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Random Thoughts: Trading the Commodity Rip


Gold, crude are the vehicles of choice.

Editor's Note: The following was posted in real time on our premium Buzz & Banter. It's being shared here for the benefit of the Minyanville community. See also Answers I Really Wanna Know Into the Election.

The Bait and Ballot - 10:55 am

It's been one of those morning's in the city of critters as the news and views are fast and furious. As the lines to vote were around the block this morning, I'm gonna---no, I've gotta--slip out now to cast my ballot. Before I do, however, I wanted to spew some dew for all to view.

  • I spoke yesterday about adding some DXO (crude) and while I only added a snivlet (I bought half and chose not to pay a dime higher on the leaves), I'm gonna feed some ducks into this morning's 5% lift. I'm still there and I wanna stay there (for now).

  • With a conscious nod to deflation--at least until we jump the shark--my chosen vehicles (gold and crude) would both trade higher if Gawdfawbid "something serious" happened in the Middle East before the transfer of power.

  • Red beans in the Green Sea? Wal-Mart (WMT), Lowe's (LOW), Amgen (AMGN), VMWare (VMW), Hewlett-Packard (HPQ), NetApp (NTAP) and the trannies (eww!).

  • Hey, wait a minute--look at that level in Wal-Mart. The stock is up almost 20% from it's recent low and resistance looms at $58ish. This was one of those retail therapy candidates we spoke of in August--the vibe that retailers would need therapy into the holidays--and I've nibbled on some January puts leaving room to add higher (with a stop on the other side of $58). Not advice, natch, just sharing.

  • Seriously, I might upchuck the next time I hear a Saved by Zero commercial from Toyota (TM). Don't they get it? Don't they see what the other side of zero percent financing looks like? Do they, too, wanna be a hat size?

  • I was sniffing at some SPY puts (in the spirit of Turnaround Tuesday) but couldn't find defined risk so I passed. Besides, with the dollar off a deuce (2%) and market internals stronger than a mule's breath, our ducks aren't lining up for an advantageous quack count.

  • Alright, I'm going to vote. I'll be back as soon as humanly possible!

No Soup for Boo? - 12:43 pm

With my duty fulfilled and my ballot cast, I strap into my turret to wade through the rest of the session. I'm in a fairly funky mood--in a good way, mind you--so work with me as I share my fare all that care. In no particular order:

  • The standout action today is in Our Wishbone World. The dollar is down a deuce (2%) and the other side of that ride--asset classes--are lifting in kind.

  • Of particular note is crude (+12%) and gold (+5%), both of which I'm long and both of which I'm happy to take partial profits. Stick and move, yo, as we hit it to quit it.

  • My nibble on Wal-Mart (WMT) puts is Ginger, not Mary Ann, so the starter position will be added to as it edges to resistance at $58 (and my stop set on the the other side).

  • I'm not opposed to taking a flier on some SPY puts with a stop on the other side of S&P 1005. Fair warning (speaking to myself), our trading tells are strong like bull and tapes that are jiggy all day (with 2:1 positive internals) tend to end that way. Still, as long as you've defined your risk, you can trade seven ways till Sunday!

  • One month till Festivus. The critters are already licking their chops!

  • Perspective is everything. Deutsche Bank (DB) is up 17% today but down 70% since last year.

  • Lemme jump to post this pup. I'll be back, Minyans. As always, I hope this finds you well.

How do I tell them that due to the unfreezing process I have no inner monologue? - 2:24 pm

The following thoughts are the very first things to fly behind my tired eyes. They're offered in no particular order and shared with a smile:

  • Diplomacy may be the only path to redemption on the global stage.

  • Oscar Gamble had some of the funkiest hair in baseball history.

  • Setting stops removes emotion.

  • My greatest fear in staying "flattish" (and scooping shekels as they emerge) is the other side of our Wishbone World. If the greenback poops (and everything denominated in dollars jacks higher), the savers who did the right thing will get the dreaded double whammy.

  • My S&P put position was thisclose from being stopped out but alas, it wasn't (famous last words). In a perfect world--I'll keep dreaming--I'll trail this Todd-lot lower should bids begin to fade.

  • The best way to combat societal acrimony is by being extra kind. Ruby taught me to take the high road as it's less crowded and boasts a better view.

  • How can you not make sales into a 10% crude pop in a single session?

  • Heck, I'm unwinding the gold and crude and booking 'em, Dano. Sometimes right, sometimes wrong, always honest.

  • Trick of the Trade: Turn your book upside down and view your longs and shorts and shorts as longs. Howya like me now?

  • In both Vegas or trading, I always make more when I bet small and steady?

  • Happy Birthday Justin Rohrlich, our lead writer on the Emmy Award nominated Hoofy and Boo show. I know what I want to get him for his birthday but he'll have to wait until December 2nd.

  • Does everything taste better milanese?

  • A trade below $78 is prolly a good stop-loss in the SDS trade if Minyans are involved.

  • Fare ye well, Minyans, and smile. It could be a lot worse.

The Home Stretch! - 3:20 pm

  • I've switched my SDS "stop limit" (below $78) to a trailing stop ($1) which, barring a gap higher, allows me to trade for a credit while participating in further jig should it occur.

  • I'll be watching tonight as the election progresses. Four years ago, after covering my Bush short, his "futures" popped higher before the mainstream media picked up on the curious reversal of fortune.

  • My small Wal-Mart (WMT) put position remains in place with the aforementioned stop above $58.

  • The SPY puts? It's a lil schnitzel so I'm trading around those with an eye towards an exit by the end of the session.

  • Alrightee then, my SDS was stopped out. If the market melts, it was a bad strategic decision. If it rips higher, it was good discipline. Welcome to the world of trading, where price is the ultimate arbiter of self-loathing.

  • Amazon (AMZN). It's not just about the books anymore.

  • My take on the "election trades" is the same as trying to game expiration influences. It's tough to garner an edge with so many people crowding the process.

  • If you close your eyes and listen to this song, how many of the artists can you name?

  • It's been a while since we've served up some Pearl Jam so what the heck!

  • Fare ye well into the bell, Minyans, and remember that the risk profile you go home with is what you'll awake with tomorrow.


Did you know the doors to Festivus 2008 are officially open? Have you yet locked your spot for the critter trot as last year's soiree sold out? (This is our annual event to commingle our professors, partners and Minyans while chowing down and listening to live music. The very best part? It's for the kids in the good name of my grandfather.)

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Positions in WMT, DXO, GLD, SPY, SMS
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