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Random Thoughts: Will the Rally Continue?

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Turnaround Tuesday carries the markets.

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Editor's Note: This content was posted today in real-time on our premium Buzz & Banter. It is being republished here for the benefit of the Minyanville community. This is also a continuation from Random Thoughts: Turnaround Tuesday.

Blazing Saddles - 11:55 am

I'm busier than Lili Von Schtupp on a Saturday night but I've got to note the following:

  • A broken clock is right twice a day but those USO puts (bought yesterday) are "better lucky than smart." I could use the other side of $140 (former support, newfound resistance) as a "stop for a credit" but, truth be told, it's a small position and I'm content to keep 'em.

  • I just said to Pep "the banks are trading drier while the tape is getting softer" (and yes, I'm watching Wachovia (WB)). Maybe something, may be nothing but worthy of a mention. As goes the piggies, so goes the bacon that's shakin' in my jeans.

  • You can learn a lot just by watching. Note the green beans from this morning---Lehman (LEH) (+9%), WaMu (WM) (+20%), biotechs (Genentech (DNA), Biogen Idec (BIIB), Amgen (AMGN)).

  • You know it's a tough day when the market internals have doubled their upside readings and they're still 5:1 negative!

  • Mama was right--I shoulda been a vet. Lemme hop friends--juggling more balls than Larry Bird.


And the kids they dance and shake their bones while the politicians throwing stones... - 1:32 pm

  • Wow, you coulda bought the WaMu (WM) 0 calls for 3.23 last night with defined risk out forever.

  • Just as tops are defined by bulls waiting to get back in, bottoms are defined by bears looking to re-initiate shorts. I would imagine that it would take -- wait, are you sitting down? -- follow-through tomorrow to shift the psychology in the marketplace.

  • Woah, sorry Boo--you're right. Today's close isn't exactly guaranteed to Hoofy yet.

  • I'm not smart enough to say that this was THE bottom (I highly doubt it) but it could well have been a tradable low. Either way, I'm happy to roll up the stops on my morning adds and let everyone else battle it out.

  • I'm just trading, mind you--my nest egg is still 100% cash, backed by T-bills and I'm not touching that puppy.

  • This South Beach diet is making me HANGRY!



  • That last bullet was intentionally left blank as I had to squeeze lemons on my steamed veggies. This, my friends, is what my life has come to!

  • Perspective Check: Market internals are still 2:1 negative.

  • How busy am I? I'm three days behind in having to pee. Wait, can I say that?

  • Remember when we talked about how precipitously lower crude prices would be bad for equities? The asterisk, if that's how you spell it, was one of field position.

  • We said--or, Fleck said and I agreed--that the knee jerk, Pavlovian response would be higher stocks, particularly if it were too occur from an oversold condition. Check, check and...

  • Man, I need a vacation! ;-)


Free Willy? - 2:39 pm

The proposed "curbs" on shorting the GSE's--and the chatter that it will extend to the broader market--is causing a lot of angst on the Street, and for good reason. We've been saying for years that we're living in the most interesting juncture in the history of the markets and while, as a proponent of free markets, this "bothers" me, there's little doubt that our world continues to get curiouser and curiouser.

Some thoughts:

  • Korea, Pakistan, Hong Kong and Malaysia have banned short-selling in the past and it led to short-term pops in the market. But we're the United States of America! We have constitutions and things like that!

  • The irony is that If regulators and politicians simply listened to the bears last year, they could have been proactive rather than reactive in addressing this mess.

  • This is the antithesis of a free market-we've been edging towards an era of socialization but this-along with Paulson's plan to purchase Fannie Mae (FNM) and Freddie Mac (FRE) equity-takes it to another level.

  • This could buy time for beleaguered companies but it's yet another example of masking the disease with drugs rather than letting the market take its medicine.

  • As Mr. Practical recently wrote, RIP Free Markets.


Bell Buzz! - 3:29 pm

  • Our sincere condolences to the Sedacca family on the loss of their lab Luke. We love critters in these parts and I, for one, can surely relate!

  • If this drop in crude picks up the slip--again, $140 is nice and tight defined risk, for those looking for a level--keep an eye on the airlines for some Pavlov lift. They're issues aren't going away, me thinks, but the slightest shift in psychology could usher in a nice lil' schnitzel.

  • Do I think this rally will last? I do, yes, at least for a bit. Do I think we've seen the worst of the bear? Unfortunately not. As the owner of a small business, I sincerely hope I'm wrong but hope, as we're apt to say, isn't a viable investment strategy.

  • Man, I sure picked the wrong week to eat like a bunny.

  • Lemme take a moment to echo Kru-Cat's sentiment and thank ye Minyanville professors--along with the massively awesome Minyanship--for sharing this freaky journey. I've always said that our odds of thrivin' and survivin' would greatly increase if we stuck together and I'll humbly offer that we have the snazziest community in the financial space.

  • Hoofy for President with Boo as his vice? OK, maybe Boo as his vice-fund!

  • Oh yeah, I've gotta hit the "post" button on our MV editorial tool before it leaves my screen. Jeez, you'd think I know that by now, eh? Jeff Saut once told me "You can't do two things at the same time." As usual, he's right!

  • Cheers, little ears, I'll see YOU on the Hump!

R.P.

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Position in USO, WB, FRE

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.

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.

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