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Random Thoughts: Turnaround Tuesday

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Bulls are looking to take control.

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Editor's Note: The following content was posted in real time on the Buzz & Banter. It's being reproduced here for the benefit of the Minyanville community.

Toto for Sale! - 9:27 am

  • One of my Ten Themes for 2008 was the transfer of wealth. While I've got an active imagination, I never envisioned that China could conceivably help Fannie (FNM) and Freddie (FRE).

  • The most bullish action for the marketplace is a harsh, whoosh lower this morning. None of this 15-20 handle kid's stuff, I'm talking a 30-50 handle diaper affect.

  • I still think there's risk to S&P 1050 sans a bank bounce but my "trading" hat--as opposed to my long-term investor "100% cash nest egg" hat--wants to buy into that Auntie Em Auntie Em!

  • It'll be interesting to juxtapose the timing of David Tice selling his Prudent Bear Fund against the 2008 S&P chart.

  • This is what we've been training for Minyans. Head up, eyes open, think positive. Profitability begins within.


Gate Sniffage! - 9:46 am

  • Green beans in the Red Sea? Lehman (LEH), WaMu (WM) biotech and pharma, General Motors (GM) and DuPont (DD). Whenever stocks (sectors) open flat to green during a gap lower--as they have--it typically speaks to underlying demand.

  • One more answer I really wanna know? Can capitulation occur in a single sector rather than the broader tape? After 17 years of trading---and I've seen my fair share of panics--the action in the financials is screaming "bid wanted" to me.

  • Call me crazy--you wouldn't be the first--but I'm layering into a slew of calls in the financials (and leaving room lest I'm early). I have remnant Wachovia (WB) on my sheets (from before my break, mea culpa) but I've gotten more aggressive in a few different names. Again, pure trade.

  • This is why I have dry powder--to take the other side of widespread panic.

  • I may be early--and I might be completely wrong--but barring the complete destruction of the financial system right here, right now, I'll have a chance to sell them higher. If not? It'll sting but I won't go broke.

  • I was early on the short side and got a lot of push back last spring. I suspect I'll get the same sorta nose scrunches now.

  • Have I mentioned how much I absolutely adore Tuesday's?

  • Engine room, more steam!


Laundry List - 10:01 am

We don't "do" advice in Minyanville but the following names (at the following levels) stand out to me as pure trade candidates to the upside:

  • Lowes (LOW) ($18.40)

  • General Motors (GM) ($9.05)

  • Freddie Mac (FRE) ($5.34)

  • Wachovia Bank (WB) ($8.37)

  • Pulte Homes (PHM) ($8.77)

  • Gannett (GCI) ($16.77)

  • Merrill (MER) ($24.5)


Again and as discussed in previous Buzzes, the S&P has risk to 1050 absent a bounce in the financials and bigger picture, I think we've got a few years of muck. As a trader, the destination we arrive at isn't as important as the path that we take to get there and that's the terrain I'm attempting to traverse.

Hey, sometimes right, sometimes wrong, always honest.

Holla at yo boyz Yo! - 10:59 am

  • Shoes are off. Why? Call me superstitious!

  • If I still dressed up in those silly metaphorical bull and bear costumes, I would have two legs in Hoofy right now (50% conviction on the long side) and it would be the first time since Bear Stearns)

  • Biotech continues to trade well. Noice Pep.

  • We said this morning that the bulls wanted to see a 30-50 handle whoosh in the S&P. They got 'em down 28, for those keeping score at home.

  • Crash, or capitulatory? Market internals were 10:1 negative at their worst readings.
  • Deep breaths ova here as I juggle my MarketWatch deadline, Minyanville duties and afternoon Fox Business hits (I'm "off" this morning--thanks Prez!). Oh yeah, and I got that oh-by-the-way risk on. And a board meeting tonight. And a South Beach diet going. And... yeah!

  • Don't you just feel like a pony?


For Toddo's continued vibes, click here for Random Thoughts: Will the Rally Continue?

R.P.

Positions in WB, financials, GM, FRE, LOW
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