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Greased Lightning

By

"I've got chills, they're multiplying. And I'm losing control..."

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These posts originally appeared on the Buzz & Banter today and we share them for the benefit of ye faithful.


And the kids they dance and shake their bones and the politicians throwing stones.... - 12:49 PM

Geez, Louise, it's getting hairier than Billy Meehan's back (ewww!) as we grunt and groan over the weekly hump. Some top-line thoughts as I furiously pound my keyboard and inhale turkey-something-or-other for lunch...

  • So, Royal Bank of Scotland puts out a note suggesting that bank write-downs might be $100 billion. Who knows (if it happens or how the tape reacts) but I, as you know, agree with thy majesty. And this is far from a victory lap... nobody is gonna win if the ashes, ashes all fall down.

  • Here's a little anecdote for those buying banks because they're cheap. Once upon a time I was long Platinum Technologies, a software company, as a cheap takeover play. Heck. It was trading at two times sales! I owned a TON of it. And then... it preannounced, cutting forecasts by 50% and was suddenly trading at 4X sales!

  • My point? I was hit up yesterday on Washington Mutual (WM), which was trading below book value. And, of course, we see today's news and the 13% drop in the stock). The market is a forward looking discounting mechanism and generally---albeit ultimately---efficient.

  • S&P 1500 is now overhead as all eyez on S&P 1490. Can Hank pull a Jim Craig and kick-save the tape? Dude---of course he can---don't you know? Still, anyway and so it's said, there is nary a nudge of evidence (other than the dry action in beta) that suggests higher prices.



Mr. Buttah, meet the hot knife! - 1:28 PM

S&P 1490 is upon us and... uh... wait, now it really is upon us. Sorta on top of us. Like, all over us. Like, 2,000,000 SPY printing on the lows...

I'm watching the action---from the 12% drop in Fannie Mae (FNM) to the 50% jump in Washington Mutual credit-default swaps to horrific action in the brokers to... wait, could it be? Google is down a dollar! Now we know we're in trouble!

In all seriousness, the action is serious... but not over until the Fat Toddo sings. Along those lines, and while S&P 1490 is THE level, please note that the S&P 200-day is right here, right now and Hoofy will take what he can get. I have grave concerns (is there any other kind?) but we've seen strange things afoot at the Circle-K of late so trail those stops and stay on your toes.

San Dimas High School Football Rocks!


Remember to breathe! - 1:48 PM

  • Emotion is the enemy while trading. Remember that... it's important on days like this. Leave the laughter and tears for weddings and funerals.

  • Wow, I guess grease really is the word.

  • Be that as it may, expect to see Hoofy's Heroes attempt to defend S&P 1490. The battle lines have been drawn. And nobody's right, if everybody's wrong.

  • Wasn't it Inspector Kemp who said "A riot is an ungly thing... undt, I tink, that it is chust about time ve had vun?" True dat---and perhaps, in some queasy, backward way, this flush in the financials is exactly what we need.

  • The problem with that---which is different from saying we don't see it---is, while the VXO is up 27%, A) we're a ways away from previous panic fulcrums and B) we're still 5.5% from an all-time high in the S&P.

  • Yes, that could be viewed bullishly... but the context is important no matter how you swing your thing.

  • Be on the lookout for a Snapper attempt and remember what "offer vacuums" feel like (they should be ingrained in our memory by now). What to do? Maybe trade a little "in between," take some pressure off or, if able, watch this round from the side of the field.

  • Fe fe fi fi fo fo fum... good golly, Miss Molly, we're busy in the 'Ville today!

  • Yes, there's a method to our madness. A little levity goes a long way!



I've got chills, they're multiplying. And I'm losing control... - 2:58 PM

OK, admit it---you really like the movie Grease. Come on, it's alright, nobody will judge you. Travolta was old school (best role outside of Pulp Fiction) and Olivia? Mama Mia, when she walked out to the carnival dressed to impress? It forever changed my childhood. But alas, I digress...

SO...

Snapper has been trying his best to mount a comeback and trigger a short squeeze into the close. While there is still a shot--there is always a shot given he collective agenda--the attempts have been feeble, at best, and I'm starting to smell turtle soup. Breadth is abysmal (9:1 negative on the NYSE), there are steady sellers in the financials and credit proxies are widening (which is bad) behind the scenes.

Perhaps the most intriguing element of the current juncture is the very fact that we've been saved so many times in recent history. The bears are conditioned to cover, the bulls are using lower levels to add and the dip schtick is good and thick. That, coupled with S&P 1490 (right here, right now), is a recipe for over-thinking (hand raised).

As discussed, I added some S&P puts on the first rally attempt this morning and yes, I'm gonna take some off into the bell. Color me conditioned but speak of me disciplined. I have no interest in hitting a home run, I simply wanna stay in the game and move the runners over.

OK, enough mixed metaphors, I've gotta juggle the struggle and circle my risk. I sincerely hope this finds you well and helps you dwell into the bell.


Beauty School Drop Out? - 3:18 PM

  • Really!

  • See both sides---seriously---and respect the fact that if we DO hold S&P 1490, there will be uber-obvious reverse dandruff to point to in the S&P.

  • Until Google (GOOG), Amazon (AMZN), Research in Motion (RIMM) and Apple(AAPL) break, that scenario stays alive. You don't have to agree with it, you simply have to respect it.

  • Man there's alotta societal acrimony out there---5% off the highs, no less. Imagine what would happen if gawdforbid the market was down for the year? Welcome to the finance-based economy.

  • I just walked into the pit and thumbtacked a crispy fitty on the wall and took an informal MVHQ office pool on where the DJIA would close. The winner will be lit up on tomorrow's Buzz.

  • Wow, I'm tired.

  • We've got Minyans flying in from Mexico (wasabi Raoul) and Europe for Festivus. Hey tri-state area faithful---whataya doin'?

  • Remember, Big Ben tomorrow will shape the tape.

  • Did anyone else wonder what the REAL story was with Rizzo's bun in the oven?

  • Yes, I need help... don't we all?



Sha Na Not! - 3:49 PM

Itchie Owie... it's been a while since we've seen fear---and I mean real fear---creep into the mindset of the masses. As a card carrying contrarian, there's a part of me that views the collective angst as a necessary, overdue evil. As someone who believes that the structural imbalances as cumulative, I'm wary of the wheels falling off the wagon.

So, what to do? Road trip? Toga? Scream ARMAGEDDON and climb under the desk? Nah--too dramatic and believe it or not, I'm in anti-drama mode (no, really). SO, I'm peeling out of my S&P puts - feeding the ducks as we say on the Street - and will go home lighter---if not naked---and take a fresh look tomorrow.

That's my chosen path and, admittedly, not everyone dances to the same tune. If you're a longer-term type, I'll go back to what I said on Tuesday morning---my Lord, was that yesterday?---and offer that capital preservation, debt reduction and financial literacy are the hallmarks of financial longevity.

So, with that, I've gotta hop. I can't begin to tell you how many trading opps I miss while furiously scribing but, you know what? It's totally kewl---there's a much bigger picture with Minyanville and I've got my eye on the ball. But what am I saying, if you're reading this, you prolly already know that.

May peace be with you.

R.P.


Holiday Festivus is here! Come join us and support the Ruby Peck Foundation For Children's Education at an old-fashioned Southern-style hoe-down in the heart of New York City on December 7th. Click the image below to learn more!

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No positions in stocks mentioned.

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.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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