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Random Thoughts: A Market of Stocks, Not a Stock Market


Hang back until you see something you like.

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 Chutes and Ladders.

Gate Sniffage! - 10:30 am

It's November in New York City so riddle me this--why the heck is it so muggy outside? Following the filming of our morning segments for Yahoo Finance (coming soon to a 'Ville near your), President Fish, Grandpa Charlie and I hiked back to MVHQ. It was dark, humid and unusually uncomfortable, which I suppose is apropos given the current market condition.

As I strap into my turret and power up my eight screens, this is what I'm doing, thinking, trading and writing, in no particular order:

  • My first order of business was to punt my remnant S&P puts that I carried over from yesterday. Trades are made to be taken and while breadth (2:1 negative), the dollar (+85 bips) and reaction to news (Cisco (CSCO)) are equity headwinds. As it stands, the Winky Wright school of trading (jab jab duck) continues to hit it to quit it.

  • The Yahoo (YHOO) calls and Wal-Mart (WMT) puts are still on my sheets and I'm "trading around" them as a function of price. Smallish, but that's how I'm rolling these days. There's no shame in admitting it's hard, there's only shame in not adapting in kind.

  • After punting my energy exposure into the Hot Popper on Tuesday, I'm starting to sniff around the buy side anew. I haven't pulled any triggers yet but the usual suspects (DXO, BHP Billiton (BHP), Transocean (RIG), and Weatherford (WFT)) are on my radar. A breach of crude $60 would be a technical breakdown, mind you, so that's factoring into the equation as well.

  • Random Thought: Sideways action under resistance is a bearish churn while the same action above support is a bullish basing.

  • Sisyphus who? Why is it that whenever I take 12 hours away from my email I'm in ketchup mode for the better part of the next day? It's the "other side" of the digital media trade, I suppose.

  • Alright, enough stalling. I'm gonna post this before it's a dinosaur. Good luck today Minyans--be the ball!

Answers I Really Wanna Know... - 11:30 am

  • Who was it that said that NYC is NOT the place you wanna be during the next five years?

  • Is there any doubt that real geopolitical risk remains as the Beltway Baton is passed?

  • Would a break of crude $60 (new lows) be a bearish tell for equities?

  • Remember when Texas Tea was well into the triple digits and everyone thought lower crude would be equity positive?

  • Would "everyone except Minyans" be a more accurate statement?

  • Did you just hear that?

  • There it goes again?

  • Is that the sound of societal acrimony percolating?

  • Why does a pint of Haagen Daz (chocolate chocolate chip), an Uncle Buck DVD and my bed sound so very good right now?

  • Is anyone in the world not watching S&P 840 as an inflection point?

  • Has "risk management over reward chasing" paid dividends for you yet?

  • Isn't the fatal flaw of fundamental analysis that news is always best at the top and worst at the bottom?

  • And doesn't that work across the continuum of time horizons?

  • Why does the word "kumquat" make me smile?

  • Have you lost your sense of humor Francis?

  • Did I write (or just think) that my angst antennae was vibing extra hard yesterday?

Alright, so here's the situation. My instincts went away on a week's vacation... - 12:13 pm

So, I'm sitting and scanning with powder in my pocket and an eye towards opportunities, chewing through numerous stocks, looking for defined risk set-ups and advantageous entry points. It feels like something big is in the hopper and as a trader of 17 years, these are the times when I earn my lunch money.

The problem is, many of the names I pulled up appear vulnerable to these admittedly tired eyes. Stochastics are "crossing at the top" and while that's one (very small) piece of a very complex puzzle, it gave me pause. Unable to find individual names, I pulled up the SSO (juiced S&P) and drat, same gig--stochastics crossing at the top.

I was reminded of an axiom I learned a long time ago--it's a market of stocks, not a stock market. If you can't find situations of appeal, playing an aggregate proxy prolly isn't a good idea.

As I scribe these vibes, I see Toddo on TV posted with the title "Bottom's In!" To be clear, the context of the conversation is the 2008 trading low (S&P 840) as opposed to the market bottom. Either way, the markets have an ever-changing fluid dynamic dependent on a multitude of factors and while sound bites are nice, the process is more important.

That's why we gather each day in the 'Ville and, alas, it's why I share this fare. Sometimes right, sometimes wrong but always honest, I'm in "do less" mode until I see something meaty in our midst. If we've learned nothing else through the years, it's that opportunities are made up easier than losses.

As always, I hope this finds you well.


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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