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Positioning in Front of the ECB Meeting


The scary aspect of the European Disunion is that it's but one of many potential pitfalls.


Yesterday, with the DJIA down 264 and the S's off 32 and change, I took one arm out of my metaphorical bear costume, which was added Monday at S&P 1200, leaving one arm (25% conviction, for a trade). The intuitive price target, as a first stop, was S&P 1150.

Yesterday's Cliff Branch, it turned out, was the 50-day moving average at S&P 1169. That's where Hoofy made a stand and he held the line for the remainder of Turnaround Tuesday.

This morning, we've chewed through that level as 1) Moody's put Portugal's government bond rating on review for a possible downgrade, 2) the dollar continues to Oxycute carry-traders (breaking out, get it?), and 3) traders, loaded to the gills after an incessant run, turned tail on a technical basis (such as the iShares MSCI Emerging Markets Index (EEM), which violated the uptrend and the 200-day moving average).

I've made no bones about my deep-rooted big picture concerns. The scary aspect of the European Disunion is that it's but one of many potential pitfalls. States are in a scary, uh, state, pension problems abound, social mood is shifting (note the unrest in Greece, which turned violent, leaving three dead), and the "buy the dip" shtick is still good and thick, begging the question of where we are on the denial-migration-panic continuum.

With that said and respected, my metaphorical costumes are pure trades and trades are made to be taken. I eyed S&P 1150 on Monday at 3:30 PM when the S&P was at 1200. While I continue to trade around a gamma position, I humbly removed my other arm from the bear suit, in real-time on the Buzz & Banter, shortly after the opening bell as we edged towards that level. That's 4% in 7ish hours -- better lucky than smart indeed.

Remember Minyans, there's an ECB meeting tomorrow. While nobody is bigger than the market, something one of our Uncle's will eventually learn, a cornered animal will do anything to survive. That too should sound somewhat familiar.

Please keep that in the back of your crowded keppe as we hike up the hump and find our way to better days.

Random Thoughts

  • Do you wanna step inside the Berkshire Hathaway (BRK-A) Annual Meeting with Professor Larry McDonald?

  • Will Warren Buffett's reputation remain unscathed when the dust settles on this financial crisis? I hope so -- we need positive role models and he's been good to the 'Ville -- but it remains to be seen given you're a reflection of the company you keep. He's extremely close to Goldman (GS) and Moody's (MCO), two companies under the gun staring down the barrel of a populist shotgun.

  • Where the heck is Franklin Raines? I saw him on CNBC yesterday and couldn't help wonder how he managed to side-step the cross-hairs given his role as chief cook and bottle washer at Fannie Mae (FNM). Anyone have the name of his publicist?

  • As per Minyan Kirk, have you spied the uncanny similarities between January 2007-July 2007 and December 2009-May 2010?

  • You wanna see the court of public opinion and a court of law collide? UBS (UBS), Deutsche Bank (DB), JP Morgan Chase (JPM), and Depfa Bank (the Irish unit of Germany's Hypo real estate) will face trial tomorrow after having been accused of earning €100 million in "illicit profits" in the sale of derivatives linked to a bond issue by the city of Milan, according to The Wall Street Journal. Pay attention to this case, Minyans, for it may serve as a precursor for many more lawsuits to come.

  • I can't get Mel Brooks out of my head. I wonder if that's some sorta allergy?

  • Is it possible that an American citizen from Pakistan facing charges in the Times Square bomb plot might have contributed to yesterday's slippery slope? I watched an interview with John Bolton on Bill Maher last week when the former US Ambassador to the UN opined that the war on Afghanistan was to gain a "foothold" near the nuclear armed Pakistani state. I don't agree with many of the views of Mr. Bolton, but I thought that was an interesting angle on an unfortunate war.

  • The sharpest rallies occur in the context of a bear market and the sharpest declines (are supposed to) happen in the context of a bull market, cyclical or otherwise. I offer that through the lens of seeing both sides and staying humble (before the market does it for us).

  • Hump? What hump?

  • The most bearish thing on my screen may be the upside reaction in the greenback and the attendant slippage in the Euro. It's almost like the market looked at Greece and said, "Thank you sir may I have another!?!" For more on why that matters, please check out yesterday's vibe, "Will 2010 be the Mirror Image of 2009."

  • On the opening this morning, the VXO was up 86% in eleven sessions. Yeah, that's normal.

  • I reference the Buzz & Banter often for one reason: it's real-time and real good. We built it as an application that allows up-to-the-minute observations on the marketplace and it's where our best, most actionable thoughts and ideas are located. I've never been much of a salesman but it's easy to talk (and write) about things you love and things you know. If you've never seen it, please give it a shot. There's a gratis trial that will allow you to make an educated decision.

  • Fare ye well Minyans, and happy Cinco De Mayo!


Position in S&P
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