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Random Thoughts: IndyMac Deposit Concerns

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Perception is reality on Wall Street.

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  • I've taken off the quick downside schnitz in American Express (AXP) as it failed into the $40 level. Just trading and keeping my powder dry.

  • That smoke you smell is the friction between opinions.

  • On the one hand, you've got "markets are a leading indicator, we saw capitulation in the financials and this is a healthy retest before a resumption of the mean-reverting rally."

  • On the other, you've got "the Fed can save Fannie (FNM) and Freddie (FRE)--their debt, at least--but the dike has many more holes."

  • The fact that reality is a fluid, multi-linear target isn't making the distinction any easier.

  • A guaranteed smile on a drabby, dark day!


Minyan Mailbag

Toddo,

You've mentioned the best trade ever scenario (if you had held the Wachovia (WB) calls) and the hot-hand theory.

As much as I use Minyanville for the Buzz, I attempt to understand the psychology and nuances that go into a trade, but the question is what follows beyond that. After making your best trade ever, presumably you seek to improve on that.

My question then is "After making your best trade ever, or have a hot hand, then what?"

It may all boil down to discipline over conviction and sticking to the rules but I was curious if a more detailed response was out there.

I know you've written previously about one of your worst trades; I'm curious how you act in light of your best. I know you don't parade around when you make a good call, this is more to the question of "what next?"

Thanks in advance,
Minyan James


MJ,

There's no set formula as one of our Ten Trading Commandments is to adapt your style to the market.

As discussed yesterday, stylistic approach varies as a function of field position (among other elements). Case in point, while I "scaled into" the financials into the abyss last week, I traded the sector long this past Tuesday with tight stops below.

Same game, different rules but the mechanics of the swing often define the results of the at-bat.

Happy trading.
Toddo

Answers I Really Wanna Know…


R.P.

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