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Randoms: General Electric, Smoke or Fire?

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The industrial giant fans flames of concern.

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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.


Pop & Drop? - 9:42 am


With Minyan Karaoke in the rear-view--quick snaps to Pepe Depew for taking home the trophy--we turn our attention to the Hump Day jump.

With the world dressed in green, the "easy" trade may be the first fade (lower) particularly with General Electric (GE) and Google (GOOG) heavy, man. The former storm is of particular note given the action in the GE Credit Corp CDS, which have been standing out in credit circles.

I've faded (sold) the opening for an uber-quick schnitzel and will trail my stops tightly on this coming probe. And yes, Minyans, it's coming. From there, we'll take a fresh look.

I'll be back.


Rusty Gate Sniffage! - 10:14 am

  • As discussed in the last Buzz, I viewed the first fade as the "easy" trade. My chosen vehicles were SPY puts and Google (GOOG) puts, the first as a market proxy and the latter as a function of eyes (was red pre-market despite the green seas).

  • For purposes of full disclosure and forthright discussion, I already booked 3/4 of the Google and set my initial stop on the SPY puts above my entry (S&P +20ish).

  • One of the primary catalysts for pulling the trade trigger was General Electric (GE), despite the fact I'm not involved. With the stock off another 10%, wobbly wheels--at least initially--made intuitive sense for the market at large.

  • If you're a reflection of the company you keep, does weakness in GE really come as a shocker considering their relationship with the Citi (C) that often weeps?

  • NYSE internals are 3:1 positive and Europe is holding gains. That's the good news.

  • GE melting, JPMorgan (JPM) and Wells Fargo (WFC) flipping the crimson switch, Google ($10 downside reversal) is the not-so-hot trot.

  • See both sides and await an advantageous quack count when the ducks align.

  • Yes, Minyan Karaoke is coming soon to a screen near you and no, it's not what one would call "pretty." It was, however, fertile ground for wide smiles, which is just what the doctor ordered during these most difficult days.

  • Speaking of Minyan Initiatives, all MUR's shoulda gotten correspondance already. IF you STILL didn't get the initial note, please ping me so I can 1) force intern Jarred to eat 5 (five) M&M's for each Ambassador and 2) make it right, as we like to do in these parts.

  • Pepe tells me that recapturing S&P 705 by Friday's close is mission critical for the Matador Crowd. I'll leave the details to the Karaoke King himself but I wanted to toss it on ye radar.

  • Good luck today, my friends, and keep your eyes wide open. Today is gonna see alotta Oliver Twists.


The Ostrich Position - 11:15 am

Please direct your attention to the article Investors Assume the "Ostrich Position".

As an aside, and before I began the tangent linked above, please know that I covered my initial fades (short sales in Google (GOOG) and SPY) into the dippage with an eye towards the "defense" of General Electric, either through corporate communication or government inclination. Both were pure trades and trades, as they say, are meant to be taken.


Google Class War and See What You Find! - 12:13 am


In particular, I'm concerned that one of two things must happen in the years ahead. Either the US dollar must further devalue, as it has to the tune of 25% since 2002, or asset classes will deflate in sync. I'm unsure if these are mutually exclusive events but we'll likely jockey between the two as we figure it out. I will also offer that the greenback will serve as a proxy of isolationism as America delicately dances through a difficult war and sets protectionist policies in place.

As we edge through the new world order, our economic ranks and societal structure will continue to shift. While last year's election brought the dichotomy between blue states and red states to bear, a more disturbing conundrum has evolved that has little to do with party lines or political affiliations.

As we digest initiatives of eminent domain, understand the motivation of the new bankruptcy laws and come to accept that our social security and pension programs are inherently flawed, the growing chasm between the "haves" and "have nots" has become increasingly apparent. The middle class is steadily eroding as we balance the lifestyles of the rich and a struggle to exist."

  • I just said to Pep "IF this tape turns lower, Google (GOOG) is down $20." I offer that based solely on the price action and in the interest of full disclosure--AS ALWAYS--I nibbled anew on a Todd-lot of puts with a tight, trailing stop.

  • You can do anything as long as you're disciplined (and please note that, given the swings, I may well be stopped out by the time you read this).

  • Man, I'm juggling more balls than a prepubescent Larry Bird. I'll be back.


Two Ways To Play! - 12:57 pm

With all due respect to Trading Ninja Terry Woo, I'm gonna borrow his by-line for this Buzz. There are indeed two ways to play and today's tape is a textbook example of that.

Consider this--the market has every conceivable reason to reverse lower and crack hard. General Electric (GE) is screaming bow wow wow yippee yo yippee yikes, JP Morgan (JPM) is off a finski (5%) Wells Fargo (WFC) is down a dime (10%) and Google (GOOG) is gurgling.

YET, the S&P futures are holding a steady, not entirely natural bid up 20 handles. It's almost as if someone is attempting to artificially support the system. That used to be gibberish--conspiratorial, grassy knoll stuff--but not anymore, not in this world.

Indeed, this market isn't free, Willy. Sorta sad. No, actually, it's very sad.

Be that as it may, it is what it is and we'll do what we must. What was once an empirical assimilation of four primary metrics--fundies, technicals, structural and psychology--has morphed into a great big game of chicken, with cumulative imbalances on one side and government intervention on the other.

SEE the binary nature of the our current juncture.

RESPECT that there are forces in play that are much bigger than us.

TRUST that Financial Staying Power will allow you to capture the flag on the other side of this ride.

And SMILE, Minyans, for we've only got one go at this journey of life.


R.P.

Position in GOOG

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 todd@minyanville.com.

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.

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