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Random Thoughts: Defined Risk for Brave Bulls


Given all the headwinds and crosscurrents, Citigroup is a decent psychology proxy for the financials.

  • Given all the headwinds and crosscurrents, Citigroup (C) is a decent psychology proxy for the financials. $29.60 is the level there, so you know (defined risk for brave bovine), just as BKX 90ish is a level of lore for the broader banks (BKX 88 is the intra-day low).

  • Goldman (GS), typically the bellwether of the bunch, will trade with a "stock-specific" agenda ahead of earnings this week (widely expected to be an upside blowout). I sense that there will be some witch-hunts at those hallowed halls but that's not near-term business.

  • All those warrant caution but I would caution against a hard-line stance either way. My bets, as discussed, are all quite tight, depending on the set-up, and flexible, like Olivia Newton John in Xanadu.

  • You call that a Nor'easter?

  • The Following Buzz Took Place at 10:22 AM

    Okay, Mr. Push-ups, let's hear your story…

    Market breadth continues to stank and, as discussed this morning, there is cause for pause on the long side. Still, you can try anything as long as you're disciplined and I did just that into the morning muck, nibbling anew on Citigroup and Pulte with risk parameters so tight you can bounce a quarter on it.

    Where are my eyes? All over the place, as they tend to be, but particularly focused on the financials for obvious reasons. Conventional wisdom dictates that fund managers will purge these names from their portfolios into year-end. Given the wave of downgrades and the "right here, right now" support, however, that bed has yet been made.

    The bigger question arrives in the context of "As goes the piggies, so goes the poke." Given that the BKX is off 25% for the year and the S&P is up almost 3%, the piggies could conceivably hold and still weigh on the fray in a big, bad way.

    I suppose that's why we've got defined risk, eh? Discipline over conviction.

  • Green seeds in the Red Sea out of this morning's gate? HON, NVLS, MRK, AIG, VLO, FLEX, QCOM and DELL.

  • Who be putting out their KOOLS on my floor? (Trading Places)

  • For what it's worth, I believe that what's happening in baseball is the saddest situation in the history of the game. Worse than the Black Sox scandal, although I'll have to take Charlie Mangano's word on that.

  • Centro Properties Group, which manages U.S. malls with tenants from TJ Maxx to Wal-Mart (WMT)(the fifth-largest retail property owner and manager in the United States), warned it is having trouble refinancing $1.1 billion in debt and may have to restructure because of fallout from the U.S. subprime crisis (thanks Minyan AC).

  • I've rolled my stops in Citigroup (and fed some ducks into the lift, in the interest of full disclosure) and Pulte (PHM) to the other side of the flat-line. I will continue to do so if the traction continues. Just tradin'.

  • Why? I don't like the breadth... and these are pure trading positions. I expect to see a Citigroup dividend cut in the near future and while I don't know how the stock will react, that's not a coin I have an interest in flipping.

  • Well, at least I have Orange hoops to look forward to. Or, maybe not so much.

  • The homies trade well, at least so far, as the HGX hangs on above the aforementioned HGX 240 level. We mapped a lot of dandruff this morning across a bevy of sectors. This is one group that, ironically, is potentially tracing out (bullish) reverse dandruff.

  • It's you and me kid! While some folks are already stretching their holiday legs, I'll be in through next week before taking the first week of the year for some way overdue time off. Some writing, some Happy Hour with the critters (Wednesday and Friday this week) and, dare I say, we'll have some fun.


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Positions in C, PHM

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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