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Randoms: Staying Bullish on the Tape

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Betting on heavily shorted stocks in a counter-trend rally.

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Editor's Note: The following was posted in real time on our premium Buzz & Banter (click for a free trial). It's being shared here for the benefit of the Minyanville community. See also The Rock and Roll!


Slumdog Matador? - 9:17 am

  • As discussed, I carried exposure over the weekend but financial stocks were not amongst my rental vehicles. That's not to say they can't rally--we could look back at Bank of America (BAC) at $3-ish as the deal of the year--but between dilution and nationalization, I took a pass on those ponies.

  • I am there on a slew of other upside bets, as communicated earlier, with the thought that if they cart the injured players off the court, the game could resume for a counter-trend trade. It's not without risk--note the textbook dandruff on the S&P--but if there wasn't risk, it would be called "winning," not trading.

  • Of course, I'm outie most of the session at The Money Show, which is gawgess in terms of timing. I'm sure they'll have turrets there and I'll be the guy in the suit talking tape on the one hand and trading it with the other.

  • I'll make some partial, disciplined sales into the opening jig (respecting the process), which may or may not include unwinding a snivlet of my downside gold schnitzel. I do think the yellow metal has downside risk but trading "in between" makes a ton of sense in this tape.

  • Expect a (downside) probe at a point and when it arrives, watch the tone and tenor of our tells.

  • Two other points of parliamentary procedure? First, we've got option expiration hangover, which will cloud the action for the first few hours. Second, tomorrow is Turnaround Tuesday and that's when we could conceivably see a meatier move.

  • I'm already a self-loathing Yankee fan. Are the Raiders are trying to force me into the same pigskin situation?

  • If I were a Hussman, yada dada dada...

  • Chinese Checker! Are we about to see some consolidation in the energy space?

  • Pepe is at Jury Duty today, so you know, so the Buzz will be in the most capable hands of MVHQ staffers and our most excellent professors.

  • Good luck, my friends, and play like a Minyan today!


Juicy For Sure! - 9:51 am

  • For what it's worth and so it's said, I heard from two very credible (separate) sources that the trading tax is DOA. That's good news, Yo.

  • You wanna know what stands out like a red head at an albino convention? Deutsche Bank (DB), which is down a deuce despite the broader rally attempt by the financials.

  • In a typical counter-trend rally, you wanna buy the stocks that are the most heavily shorted. If these were typical times, the financials would be at the top of the list. It's not and they're not, at least for the time being. Instead, I focused my lens on tech, retail and energy.

  • With that said, I made some token sales into the poppage (Dryships (DRYS), SSO, Target (TGT), GLD puts) as a function of discipline. My overall posture (skewed bullish) remains the same with plenty of dry powder to add lower should the wheels wobble on the wagon anew.

  • Financial Staying Power. Keep it front and center, Minyans, for there will be bountiful opportunities when the dust settles and winners of the new world emerge.

  • Fair warning, you will NOT be able to get this out of your keppe once it's there.


As If! - 10:30 am

As I ready to shoot to the Marriott Marquis for The Money Show--yes, I know--the following vibes are top of mind:

  • The aforementioned probe has arrived and, as it stands, market breadth has retreated towards a 9:5 negative posture while banks (with the exception of of the previously flagged Deutsche Bank (DB)) are holding a bid.

  • Overall, the action is "S's over N's," although the industrial complex--including General Electric (GE)--is pretty in pink.

  • I continue to sniff around the energy complex, including a small May call position in Transocean (RIG).

  • Yes, I qualify many of my positions as small--in this environment, you don't need to make big bets. Hit for average, not for power, and remember that with this type of volatility, you don't need to make big bets.

  • At this point I just want the Orange to get an invitation to the big dance.

  • Research in Motion (RIMM) acts dry in the face of fugly futures. That's a bit of a character shift that warrants a mention (yes, I'm involved).

  • A'ight, I'm outie like Cher Horowitz after Elton put the moves on her in the car. Quite hopefully, my shoes will make it across midtown. Keep your head up and eyes open, Minyans, and let's put some jingle in our jeans as we find our way.


R.P.


Position in GLD, DRYS, SSO, TGT, RIMM, RIG

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.

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