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Random Thoughts: One Foot in Front of the Other


Baby steps, Minyans.


Editor's Note: This content was posted in real time on our premium Buzz & Banter and is being shared here for the benefit of the Minyanville community. These thoughts are a continuation of Random Thoughts: Looking Back As We Look Forward and Morning Dew: Preparing for a Wild Session.

Gate Sniffage - 9:36 am

  • I just heard someone on TV say "the good news is that oil is down $5." That's NOT good news through the lens of deflation as it's endemic of slowing global growth. I will, so it's said, nibble on some USO (small) with an ear towards a rate cut and an eye towards a bounce.

  • I'll be scanning my screens for green beans this morning but it--and everything--is purely a trade. First blush, I'll note that Amazon (AMZN) is only down $1.70. That, to me, hints at some underlying demand.

  • We've spoken about The State of the Art in the financial industry for some time. With three of the five top-tier brokers--Bear Stearns, Lehman (LEH) Merrill (MER)--disappearing this year, it's safe to say that the future is now. It's not something one would wish for--and our hearts to out to our fallen friends--but I'll again offer that it was necessary medicine on the road to recovery.

  • Those of us who traded the Asian Contagion, LTCM, the implosion and the aftermath of 9/11 will tell you that price discovery is a process rather than a point. It's entirely alright to be opportunistic but it's more important to remain disciplined. These are unchartered waters and risk management should trump reward chasing.

Eye Balls! - 10:03 am

  • The first Snapper attempt was the 'easy' trade. From here, it gets dicier than a casino floor. Trade, don't chase, or don't trade, if that's an option.

  • Continental (CAL) stands out on the heels of the energy squeal and a broker upgrade. I nibbled on some puts (small) with a very tight stop on the other side of $20. Not advice, natch, just sharing the process.

  • I also added some USO calls (pure trade) as per our previous post.

  • Green beans in the Red Sea? Target (TGT), Applied Materials (AMAT), KLA-Tencor (KLAC), Wells Fargo (WFC), Pulte Homes (PHM), Garmin (GRMN), Qualcomm (QCOM).

  • Proctor & Gamble (PG) also stood out to the upside this morning. While I thought about it, I decided to pass on a stock that's up 21% since July.

  • QLD $62.5 is big level for the super-Q's and defined risk for the those looking to dance with Snapper. Could it work for a trade? Sure. Is it something I'm willing to layer into as a function of price? No sir.

  • I seriously eyed some JPMorgan (JPM) puts when it flipped positive but bit my fingers instead. Why? Two reasons--one, I"m trading less and smaller and two, volatility is so pumped, you gotta be very right to make a little money.

  • Finally, with a nod to the real word, some serious snaps to DMC and my Raiders for winning their first game of the season and gaining much needed respect. I only wish I actually had time to enjoy it last night as I poured over my computer until 3:00 AM.

  • Breathe, Minyans, this too shall pass.

The Big Picture is made up of a million little pictures... - 10:56 am

  • Want a little perspective? The BKX remains 48% above where it was on the July 15 low.

  • Amazon (AMZN) continues to trade curiously dry (but without me). We flagged it early and continue to monitor it.

  • The risk isn't what we see, it's what we don't. Funds throughout the world have forced agendas and that---coupled with the invisible hand--makes conviction a difficult proposition.

  • Will we see a surprise rate cut? They're likely holding that bullet in their back pocket should prices demonstrably decline. It would be more symbolic than effective, in my view, but we should remain conscious of the possibility.

  • Remember how we flagged AIG (AIG) early last week? We also mentioned General Electric (GE) (as did Jim Grant on Friday). Keep your eye on this puppy, Minyans, as it's exposed along with the rest of 'em.

  • We talked about the first fade (higher) as the easy (albeit risky) trade and that has come to pass. I expect them to test the downside anew as we find our way towards... brunch? Jeezums.

  • The VXO is trading at 30. Keep in mind that it was twice that level during previous pain fulcrums.

  • I'm excited to turn the corner towards recovery. While that process will be a journey, recent events were a necessary, albeit painful, step in the right direction. Minyanville was branded Cassandra for a long time but by the time this bottoming processes finishes, we'll be viewed as Pollyanna. Mark my words.

  • Bad seasons defined good fans, bad times define good friends, bad markets define good partners. This is the time to step up and be a good fan, friend and partner--it is when true character is revealed.

  • Take a deep breath and be part of the solution. Remember, you're a Minyan--this is what we do.

  • As always, I hope this finds you well.
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Position in USO, CAL
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