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Random Thoughts: Breach of Crude $60 a False Breakdown?


Level may be a precursor to fresh S&P lows.


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

The Hump Day Cometh! - 10:13 am

Good morning and welcome back to the flickering pack. If ever a Wednesday felt like a Friday, it is today. The shelf-life on energy and enthusiasm is diminishing on Wall Street as anxiety percolates, ranks thin and returns suffer.

As discussed this morning, there is another side to this trade. The onus is on us, as Minyans, to find our way through this fray and scratch a path to the other side. It's an arduous process but one we must endure. The other side of that ride--failure--simply isn't an option.

Some top line vibes as we kick the dirt from our cleats:

  • I Buzzed yesterday on my way out the door that my inclination was to buy Goldman (GS) (with a $60-something handle) and Google (GOOG) (near $300) for a trade. Both bounced in kind although I wasn't here to see it happen. Those stocks at those levels remain on my radar.

  • I did, however, nibble anew on some Dryships (DRYS) near $10 (do I know how to pick 'em or what?). The stock is slippy anew this morning and I'm still there.

  • Not to be an Eddie Mush but Jeff "Coops DeVille" Cooper has had a pretty hot hand of late. When he publishes a report that says "Close to a Big Rally," I pay attention.

  • I noted earlier this week that a break of crude $60 could be a precursor to fresh lows in the S&P. While that's certainly within the probability spectrum, I can't shake the sense that this is a bear trap false breakdown in Texas Tea.

  • Early morning eyes include nosty breadth (4:1 negative on the big board), green piggies (Bank of America (BAC), Citigroup (C), Wells Fargo (WFC)), a marginally higher buck and a very reactive environment. Remember, Minyans, the buyers are higher and the sellers are lower.

  • Lemme get this posted Yo, I'll be back in two shakes of a lamb shank. As always, hit 'em hard and stay true to you.

Answers I Really Wanna Know... - 10:47 am

  • Merrill's John Thain sees an "epic" global slowdown (dated November 11th, 2008)?

  • Is that anything like a "prolonged period of socioeconomic malaise" (dated August 16, 2006)?

  • Is the IEA really warning of a supply crunch in crude?

  • Is that, coupled with my "gut feel" that the breach of crude $60 is a false breakdown, enough to garner a toe dip back into the energy space? (Yes.)

  • Not to mention the muted geopolitical risk premium?

  • I mean seriously, given the global acrimony, where would WOPR be in Falken's Maze?

  • Why is it that when I read Cooper's last Buzz thinking of a master square, I thought of this?

  • If folks on Wall Street aren't paid--more sensibly, but still--who will navigate the financial construct?

  • Is there anyone in the free market world that doesn't have a stop set on the other side of S&P 840?

  • With E-Day on December 2nd, will the will the grass be greener and the wine taste sweeter at the December 4th Festivus?

  • Eddie Mush Who?

  • Can credibility return to the system before we're allowed to see what's been stuffed into the Federal Reserve's balance sheet?

  • It took the CRB four and a half years to go from 252 to 478 but only four months to go from 478 to 252? (Thanks Minyan Dougie.)

  • Why, prey tell, is my gut warming up to the buy side when oh-so-many tells are pointed lower?


Did you know the doors to Festivus 2008 are officially open? Have you yet locked your spot for the critter trot as last year's soiree sold out? (This is our annual event to commingle our professors, partners and Minyans while chowing down and listening to live music. The very best part? It's for the kids in the good name of my grandfather.)

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