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Random Thoughts: Edging Into Energy


Keep your eyes on Hallburton, USO as possible sector plays.


Editor's Note: The following was posted in real time on our premium Buzz & Banter (click for a free trial). It's being shared here for the benefit of the Minyanville community. See also Bears Devour New Year's Gains.

The Morning Dew - 9:20 am

  • The reaction to news is always more important than the news itself. Through that lens, Wal-Mart (WMT) is a focus today following its bed mess. Remember, the market is a forward-looking discounting mechanism.

  • We warned of the retail space last August ahead of the holiday season sell-off but by the time St. Nick arrived, these names traded higher. Trade the stocks, not the headlines.

  • Y'all see my vacation pics?

  • The financial news you need to know before you know you need it. The Pin Prick was first published in Minyanville in 2003. Five years (and one month) later, the bloom is coming off the rose for U.S debt.

  • After punting my energy exposure on Monday, I nibbled ever-so-slightly on some Halliburton (HAL) yesterday with a stop below $20. I almost dipped a toe back into the USO but sat on my hands as a function of the crossing (bearish) stochastics. With Texas Tea off another 3% pre-opening (15% in two days), I may dip a toe near the opening.

  • A potential cause for pause? Reaction to news. I woulda thunk crude would be higher given the escalation in the Middle East.

  • And yes, I think financials are an intuitive "hedge" against long energy exposure. I foresee several scenarios where crude pops and piggies drop but I'm not seeing a situation where crude dumps and banks jump.

  • All... morning... long.

  • "If Germany is having trouble floating a euro 6 bil bond issue, what is the possibility, given the supply coming this year and next, that happens to a Treasury auction at some point? What would the implications be for yields if the US Treasury had a failed auction? The next financial crisis?" --Minyan Cheesehead Mike

  • Good luck Minyans. Stand tall and be the ball.

Gate Sniffage - 10:05 am

  • Talk about the path of maximum frustration. Wal-Mart (WMT) (-9%) was considered best in breed and Sears (SHLD) (+20%) was viewed as the most vulnerable. How's that pairs trade doing today?

  • Citigroup (C) and Bank America (BAC) (giggling green) were the first stocks that jumped out and bit me on the ankle today.

  • Well the rain exploded with a mighty crash as we fell into the sun. And the first one said to the second one there, I hope you're having fun...

  • NYSE internals are 2:1 negative. See it, Yo, and balance it with the rest of our tells.

  • We're barely a week into the new year. Breathe, balance and remember that "Financial Staying Power" will likely emerge as the catch phrase of 2009.

Red Bull? - 10:41 am

  • Get used to these headlines, Minyans, for they'll be around for a while. Indeed, it's gonna be a good year to be a lawyer.

  • The second bird gets the squirm? I dipped a toe into the USO on the pullback (-3%)from the opening Snapper. Maybe cute but it was top of mind and when I read Coop's Buzz, I pulled the trigger.

  • "Catching a fraud is practically impossible. There's only so much due diligence you can do." Perhaps, but that likely won't stem the migration of clients and customers away from the fund of funds business.

  • I'm going to physical therapy tonight for the first time since December 2nd. Anyone wanna venture a guess as to what the Doc will say when I tell him I went skiing?

  • Halliburton (HAL) continues to trade drier than my eyes the first time I watched E.T. I'm still there (not huge) with a stop below $20.

  • S&P 885 is a level to watch. Why? Trendline Yo.

  • Our President-to-Be will step on stage at 11:00 and that'll certainly move the tape. Keep it on your radar, particularly given Pep's insight yesterday. If anticipation is keeping a bid to this tape, realization could trigger a "sell the news." I'm not positioned that way but it's worthy of a nose scrunch as we together edge ahead.

  • As always, I hope this finds you well.

He Walks Walks Walks and He Pecks Pecks Pecks - 10:54 am

Purely a follow-up and most certainly not advice but...

I nibbled on some Goldman Sachs (GS) puts as a hedge against my Halliburton (HAL) and USO to set up the pairs trade we've been noodling (energy vs. financials). Small potatoes, fer sure, but directionally that's what I'm thinking as we edge into the '09 dew.


Position in HAL, GS, USO

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

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