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Thursday's With Story: Yesterday's Upside Catalyst

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Just as good news is sold in an extended market, bad news is scooped in an anxious market.

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Some Random Thoughts

  • The Credit Card song? Perhaps, but the bulls are taking it to the limit (one more time) themselves as they sniff at triple-lindy resistance on the S&P. Between the 200-day, S&P 1490 (from where we broke) and the downtrend line from the lower highs - not to mention that this is a 50% retracement from the October highs - one picture is worth 1,000 words (and a few hundred points).

  • By my count, this is the fourth time we probed this level (on the upside) since we broke down on November 7th. Remember, resistance (support) weakens with each subsequent test as supply (demand) is chewed through.

  • Some are pointing to the productivity numbers as yesterday's upside catalyst. I humbly disagree. Just as good news (that's not great) is sold in an extended market, bad news (that's not horrid) is scooped in an anxious market.

  • For years we talked about the grand experiment and the difference between legitimate economic expansion and debt induced largesse. "They" put tremendous effort into getting us to this point, be it fiscal policy, monetary policy or financial engineering.

  • Heck, Alan Greenspan stood on a soap box and championed the benefits of adjustable-rate mortgages.

  • And now? Bailout plans, from superconduits to sub-prime rate freezes. Don't get me wrong, I don't wanna see people tossed out of their homes any more than you do. But moral hazard is a spooky realm, sorta like Kevin Bacon in Flatliners, and I'm toggling between anger and sadness as I watch the world evolve around us.

  • As Franklin Raines continues to take in his million dollars a year as Fannie Mae (FNM) shareholders take it on the chin.

  • The flies in yesterday's try? The financials (Merrill (MER), Morgan (MS), Lehman (LEH) and Bear (BSC) are redheads) and volume.

  • The Cliff Branches? It's the festival of lights.

  • Keira Knightley cute? That's how I felt when talking about my small upside shot in Pulte Homes (PHM) (spring calls, tight stop) last night with the savvy soothsaying sommelier, Jeff Saut, while we chatted and chewed at BLT. He held up his thumb and forefinger to make an "L", which I can only hope was in reference to an L-shaped recovery.

  • And that was before Toll Brothers (TOL) reported its first loss in 21 years in the face of the highest-ever cancellation rate.

  • "Over the last 50 years, the month of December has a fairly high win percentage. It's worth noting a material performance over the first two days of December has proven an accurate indicator for the month. If the SPX is down more than 1% over the first two days of December, the monthly return was negative 87.5% of the time by an average -2.24%. Conversely, if the SPX gains more than 1% over the first two days of December, the monthly return was positive 85.71% of the time by an average of +3.61%. Professor Jason Roney on the Buzz.

  • Discipline trumps conviction and the definition of an investment should never be a trade gone awry. This, we know, for they are our commandments.


Honest Abe!

I've always believed that my greatest strength is understanding my weaknesses. So, while I know enough to know that I know very little, the following are things that I have a high degree of confidence in:

  • The "Long Jo-Short Blair" trade was a huge winner.

  • Yesterday's rally had nothing to do with the 1.5% decline in crude.

  • No matter how you slice it, we're still got lower highs in the S&P.

  • Bailout plans, while they may offer perceived relief, are Band-Aids on a broken bone.

  • The high road is less crowded and boasts a better view.

  • I'm gonna face plant in a big way following Friday's Festivus for 300+ Minyans.

  • Higher prices equal more risk, not the other way around.

  • Minyanland will blow your mind and change the face of children's financial literacy.

  • A dream is only as powerful as those who believe in it.


The Important Stuff

Minyanville and the Ruby Peck Foundation would like to thank the sponsors who have stepped up to support Friday's Festivus. Many kind snaps to:

  • TD-Ameritrade

  • Kaboose Inc.

  • Harbor Pilot Asset Management.

  • BTIG (thank you Steve Starker)

  • The folks who made generous donations but prefer to remain anonymous (you know who you are).


It's quite amazing, really. Old school Minyans will remember when we launched in 2002 with a mind full of dreams and a whole lotta hope. Five years, 15,000 articles, 80,000 Buzzes and 110 countries later, here we are.

The opportunity to raise money in my grandfather's good name has been the definition of humility. This Friday, over 300 Minyans will gather to do their part in affecting positive change through philanthropic endeavor.

Thank you... and you... and you... and you. Not only for the support, but for bearing with me as I juggle the efforts and balance the journey. As Ruby would say, what goes around, comes around.

Good luck today.

R.P.


Holiday Festivus is here! Come join us and support the Ruby Peck Foundation For Children's Education at an old-fashioned Southern-style hoe-down in the heart of New York City on December 7th. Click the image below to learn more!

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Positions in SPY, PHM
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