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Random Thoughts

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Trade, don't hope, and think positive. Always think positive.

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  • We've been noodling the potential of an escalation with Iran for quite some time in the 'Ville, offering that energy and metals--which already have secular winds at their backs--would further benefit from the unfortunate evolution. Keep that front and center, Minyans, and keep it as a compass in your portfolio.

  • Every orifice of the government denied an "incident" last night but where there's smoke, there's fire. Something happened and the (crude) market sniffed it out. If it wasn't a "shot across the bow," there are plenty of other reasons to uptick the risk premium in the region. And that's what we're seeing now (VXO +17%)--that re-pricing of risk.

  • As Big Ben barks about how sub-prime problems are contained, there's no spillover from housing and growth is on track, I'm left with one simple thought: I'll have what he's having!

  • Seriously--we don't "do" acrimony in the 'Ville and that's certainly not our intention now. But let's call a spade a spade--the FOMC is saying that they wanna see what happens and react in kind. The only flaw in that logic is that the market is a leading indicator. By the time they have Cause célèbre, it'll already be baked into the price action cake.

  • Be that as it may, as traders, the journey itself is more important than the destination. As such, please know that I was thisclose to slipping into the metaphorical fur (bear costume) this morning but deferred as the Theraflu, Emergen-C and antibiotics have combined to give me 16 screens (rather than the normal eight).

  • Still, and despite nibblin' on some SunMicro below $6, I added a dose of index puts to further skew my risk profile to the short side.

  • There are two levels to lean against, S&P 1425 (50-day) and S&P 1450 (Tom Petty's breakdown). I'll likely use the former for the incremental risk and the latter as a broader brush. And I'll say this, the longer we stay down (with breadth 2:1 negative), the more likely a sloppy close becomes.

  • Hello. My name is Inigo Montoya. You killed my father. Prepare to die!

  • Professors Sedacca and Zucchi make good points on the sub-prime containment vs. contagion. We talked on this point before, noting that while sub-prime is a small percentage of the overall mortgage market, there is real risk as a function of derivatives. If you missed this, give it a read. It sorta ties it all together.

  • Maybe it's me but I've heard Big Ben say "hope" an awful lot during his testimony. Hope, above all else, is not a viable investment vehicle.

  • The killer Beaz! Professor Fil Zucchi offered a nice, succinct take on the Beazer battle over on the Buzz.

  • Wait, you're not reading the Buzz? DUDE!

  • Many thanks to Minyan Fritz for his kind donation to Ruby's Kids!

  • Meanwhile, we're a few S&P points away from removing the entire "removal of the tightening bias" rally.

  • Growth spurt! The VXO has matured from his bar mitzvah (13), through the sweet sixteen and now, don't blink, to voting age. Mazel tov!

  • Trade, don't hope, and think positive. Always think positive.


R.P.

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