Random Thoughts: Be Careful for What You Wish
Bulls near the end of their rope.
Editor's Note: The following content was posted in real time on this morning's Buzz & Banter. It is being reproduced here for the benefit of the Minyanville Community.
Gate Sniffage! - 9:46 am
- I've used the 3% lower opening in the DBA (agricultural ETF) to sell my remaining puts from yesterday. Jab Jab Jab...
- I also double dipped my chip, or Google (GOOG) as the case may be, after sidestepping the elevator ride lower yesterday. $427 is a level that works back to 2005 and that's about as tight as you'll get with a stock such as this.
- The semis act snazzy, which fits our "you can learn a lot just by watching" methodology.
- Goldman (GS), Bear (BSC), Lehman (LEH), Bank America (BAC), JP Morgan (JPM), Morgan Stanley (MS), Target (TGT)...
- Breadth is bunk, yet again, although I wanna take a fresh read after the first half hour passes.
- Where ya going William Wallace? "I'm going to pick a fight..."
- Good luck Minyans, let's end this week with some serious jingle in our jeans!
Do the Jitterbug. Do the Jitterbug... - 10:27 am
Orange Mocha Frappacino! I hear ya, Derek, there's gotta be more to life than being really, really, really, really, whipped around! Be that as it may, and whatever that may be, this is what I'm thinking as we edge pass the first hour of our Freaky Friday:
Hit it to quit it! I sold 25% of my Google (GOOG) position into this thrust higher in the interest of pure discipline. Not sure if that was the "easy" trade but I'm keeping a tight leash on the leaves.
- I'm getting alotta "WTF?" instant messages regarding the lift in the financials. That tells me that the path of maximum frustration may be higher for the piggies, at least for a trade.
- S&P 1310 (former support, current resistance) will be the first test for this minxy pest. Meanwhile the DJIA is hugging the January lows like a blankie.
- Schering Plough (SGP) is a teenager again, which has been "money" as an entry point. What I've gotta do is balance my current Winky mindset against the potential to capture some longer-term opportunities.
- Make no mistake, two-sided risk remains for this tape. Respect--don't defer--to the price action and trade to win, never trade "not to lose." Above all, don't let the fear of missing dominate your mindset. It used to be that folks pined to keep up with the Dow Joneses. That sword most certainly swings both ways.
- Aye, fight and you may die. Run, and you'll live... at least a while. And dying in your beds, many years from now, would you be willin' to trade ALL the days, from this day to that, for one chance, just one chance, to come back here and tell our enemies that they may take our lives, but they'll never take... OUR FREEDOM!
Knock Three Times on the Celing if You're Minxy! - 11:14 am
In the interest of full disclosure and abject honesty, I took my trade in Google (GOOG) as the stock probed $440. If we pop through S&P resistance, I can always re-initiate my risk if I so choose. Jab Jab...
Market breadth? Flatter than a sat on hat, both for the S&P and the Nazz.
That's also how I plan to go home position wise today, a few longer-term situations aside.
Merrill (MER) is the one broker that didn't get jiggy this morning. That tidbit may prove useful if we flip the switch and bait the witch. $47.50 (previous Jan lows) is defined risk for Boo's crew should they wanna mix it up.
Banana Peel Alert! - 11:56 am
Heads up, Minyans, it's feeling particularly slippy out there right now. The first rally got alotta folks excited and, in the process, likely caused some shorts to cover up. Now, with Goldman (GS) and Google (GOOG) flipping the Red Dye switch in synch, noses are starting to scrunch.
If we trade off into the weekend, the post-script will seem obvious with the benefit of hindsight. Bad economic numbers. A rally attempt that was unconfirmed by breadth, failing directly at the January lows (S&P and BKX) and confirmed by new lows in the DJIA. That's a recipe for weekend worry unless, of course, you're trading tight and treading light.
There's alotta trading left in the session so keep that right hand up as we find our way.
And maintain perspective, Yo, seeing where we stand in the broader cycle.
Blind Faith - 12:57 pm
Hoofy just limped into my office, pulled a chair next to my desk and gave me that look. "Toddo, I'm near the end and I just ain't got the time," he said as he watched the price action on my eight screens, "I'm wasted and I can't find my way home."
I hear ya boss, these are strange days indeed, a never-ending adventure that history will one day watch with wide-eyed wonderment. I talk about this with Mr. Practical daily, marveling how unique our journey is and reflecting on our roles are in the process. I will say this, and it applies across the board: You really gotta want it.
As we edge over the final Hump of this freaky week, I offer the following thoughts in no particular order:
- No, your screen isn't broken--the dollar is green. Hey, even a broken clock is right twice a day! I will say, however, that those who view the dollar demise as a downside catalyst should be careful for what they wish if and when the greenback gets grabby.
Why? Through the lens of asset class deflation vs. dollar devaluation, you can make the case that a stronger dollar will be bearish for equities. In fact, the action in stocks given the weaker dollar may very well be a bearish divergence. I offer this purely as an observation rather than with directional inclination.
Some of the big themes in this morning's papers, assigning reason to yesterday's downside rhyme, was the reduction in risk appetites, shifting social mood and both voluntary and involuntary thrift. This should be familiar fare for ye faithful by now.
I'm planning on hitting the hardwood tonight with a flattish book outside some individual situations. Make 'em to take and and hit it to quit it. It's not for everyone, I know, but I'll always be honest with how I'm hanging.
And finally, in the interest of keeping it real, I leave you with some metaphorical thoughts:
Faith is a bridge.
It is what it is.
As always, Minyans, I hope this finds you well.
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 firstname.lastname@example.org.
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