Stress Tests Not Actually All That Stressful

Hello from Reality, to which I’ve returned after spending 3 days (4 TV days for those emailing concern) in Las Vegas. We went to Sin City for the best reasons. First, it was life-long pal Oly’s wife’s birthday. Second, I was 50/50 to go full McMurphy if I didn’t get some time off, and finally, I wanted to compare the activity to the death-pall hanging over the place when I was there last October for Mrs. Jeffmacke’s big day.

For the record, I found the activity level slightly, very slightly, higher than 6 months ago. I actually sat on the plane next to a guy from McDonald’s (MCD) who was going down on a company visit (not full corporate, chain owners, but still a good sign). A fan-freaking-tastic time was had by all, right up until I landed in the sleet (sleet?!) at JFK, then pulled up the quotes for the day.

It would seem reality caught up with our rally. Here’s what I’m watching as I try to get my feet back under me and shake off vacation:
 

• I realize it’s yesterday’s news, but TiVo’s (TIVO) decision to sell information on ad-skipping is going to fast forward the demise of the ad industry as we know it. To have a DVR and the second-worst attention span of anyone I’ve ever met is to realize that nobody with the option to skip past ads watches them. No one. Glad I’m out of Google (GOOG) but, if I had any squash, I’d have shorted the stock after earnings. Ads are dead, people. Don’t argue with me but, instead, use that energy to rethink a way to promote products and get rich.
  
  
• Caterpillar (CAT) just issued guidance which more or less confirmed to bogality (not a word but more elegant sounding than “bogusness”) of the Chinese stimulus and instant farmland turnaround in general. Regardless, Caterpillar has turned green for the day. Makes you go “hmmm,” given the 50% forecast cut.
  
  
• I'm reading a lot of pop-press “explanations” that banks sold off on concerns regarding the stress test. Forgive me for saying so, but &@$!*#. The point of the government stress-testing banks in the process of failing wasn’t to catalyze more failure. More to the trading point: Yesterday’s action was why I always take profits in outsized gains, even when it’s annoying to miss follow-through.
  
  Speaking personally, had I still been long full positions in, say, Wells Fargo (WFC), Goldman Sachs (GS) or pretty much anything we’ve been chatting about in the last month and saw where they closed yesterday, I would have redefined “air rage” in an extremely verbal way. It’s worth noting that both Wells Fargo and Goldman Sachs are acting like champions today - meaning, being in flight may have kept me from overtrading the bailing.
  
  
• For the record, the person with the shortest attention span on earth is Todd-O. While we’re Cliff Clavin-ing, losses feeling worse than gains catalyzing happiness is actually a psychological norm; one that both Vegas and Wall Street are largely constructed to offset (think colored chips, rather than actual money, and phrases like “it’s not a real loss until you sell” (NB: Yes, it is).
  
  
• Which brings up a note to the Schwabs (SCHW) of the world: You're advertising half your business with this “relax; buy and hold” garbage. Advising folks to hold full positions in stocks moving 50% higher in a month is as reckless and asinine as advising them to ignore 50% drops. There’s ample space between responsible financial management and “day-trading.”
   

With that, I’m off to pore over more earnings, get my stitches removed, and mull over what to do with my assorted longs, shorts and heaps of dry powder. The early inclination is to avoid buying day one of a long overdue sell-off.

Appropriately, since I just got back from Vegas, I took off the 2x short S&P 500 ETF (SDS), the one trade I did, taking the gains this morning once the S&P 500 went green. Bragging after the fact? Hardly. If I were doing that I’d claim I’d bought Caterpillar huge.
 

• Bonus Bullet: Don’t get that freaked out by earnings erosion later in the reporting season. “The Book” says Alcoa (AA) reports first, and is horrible, then the best numbers come in for about a week (Goldman, etc.). The Book also says hit on 15 against a face card; I’m not saying the book always works, just that weaker reports are to be expected at this point.