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Randoms: The Big Bang Theory


Next week will be one to remember.


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 How Will the Market React to Nationalization? and Buy the Cannons, Sell the Trumpets.

Answers I Really Wanna Know... - 11:30 am

  • Is this the quietest 10% decline in the history of General Electric (GE)?

  • If the company's fate followed General Motors (GM), Ford (F) and other "financials in drag," would old school Minyans be all that surprised?

  • With the second (expected) test underway, will we see the diaper effect needed for a credible trading low?

  • Why do I continue to vibe railroad tunage?

  • Is that a bull costume I see dusted off in my office?

  • Did I mention I added Lowe's (LOW) calls to my Freaky Friday Potpourri?

  • Do you think some folks reading the 'Ville for the first time today think I'm some sorta Pollyanna?

  • What, are $3 kind GLD puts not allowed?

  • Why do I find it so hard to take a complement?

  • Do dogs look like their owners or is it the other way around?

  • Do we have 30 S&P points to the downside and 300 to the upside?

  • Are you remembering to "Do Something Joel" (a random act of kindness) each day?

  • The next time you get into a spat and someone says to you "You're being ridiculous!," why not jump up and down, do a chicken dance, make some noise and then say "No, that's ridiculous!"? (I've done this and trust me, it diffuses a situation in a hurry.)

Substance and Style - 12:15 pm

As we vibe our process in real-time in the 'Ville, I wanna communicate a slight stylistic shift in my approach. Whereas I've been in "hit it to quit it and make it to take it" mode for some time, I'm now scaling into exposure as a function of price. That doesn't make it right but it sure as sheet makes it honest.

I'm not going nuts (I know, that's open to interpritation) but my expsoure is slowly expanding like my belly at BLT Steak. I've shared the list with ye faithful throughout the day so I won't be redundant. I've shared the list with ye faithful throughout the day so I won't be redundant.

Again, this is all in my trading bucket, mostly in March and April paper and peppered across tech, retail and energy. I also have a snivlet of gold puts (my risk is $3) but it's just that, a snivlet. And it goes without saying that it's a pure trade as we attempt to collect shekels on the path towards our ultimate destination.

So, that's where I'm at, my friends. Might as well Jump!

It's a Jungle Out There! - 12:49 pm

  • The "Big Bang Theory" (bank nationalization) is akin to The Bear Scare in terms of how I'm approaching it. The trick to that trade, naturally, is the entree, which is why I'm trading in between.

  • If we walk in Monday to all sorts of nosty headlines, we could see a whoosh (which I'll buy). Should we giddy up from here, I've got some representation. The key is to see all sides, assign a probability and allow ample margin for error. Sounds easy enough, right?

  • The easiest thing to do in this fragile world is to climb inside a shell and suspend communications. Ironically, community will emerge as the backbone of successful next-generation business models. Trust me on this, Minyans, it's one of my more lucid thoughts.

  • I'm not sure we could have been any louder about the fragility of the banking system, dating back four or five years. A little foresight is a dangerous thing, particularly as the point of recognition spreads through the mainstream.

  • Maybe that's why I'm operating with a relatively more constructive stance... and maybe it's why I'll likely be early to this side as well.

  • Tick tock, Minyans, three hours to go...

Johnny Credit? - 1:47 pm

  • Beware of pin risk, which typically occurs when open interest at a particular strike price is outsized relative to average daily volume.

  • So yeah, I'll be out most of Monday speaking at The Money Show and doing some views. Figures, right? As someone who prides himself on his name and his word, canceling due to market conditions simply isn't an option. The timing, however, is uncanny.

  • I asked someone I respect if we need to see the "big bang"--complete with the diaper effect, bid wanted, complete capitulation--before an upside trade triggers.

  • His response was, "We are going to have closed lower for five straight days and eight of the past ten. I don't think there are enough buyers out there to capitulate." I'm not sure I concur but as we always strive to see all sides, I wanted to pass along the perspective.

  • Remember, the DJIA is down almost 50%, which is typically a level of snappage, if only for a trade.

  • Turnaround Tuesday?

  • Jeez, I remember when the weekends would spring an outbreak in Gotham. These days, it's a recipe for fun flicks, gym visits, sleep and a good book. That's not a bad thing, Minyans, for balance takes many forms.

  • Just be good to others and better to yourself as we together ride the train. A wise man once said "this too shall pass" and that'll prove true again.

Spike Lee! - 2:48 pm

It's gotta be the shoes, right? As I sit and chat with an incoming professor (thank you Minyan Michael Santoli for the intro), my sixth screen--the one with the intraday S&P futures--had a melt up.

"Hey Pep, did something just cross the tape?," I asked as I swiveled my head, "Or is this just expiration games?" As I didn't see anything on the former, I assume it's the latter, for we know that they like to push the button into or on expiration for maximum bang for the buck.

Yeah, I know, I'm a conspiracy theorist. But not really.

Two quick thoughts. First, it is contra-hour, so keep that somewhere in the back of your crowded keppe. Second, if you were choking on exposure down 25 handles, remember how that felt during the reprieve. You can do that through trailing stops or straight sales, depending on your particular approach.

For my part, I'm looking for things to sell (however small and versus my in-the-hole purchases) simply to respect the process. I bought a fair amount this morning and while I'm gonna go home long, I wanna make sure that the mechanics of my swing are consistent regardless of the results of my at-bat.

Besides, there's a lot of trading left in the day and the last hour is promised to nobody, particularly with NYSE internals 4:1 negative.

As always, I hope this finds you well.


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