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Random Thoughts: About Face?


Toddo humbly slips out of his bull costume for a trade.


Editor's Note: The following was posted in real time on our premium Buzz & Banter. It's being shared here for the benefit of the Minyanville community. See also The World's Wildest Reality Show and Just Another Manic Monday.

How do I tell them that due to the unfreezing process I have no inner monologue? - 1:13 pm

It's an ice box in the freezer formerly known as my office as we chew through the screwy dew. While my fingers are white and my head is light, I wanted to share the following fare as it edges through my cold keppe and finds it's to a screen near you. In no particular order:

  • The first fade (supply) at S&P 840 made intuitive sense as past support is future resistance. During the pullback, I'm watching market internals (still 5:1 positive), the financials (gaining, not losing, steam despite the broader pullback) and the dollar (still near session lows).

  • One group conspicuous in its participation today is the consumer non-durables, which was one of our top ten themes of 2008. Makes sense, right? We've long offered that they would benefit from the slippage in commodity prices and given the counter-trend move in the dollar (and the attendant lift in "stuff"), this complex becomes incrementally less attractive.

  • For my part and with my coin, I've made enough sales into this level to honor thy process while leaving enough to participate if it punches through to the upside (hence my bull costume posture update).

  • With the paring of my risk in the financials (Goldman (GS), Citigroup (C)), my remaining exposure is skewed towards the energy complex (DXO, Weatherford (WFT), USO and Dryships (DRYS) as a tertiary) although I've made partial sales as a function of discipline and will continue to do so into further liftage). I have other Todd-lot positions, mind you, but that's the meat of my heat.

  • We've long said that nobody would "care" who called this massive market mess. Now that we're there, the collective Minyanville mission has shifted towards helping policy makers identify potential fixes. Time and price remain the ultimate arbiters of our financial fate but, as we're apt to say, if you're not part of the solution, you're part of the problem. True dat.

  • It sure feels like there are alotta non-believers in this rally. Just as many bears covered up on the first dip last October, alotta bulls are selling into this lift. They might be right but keep performance anxiety in the back of your mind. IF (big if) the tape can push through this zone and tack on a coupla positive sessions, many fund managers will find themselves under-invested. It's an "if, then" scenario to be sure but you always wanna peek around the corner when trading the tape.

  • Citigroup remains a decent "tell" for the remainder of the day.

  • I'm officially addicted to Texas Hold 'Em on my Blackberry Bold. Talk about a time suck--as if Facebook wasn't enough--although I'll admit to enjoying time when my head isn't fixated on the global financial crisis (particularly when I'm asked to talk about it in the middle of an NFL Sunday!).

  • Directional bias aside, it's tough to paint 30% daily moves in big cap stocks with a bullish brush. File that away "somewhere" in your crowded keppe as President Tyler prepares to step on stage tomorrow.

  • As always, I hope this finds you well.

Sometimes Right, Sometimes Light, Always Honest - 1:33 pm

To each, their own. Where you stand is a function of where you sit. Adapt but don't conform. No matter how you slice it and regardless of how you say it, each of us has a unique time horizon and risk profile that needs to be factored into any given approach. That, more than anything else, is why we don't "do" advice in Minyanville. Rather, we share our process with hopes that it adds value to yours.

Into last Thursday's red mess, I added two legs into my metaphorical bull costume (50% conviction to the upside) and was immediately greeted to a mouthful of losses and a lesson in humility. Following the hot popper on Friday and today's green monster, that posture has delivered in spades. Call it a fool and his money or better lucky than smart but don't call it a comeback (I've been here for years).

I've chewed through my trades in real-time for better or worse and will continue to do so. With that said and as S&P 840 looms, I'm gonna call an audible and humbly remove that other appendage from the bull costume. Yes, I've got some upside exposure but given the relative size--coupled with the "easy" trade being into this level--I'm gonna err to the side of "hit it to quit it, make it to take it and do it and screw it."

I remain of the view that an upside thrust is possible into year-end and I reserve the right to re-initiate risk (both ways). As I take great pride in my metaphorical imagery (not to mention my name and my word), I wanted to make sure I communicated this effort (particularly with the indices near session highs).

Thanks--in more ways than one!



Did you know the doors to Festivus 2008 are officially open? Have you yet locked your spot for the critter trot as last year's soiree sold out? (This is our annual event to commingle our professors, partners and Minyans while chowing down and listening to live music. The very best part? It's for the kids in the good name of my grandfather.)

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Positions in DXO, WFT, USO, DRYS, RIMM
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