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Two Ways to Play: Who's On First?

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Strengthen your portfolio in good times and bad.

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Who's On First?

This is like that old Abbott and Costello skit although nobody's laughing. "Who's on first? What's on second? I don't know… third base."

By now most are aware that Lehman Brothers (LEH) has filed for chapter 11 bankruptcy protection and Bank of America (BAC) has agreed to purchase Merrill Lynch (MER) for $40 a share. Minyanville Professor Charles Payne takes a look at this in his piece for Minyanville this morning, "What Happened to the Art of Waiting?"

From the Bull Pen: Bulls looking for a bottom in financials will want to keep an eye on Goldman Sachs (GS), JP Morgan (JPM) and evaluate if there is any relative strength in those two names today.

From the Bear Cave: Meanwhile, this may accelerate what some federal officials have said are looming issues within regional banks. The Merrill Lynch Regional Bank HLDRs (RKH) look vulnerable to additional downside if a break below 100 occurs.


A Stock Market, Or a Market of Stocks?

There's an old Wall Street saw, "It's not a stock market; it's a market of stocks." The implications of that are that there is always a bull market somewhere, but with S&P futures as we write down 43.60, that old saw may be quickly tested this morning. So what does one do during a dramatic market selloff, how do you play?

From the Bull Pen: Those bullish who believe the selloff is climactic may want to consider that 50% of the 2002-2007 range is the 1170 area on the S&P 500, or 117 on the S&P Spyder ETF (SPY). That is the likely place to look for a tradable bounce.

From the Bear Cave: On the other side, Minyanville professor Kevin Depew warned on the Buzz & Banter Friday that crashes typically occur from oversold conditions, not overbought. According to Professor Depew, there is the growing sense that, "Just when we thought it was over, it was really only beginning." Conventional wisdom seems poised to buy the open, so bears may consider pressing the first sign of strength in the SPY against Friday's close of $126 as a backstop.

For more ideas in real time throughout the trading day, check out Minyanville's Buzz & Banter.


Quick Check Around the World

The financial world is being turned upside down today as foreign markets are trading significantly lower.

Asian markets were mostly closed, but over in Europe, we find the CAC -4.61%, DAX -3.87%, FTSE -4.14%, ATX -4.77%, Swiss Market -3.88% and Stockholm -3.68%.


A Look At Commodities

In commodities, crude oil is trading lower –5.28 to 95.98 while gold is trading higher +12.1 to 776.6 this morning. Silver is lower -0.17 to 10.62, and copper is off 11 to 307.00.

The dollar index is higher, up .24 to 79.195.


On the Radar

Economics

8:30 Empire Mfg: 1.5
9:15 Industrial Production: -0.3% cons.
9:15 Capacity Utilization: -0.3% cons.

Click here for the full trading radar.

Good luck today!

No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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