Bears Devour New Year's Gains
Big one-day losses are back with a vengeance.
"Using the whole fist there, Doc?" --Fletch
Seems like old times, eh? The one-day wonders are back with furious vengeance as evidenced by yesterday's massive moves.
Crude down 12%.
The financials off a finski.
General Motors (GM) up 5%... oh wait, that's 19 cents.
You get the gist. After a few feel good days (and a nifty 27% rally in the S&P since November), it was déjà Boo all over again as we edge through the first full week of a brand new year.
As I'm taping Yahoo TV this morning, I wanted to toss off some morning thoughts as I jockey and juggle and jam through this struggle.
- The most important thing in yesterday's 'Ville? The introduction of "Financial Staying Power" as a catch phrase (thank you Alcoa (AA)!). This should be sticky noted to your screen for future reference and a constant reminder of the prudence and patience that is required from us all.
- Remember, there will be massively compelling opportunities on the other side of this ride. The trick to the trade is being in a position to prosper when they arrive.
- Setting stops removes emotions. As such, with discipline over conviction, I took home a small Halliburton (HAL) position with a conscious nod that a break of $20 begs exposure reduction.
- How tight is that stop? That depends on your unique risk appetite, which is why it's impossible to offer advice to a faceless audience.
- After punting my energy exposure Monday (following crude's 50% rally since December 19th), I came thisclose to buying back some USO into yesterday's 12% slider.
- My cause for pause? My stochastic indicators crossed at the top (which is a sell signal, for technical neophytes).
- I was definitely a hippie in a former life.
- Was that premature evacuation on Tuesday's late day escape from my General Electric (GE) and Goldman Sachs (GS) puts (both of which got clocked yesterday)? Yes and no.
- Yes in that they're both lower (I left money on the table) and no in that discipline has saved my arse plenty in the past. You can't have it both ways. For every risk, there is reward and vice versa.
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