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Random Thoughts: Metals and Energy Like Peas and Carrots

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When energy stocks are slippy, eyes immediately gravitate to the metal arena.

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  • The chatter I'm picking up from the smarter folks I speak with are somewhat skeptical of Citigroup's (C) capital raise (it's an expensive way to do it and dilutive to '08 EPS).

  • It sorta reminds me of Countrywide's (CFC) infusion by Bank America (BAC). Good for a pop but not the last stop.

  • I'm viewing the long side as "make 'em to take 'em" and the short side, into strength, as better risk reward set-ups, at least until the trend of lower highs and lower lows gets Punk'd.

  • We noted the relative lethargy in the energy patch out of this morning's gate on the Buzz. We've long discussed the notion that lower--not higher--crude could be a precursor to equity slippage. That's not a one-day wonder but it's most certainly something to monitor.

  • Jen-Nay! When I see slippy energy stocks, my eyes immediately gravitate to the metal arena. They sorta trade together like peas and carrots.

  • I've gotten stopped before---prom night, Jessica Alba at the Hard Rock pool (long story, don't ask), yesterday (and again this morning) in Citigroup-but that's the price of doing business and entirely better than the alternative. The definition of an investment should never be a trade gone awry.

  • There's something very unsettling about walking into my kitchen in the morning and finding M&M's scattered all over the floor. I can only imagine how many of them never made it there.

  • Through the lens of asset class deflation vs. dollar devaluation, commodities are equities are fetzer valves are ball bearings. Simply put, I don't know if the fragile stock market can withstand sustained dollar liftage (DXY + 50 bips).

  • I will also say this. If the banks can't hold their bid today, we've got serious whoosh potential. We knew we would get a probe-and indeed, we got one-the trillion dollar question becomes whether they can hold.

  • Pork bellies, which are used to make bacon, which you might find in a bacon, lettuce and tomato sandwich.

  • Goldman (GS) and Google (GOOG), when trading in tandem, offer a fabu trading tell duopoly.

  • Watch pharma and consumer non-durables. They seem a lot less crowded than banks, beta, energy and metals.

  • The word "tenuous" keeps popping into my crowded keppe.

  • And "kumquat." That word always makes me smile for some reason.

  • There's no crying in baseball and there's no lying in Minyanville. So...while I'm not thrilled with how I traded Citigroup of late, I will continue to share the process-win, lose or draw-with hopes that it adds value at some, selfless level.

  • Even a broken clock is right twice a day and while I've been spun around on some financial longs, Schering Plough (SGP) (which I added yesterday) is quietly 3% higher. $28 is ripcord support and the other side of $30 would be a nice hug for this drug.

  • NYSE internals are 2:1 positive. That's the good news. The VXO (-6%), lower highs (everywhere) and relative lethargy in the financials (they had every excuse to rip higher given the news and their oversold nature) offers cause for pause.

  • Perhaps I'm frustrated, maybe I'm tired (I was, after all, getting me arse kick-boxed this morning at 6:00 AM) but the tape feels very fragile to these old eyes.

  • The next step question is, IF it fails, how long will it be before we see another round of "surprise" intervention. I'm not smart enough to know that but I'm seasoned enough to respect it.

  • Don't guess, Minyans, trade. And if you're not mandated to do so, there are likely better set-ups than the juncture we're currently in.

  • Remember, there are a TON of fund managers out there who are trading reactively. If the tape trades higher, they'll chase 'em. If it sells off, they'll puke 'em. You don't have to agree with it, you simply have to see it.

  • I don't know about you but I, for one, am ready to belly up at Festivus. For the BBQ, bands and brotherhood, of course. T-minus ten days and counting…


R.P.


Holiday Festivus is here! Come join us and support the Ruby Peck Foundation For Children's Education at an old-fashioned Southern-style hoe-down in the heart of New York City on December 7th. Click the image below to learn more!

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