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Random Thoughts: Election Not a Market Cure-All


The thrill is gone. What now?


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 One Step Closer to the Future.

Eye, Eye, Eye, Eye, Eye!!!! - 10:41 am

  • It's always terrific to hear from Mr. Practical and his missive today is a must read for all Minyans.

  • Given the S&P has rallied almost 20% in six sessions heading into an event, "sell the news" potential exists. S&P 1005 remains relatively tight and defined risk for Boo's crew should they choose to take a downside swipe.

  • The SDS--Proshares Ultrashort S&P 500--is another way to skin that cat with a stop set below $78.

  • Social mood and risk appetites shape financial markets. There is a palpable societal shift underway and that must be respected. I spoke about this in my morning missive and I'll share a few more thoughts on the topic:

    • Markets are forward-looking and the 20% move off the lows was the electoral clarity trade.

    • Moving forward, any rally would be a combination of hope and performance anxiety. While the former isn't a viable investment vehicle, the latter matter will percolate if they can't get 'em down.

    • Credit remains problematic despite many of the symptoms being masked.

    • Stocks are thermometers but credit is the backbone and while the mood has... how shall we say, lightened?... you can't walk without vertebrae.

  • Not to be "that guy" but I remain wary of an uptick in geopolitical angst while the current administration is in office.

  • The tone and tenor of the drillers has seemingly shifted. Keep that on ye radar through the lens of the potential stemming of forced selling.

  • This (current) Snapper attempt was the "easy" trade. From here, we'll keep one eye on our level (S&P 1005), another on the dollar (-1%), another on breadth (3:2 negative), another on our super-tell duopoly (Goldman (GS) and Google (GOOG), both lower) and another on YOU. Yeah, I'm watching you Fokker.

  • I'll be back.

Engine Room, More Scream! - 12:25 pm

Holy frick, does anyone else feel like a moth in a light bulb factory? There is a LOT going on as we collectively digest the new world order. Given my A.D.D.-ness and time management skills (or lack thereof), I'm gonna saisir une paire des pinces et d'une lampe à souder and get Random for y'all.

  • I said to Pep this morning "Everyone is reactive, waiting for the market to move to take their cue." That's a recipe for whippage, my friends, so map your plan before playing with this wild child.

  • "The treasury futures markets are a critical component of the global finance system and they're becoming more--not less--dysfunctional." --Minyan Alan, a futures broker with 25 years experience.

  • What am I doing? Less, which is partially a function of having oh-so-many things on my plate and learning through the years, the hard way, that playing blind man's bluff is little baby's game.

  • I'm not opposed to using a trailing stop on my Wal-Mart puts despite it being a partial (starter) position. The mechanics of the swing trump the results of the at-bat regardless of size.

  • The people have spoken and they want change. That's the easy part! Now comes the entirely more difficult discussion of execution. Remember, the cumulative imbalances have been building since the tech bubble (eight years--isn't it ironic?) and there are no simple solutions or magic pills.

  • Put a gun to my head and I'd be bearish but given there's no gun (I can trade when I want, rather than when I have to), I'm content to pick my spots as we find our way.

  • I've been eying those SDS (ultrashort S&P) all day but I didn't pull the trigger. What is it they say about opportunities are easier made up than losses?

  • Green beans in the Red Sea include Genentech (DNA), 3M (MMM), Lennar (LEN), Pulte Homes (PHM) Yahoo (YHOO) (+7%--watch this!) and Research in Motion (RIMM).

  • OK Sisyphus, back to the inbox. I'll see YOU in a bit--let's be careful out there as significant risks abound.


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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