Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Random Thoughts: A Tale of Two Tapes?


The FOMC statement at 2:15 is today's toggle.


Editor's Note: The following was posted in real time on our premium Buzz & Banter (click for a free trial). It's being shared here for the benefit of the Minyanville community. See also How Realistic is a North American Currency?

In my Buzz yesterday, I stated "Into the close? I think higher, as a function of the underlying bid in the banks, the 2:1 positive breadth and the pink dollar. The question will be whether they can mount S&P 855, which we circled this morning as a level of lore."

When you couple that with this post
, which discussed trading the financials from the long side, and the Monday Morning Quarterback "Can Banks Lead The Tape Higher for a Trade?", I enter today's center with a spate of Bank America (BAC) and a snivlet of S&P (via the SSO).

Nothing crazy, in terms of sizing, but directionally consistent with our theme this week. With that as a context, let's jump right in:

  • FOMC days are traditionally a tale of two tapes with 2:15 EST serving as a toggle. With Winky Wright in mind (jab jab!), I'll make some sales into the opening jig and watch the tenor of the tape (breadth, banks, beta) into any subsequent retest. I do believe this trade has room but discipline dictates taking our journey one step at a time.

  • Do you remember in Ojai '05 when we offered that "A complex maze of derivatives has tied together the balance sheets of the world's largest organizations. With the emergence of bearded financials such as General Motors (GM), General Electric (GE) and Ford (F)-all of which have considerable finance arms-it's quite probable that a ripple in Fannie Mae (FNM) or JP Morgan (JPM) will have an exponential impact across a wide array of sectors and industries?"

  • The one stock mentioned above that continues to cling to Bar Mitzvah status is General Electric, which was put on negative watch by Moody's last night. Minyans know that this stock has been on our witch, er, watch list for some time so keep it front and center. The reaction to news is always more important than the news itself.

  • That, coupled with the IMF prediction (at 9:00 AM) that it sees losses from toxic U.S. assets totaling $2.2 trillion, while lowering 2009 global growth estimates from 2.2% (prior) to 0.5%, is the does of reality splashed on Hoofy's happy morning mug.

  • How I reconcile my perceived window of opportunity (after January 20 and before the bloom fades on the Rose Garden in March or April) with more sobering assimilations such as the one Professor Bennet Sedacca scribed? With discipline and a tight risk leash that I'll tether out when I perceive an advantageous risk-reward.

  • Yes, my weekly syndicated missive pushes some sensitive buttons, as evidenced by the responses on the MarketWatch message boards. My response to their responses? Same as it ever was. Successful thought provocation requires keeping the carrot just far enough in front of our faces so we can smell it but not quite taste it.

  • On a housekeeping note, I've got a 10:30 meld this morning that should keep me away from the fray for about an hour. Lest you think I'm slacking, please know that all these meetings are designed to drastically improve the Minyanville experience. I'll be strapped back in by the time my lunch arrives but communication is the key to all successful relationships.

  • Happy Hump and hit 'em hard, Minyans, profitability begins within.


< Previous
  • 1
Next >
Positions in BAC, SSO

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

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.

Featured Videos