabble--as I'm dabblin' now--I'm looking for four-letter freaks.

  • With a longer-term lens, I continue to believe that pharma and consumer non-durables will have a strong back half of the year on a relative basis.

  • You know what acts Punky Brewster? Visa and Mastercard. Still.

The Freak! - 12:03 pm

No, not Jevon Kearse, I'm talking about the four-letter variety! That's where my attention is focused today after scaling out of my upside exposure in the financials yesterday.

And I'll tell ya, just as I got curious looks for buying the banks on July 16th, I got equally odd looks when I sold them yesterday.

Hit it to quit it, make 'em to take 'em, move 'em or lose 'em.

That was then and this is now, we know, and there's no looking back--profitability resides in the ride ahead. In that regard, as discussed earlier on the Buzz, I'm trading from the long side in Apple (AAPL) (purely a vehicle) and the QLD (the near-term breakout above $75 potentially "works" to $80).

Click to enlarge

So you know and so it's said, I'm trading with a quick trigger finger (both ways) as I scurry to stockpile my acorns. While we could see a rally into the election, I continue to trade with an uber-tight risk leash. Proactive patience typically allows us to find the "easy" trade each day and that's my mission in the rain.


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Position in V, AAPL, QLD
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