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Random Thoughts: And Away We Go!


3Q opens up with a bang.


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

Quick Answers I Really Wanna Know... - 8:54 am

  • Can you imagine what foreclosure would look like?

  • If the financials are going to bounce, isn't today the day?

  • After all, between 1) fund managers purging exposure into quarter-end, 2) Turnaround Tuesday and 3) the relative proximity to BKX 60, isn't this Snapper's best shot at redemption?

  • If Wachovia (WB), JP Morgan (JPM), Lehman Brothers (LEH) and Fannie Mae (FNM) traded as funky as they did yesterday with the futures higher most of the session, how the heck would they trade if the worm really turns?

  • Y'all keeping an eye on that Google (GOOG) gap between $525 and $450?

  • Was the single most disturbing action yesterday the fact that the VXO was down 4%?

  • Are Minyans really surprised that the Pentagon is now warning of an Israeli attack on Iran?

  • Does anyone else wonder what Bonnie Tyler has up her sleeve today?

Gate Sniffage! - 9:39 am

  • "We don't have time to f*** around, they're fueling their birds!"

  • File this under "You can learn a lot just by watching" but Lehman Brothers (LEH) and American Express (AXP) are both bucking the early trend. I scooped an odd lot of the former (with a stop on the other side of the flat line) and covered the latter yesterday. So, I've got that going for me.

  • What else do I have going for me? Wachovia (WB) calls, in size (for me). I played this pup last week into the FOMC and got bailed out with a 9% BKX rally into the Wednesday highs.

  • It may be too cute to expect the same but my sense is that if ever there were a day for a bank rally, today would be it. If they cant--and that's a potential outcome--it will speak volumes about looming systemic risk.

  • Talk about dancing between the elephants!

  • I'm still there in Google (GOOG) on the short side--albeit small--as I "need" that as a hedge against my longs. Given the aforementioned gap, it's my go-to name for short side exposure.

  • Slammed--lemme hop. As always, I hope this finds you well.

The Good, the Bad and the Fugly! - 10:13 am

There's a LOT going on--I mean, I can juggle the struggle with the best of 'em but this is N-V-T-S nuts. I learned a long time ago that when overwhelmed, it pays to take a step back and departmentalize. With that in mind, I'll try to do just that. Ohm, peace. Ohm, peace.

The Good:

The action in the financials. We mused yesterday and today that quarter-end may have created artificial supply in the sector. That's not to say they don't have real issues--they surely do--but their destination pales in comparison to the path that we take to get there. BKX 60 remains the first level of lore for the piggies so sore. Suffice to say that given the fragility of the collective psychology, this group needs to hold today.

Runner-Up: ISM Manufacturing showing a surprise uptick. I don't put much credence in the any single economic number (or the BLS in general) but bad news (that isn't horrific) is bullish in oversold tapes just as good news (that isn't great) is bearish in overbought tape. Outright "good" news, as this will be spun, helps Hoofy's case today.

The Bad:

Energy prices continue higher after holding (previous resistance and current support) at $140. The uncertainty in the Middle East isn't bullish no matter how you slice it. While I continue to feel that "big picture, from 40,000 feet" precipitously lower crude prices (through the lens of deflation) will be extremely problematic for equities, there's no denying that higher prices still will drag on an already cash-strapped consumer.

Click to enlarge

The Ugly:

Market breadth was a stunning 5:1 negative this morning and despite the rally attempt, remains skewed 2:1 Boo. In a futures led market, it's quite possible that the futures will lead the cash markets. Still, the market internals shape up, the tape will be vulnerable to trap doors.

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In Memoriam - 10:23 am

Minyanville would like to take a moment to express our sincere condolences to the entire Macke family on the passing of Jeff's father.

Ken Macke was a visonary in the retail industry, a loving dad and a good man. He battled Parkinson's disease for years before finally succombing on Sunday. Jeff is currently in Napa tending to family business, as he should be, and we're sending alotta white light from our family to his.

We often say in Minyanville that it should never take something bad to realize you've got it good. In memory of Ken, take some time to hug your child, call your mother or offer a random act of kindness to a stranger. A little humanity goes quite a long way in the current world.


Answers I Really Wanna Know... - 11:12 am

  • How bad do you want it?

  • The tape is lower and the financials act fabu. The market rallies and supply emerges in the financials. Hard enough for ya?

  • Did anyone (away from Minyan Jeffrey Herrman) notice that the Russell pulled back to (and closed yesterday at) a precisely .618 Fibonacci retracement of the May low to the June high?

  • Who had a bigger collection of shoes--Imelda Marcos, Celine Dion or the modern day market?

  • Who the heck goes to kick-boxing at 6 am with a torn meniscus?

  • Doesn't it feel like every single session is the most important day in market history?

  • Are too many bears waiting for textbook capitulation?

  • Is textbook capitulation possible in the era of market socialization?

  • Y'all see the stealth Snapper in the big beta complex?

  • Will market internals--which are thus far not confirming the upside--be the last tell to turn the corner?

  • How bout a meaty Minyanville pat on the back to Team Minyanland and busting through 150,000 registrations yesterday?

Aw Jeez, Here We Go Again! - 12:59 pm

Have I mentioned how much I adore Tuesdays? 6:00 AM kick-boxing, a coupla live TV hits, my syndicated MarketWatch column deadline (gonna be a doozy), our requisite Minyanville content, management meetings and, just for good measure, a kick to the groin of my P&L!

What to do? Road trip!

OK, I'm dreaming, although the thought of stepping away from the fray sure sounds good right about now. In the interim, I'm gonna suck it up and stick it out right alongside ye faithful. Here's what I'm thinking for better or for worse.

  • This morning, when the piggies were green, I pinged "my brother" on Instant Message and said "Too easy? They may have to give 'em a hard test lower before they get 'em going." I could be dreaming of Jeannie (again) but this mess certainly qualifies as such.

  • Do the tells support such a Snapper? Nope--banks, brokers and breadth are all urging caution and it's SO thin (how thin is it?), you can almost hear a bonus drop. That works both ways, mind you--are you listening Hank?--so keep your right hand up regardless of which way your stacking your CHiPs.

  • I am, so you know, buying--not selling--into this muck. I've still got some Google (GOOG) short against my exposure but I'm picking (not grinning) and trading (not sinning). I've been keeping alotta dry powder and I'm strategically deploying some for a pure trade against the backdrop of some serious big picture concerns.

  • What is it they say about always wanting to lose money on a hedge?

  • Perhaps I'm not trading as disciplined as I should be but it's getting awfully doom and gloomy out there. In the absence of an outright crash, this is the type of tussle I like to take the other side of (please note that my exposure is through options thus, if we do crash, it'll hurt but it won't put me out of business.

  • Heap up Minyans. Profitability begins within. As always, I hope this finds you well.

  • Keep an eye on Yahoo (YHOO) as it's filling the gap created by the first Microsoft (MSFT) bid. As discussed, I'm nibbling on some Yahoo calls into that level as I'm a believer in the franchise value and an ability (internally or externally) to monetize eyeballs in the next-generation digital landscape.


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