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Random Thoughts: Carnage in the Financials

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Keep close tabs on those frisky financials as they've been the anchor around the neck of this market.

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Editors Note:The following originally appeared on this morning's Buzz & Banter and is being reposted here in the hopes that this real time look at the market will benefit Minyans everytwhere..


Scissor Check? - 8:55 am

The S&P futures, which were up 20 when I strapped myself in, have steadily retreated (now sitting up fifteen). Why? Because the longer we go without the "surprise" rate cut, the less likely it becomes. My sense, for what it's worth, is that if they're gonna snip, it'll happen at 9:00 EST.

If we don't get it, expect a probe lower at a point and then we'll trade on the merits of General Electric (GE) and other expiration influences until the afternoon, when redemption watch begins.

So it's said and so you know, my "overage" in exposure will be pared this morning (win, lose or draw). Discipline over conviction, now more than ever.

Good luck, Minyans. Let's end this week with some jingle in our jeans!


Rate Cut? Nope. Haircut? Nyet! - 9:47 am

Alrightee then, Big Ben sat on his hands--mea culpa, Minyans--and I've used this opening jig to pare back on some of the front month (that would be today) "gun to the head, now or nothing" exposure.

The good news? The market is higher, albeit not for reasons I foresaw, so I'm nodding my head as I pare the overage while repeating to myself "It's better to be lucky than smart."

I've still got some inventory (homies, etc) which I'll trail with stops and keep manageable. If the bloom fades from the rose, however, I'll be tight in my risk definition.

Good luck, yo.


Gate Sniffage - 10:10 am

  • The market is begrudgingly higher. Then again, if you were this market you'd be grudging too.

  • I laid 100 to 1 odds that the market wouldn't close lower on Monday and got lifted by a few eager editorial beavers before they realized it's MLK day.

  • A few of the smarter cookies I talk to were discussing the additional write-downs that will be necessary if the bond insurers go toes up. We spoke about the perception of the Ambac shoe yesterday and that, more than anything else, is in Boo's crosshairs.

  • Man, when they take a stock out back, they really take a stock out back! Note Merck (MRK) (down another 4%) and Under Armour (UA) (down another 20%, or 53% since Halloween).

  • On the frip side, the industrials (Deere & Co (DE), Caterpillar (CAT), Alcoa (AA), Honeywell (HON), United Technologies (UTX)) are all catching some love after General Electric (GE) brought good things to life.

  • Keep close tabs on those frisky financials, Minyans, as they've been the anchor around the neck of this market.

  • Lowe's (LOW) and Hot Dog (HD). You can learn a lot just by watching.


Trippy! - 10:52 am

  • Breadth is 2:1 positive and the tape wants to rally but keep a very tight leash on this bipolar stroller.

  • Geez Louise, look at those drillers. Schlumberger (SLB) down 8%, Smith Int'l (SII) and Halliburton (HAL) down 4% and Jed Clampett in a white, rubber room. Yeesh...and that's with crude higher.

  • Really! The Wall Street Journal reports that big bank write-downs have exceeded $100 billion.

  • The VXO and VXN are both down 9%. That, in a vacuum, ain't bullish.

  • When in doubt, sit it out and await ye edge.

  • James Cotton can still play a mean harmonica!

  • Xilinx (XLNX) and Advanced Micro (AMD) are up 10% each? I'll betcha alotta traders these days aren't used to this type of volatility. Old school traders--which, I suppose I am--remember these sorta moves.

  • Gotsa hop, Minyans, I'll be back with further vibage before I selfishly scoot to Rubyville to call on a Maven.


Answers I Really Wanna Know... - 11:40 am

  • Y'all see those blink-and-ya-missed-it art carnage in Wells Fargo (WFC), Bear Stearns (BSC), Lehman (LEH) and Bank America (BAC)?

  • How bout the 9% drop in Fannie Mae (FNM)?

  • As go the piggies, so goes the what?

  • Was this morning's snazzy rally a gift from the trading Gods to layer out of the "surprise" rate cut exposure? (For me, yes, particularly as I won't be at my turret to watch my risk.)

  • Have you and your kids strolled around Minyanland yet?

  • After all, has there ever been a better time to instill the virtues of earning, spending, saving and giving?

  • The VXO and VXN are still down 5%?

  • Is this the probe?

  • Is anyone else dizzy?

  • Baidu (BIDU) is down 150 points (35%) year-to-date?

  • Will it hold its 200-day moving average and bounce back to $300?

  • Is there any reality television show better than this tape?

  • What, my car's here? (Good luck Minyans, be the ball!)


R.P.


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