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Freaky Friday Potpourri


Capital preservation is the first step towards prolonged profitability.

  • So, Donald Trump thinks we're going into a recession? I said something similar one year ago this week in Vail, offering that investors might wanna prepare for "something more depressing than a recession."

  • Note the time stamp from the Vail Trail--I'm not piling into the global abyss. In fact , I covered my shorts into the opening to allow for a respite. I felt sorta naked without those puts, particularly if the script plays out the way we discussed this morning.

  • I was looking to add back some puts during the initial S&P really but with the VXO at 32, they were too fat for my taste after a two-day sixty handle melt.

  • During the second rally, I nibbled anew on a small position of S&P puts (several strikes below the ones I sold when I unleashed the hounds at S&P 1490). I might be going to the well once too often but I'm playing with some recent profits, trading smaller and trying to stay consistent with the (admittedly cute) playbook from this morning. I'm trading Todd-lots as the last thing I wanna do is put corks on my forks into the weekend.

  • If you're staring at every tick, you've got too much exposure (either way). It's that simple.

  • There's a nice bid to the metal equities (see gold +12), which we sorta figured would be the beneficiary on two fronts. One, if China dumped treasuries (they'll need a place to go) and two, if the Fed cuts rates (thy precious sector will likely lift).

  • Perspective Check! The S&P is up 20 handles on the week and the DJIA is up 6% on the year. So, while there's been pain, the losses have, in fact, been largely contained. That's one of the reasons I'm worried--given the worldwide liquidity injections and the jaw-boning by everyone, I can't help but wonder what they see that we don't yet know.

  • What was it that Capt. Frank Ramsey said in Crimson Tide? You don't put on a what unless you're gonna what? That's the sense I'm getting as global central banks deep into their liquidity spigots. SOMETHING IS OUT THERE although I'll say it again--I hope I'm wrong. In my humble opinion, in the nuclear (derivative-laden) world, the true enemy is war itself.

  • I will say this--if we whoosh lower (big if, I know) and then we see that other shoe, it might be the time to buy 'em for a trade. In bull markets, you buy the rumor and sell the news. In bear markets, you sell the rumor and buy the news. Cutesy? Golden Retriever puppy cute--but if we're anywhere near S&P 1370 at the time, that's likely how I'll play it.

  • If you're finding the 'Ville to be of help, please consider helping us make a difference in those less fortunate. We're all about the kids, family and love. In short, we're all about Ruby.

  • And you thought it was gonna be a lazy summer season.

  • Hey, it could be worse! For instance, in addition to trading this tape, you could be "out there" every day sharing your thoughts with the world! Talk about a recipe for humility, that's why I always say to stay humble or the market will do it for you.

  • See the traction in INTC, BRCM, TXN, XLNX, KLAC, NVLS and NSM--as the SOX play Cliff Branch to the broader market's Snake Stabler. If Snapper shows, these stocks will "go." So you know.

  • I hear alotta things. "How does a real man have cats?" "You're not Todd Harrison--Todd Harrison is much thinner than you are." "No seriously, it was YOU that ate the entire pint of Ben & Jerry's in your sleep." I'm also hearing that several very prominent Hedge Funds and prominent Wall Street firms are, uh, feeling it (leveraged short vol will do that). I'm not gonna name names because that's not really the point. But if any of these stories are, in fact, true, they would be more of a "boot" rather than a "shoe."

  • I'm also hearing, by the way and not confirmed, that several Wall Street firms are about to raise margin requirements for their customers (in some cases double them). Thats prolly long-term smart but it would be short-term fugly.

  • And please--watch those financials!

Minyan Mailbag


If the goal is to "let winners run and cut losses" (you always say a good trader knows how to make money and a great trader knows how to make a loss), why would you "feed the ducks," so to speak, rather than implement straight "trailing stops"? Thanks, Minyan AB.


Great question. A few thoughts:

  • Buy (sell) when we can and not when we have to, especially in gappy, whippy, thin tapes.

  • Trading "in between" and taking some chips off the table is never a bad idea. Nobody ever went broke taking a profit.

  • Discipline over conviction.

  • Capital preservation is the first step towards prolonged profitability.

  • If and when we get the (surprise) rate cut, we won't have a chance to buy 'em before they gap higher. For the record (and depending on our field position at the time), I would want to fade (read: sell) that initial rip but in a perfect world, we can trade 'em both ways.

Hope this helps, my fellow Minyan---best of luck as we truck through the muck.

Finally, as we step back from the market ledge…

Yesterday I asked, "If you could have dinner with one person (across the spectrum of history), who would it be ?" Survey says...

Make sure the house is spotless and get out the good china: Jesus Christ came in first with 29% of your votes.

Next, with 8%, would be "my late father." As one Minyan put it, "He died at 58 (seems VERY young now) in 1976. I'd just like to bring him up to date and tell him how it all worked out. My brother and I were the first from either side of our families to get college degrees and all five of his grandchildren have done the same. Besides, after 31 years he has to be starved ."

A few of the other names suggested: Adi Shankara (a Hindu saint), FDR, Socrates, Boo, Cleopatra, Richard Feynman, and D.B. Cooper , a mysterious plane hijacker from the '70s.

As an aside, my choice (initially Leonardo DaVinci) would be my grandfather Ruby, when he was my age. I would give just about anything to run around with him for a night!

Hey--it's a tough tape out there. Whoever you have dinner with tonight, make sure you make it count. Tomorrow, as they say, is promised to nobody.

Fare ye well into the bell and have a mindful weekend!


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