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Random Thoughts: Are We Seeing Rotation Out of Tech?


Could it be that some markets aren't in agreement with the optimistic equity realm?

The following appeared this morning on the Buzz & Banter and is reprinted here for ye faithful.

Zing! - 9:47 AM

I just finished scribing some vibe on the overnight events, which will post in a moment.

In the meantime, and in the interest of communication, I have taken the trade on my upside rentals, including Schering Plough (SGP) and Pulte Homes (PHM), and added a spate of January puts in the S&P with a stop on the other side of 1490.

I'm not smart enough to know if we reverse today, but given resistance and the rate of the recent rally, I'm happy to take some trades and take a shot.

If we power through this level, the potential remains that we'll stay buoyant into the FOMC on December 11 before, perhaps, selling that news.

Good luck today.

Gate Sniffage - 10:15 AM

  • I couldn't decide between a bacon, egg and cheese sandwich versus a poppy bagel with butter this morning. So I ate both, because I haven't quite added that fifteenth holiday pound yet. What was that seventh deadly sin? Gluttony? (Hand raised.)

  • Why did I take Schering and Pulte off? They were trades, not investments, and I've been eyeing S&P 1490 as a potential pivot. It might be too cute but Gucci Gucci Goo, I'm in make 'em to take 'em mode. Especially with six melds (today) and three launches (December) coming up quick.

  • Red beans in the green seas include the semiconductors (watch these), Dell (oofa, that's 14%, dude), Weatherford (WFT), Johnson & Johnson (JNJ), Research in Motion (RIMM), and Electronic Arts (ERTS).

  • Is Manhattan real estate starting to crack? "Fewer apartments are being sold -- 858 went into contract in September, a 9.9% drop from a year ago and the lowest total in two years," according to brokerage Corcoran Group. (Thanks Minyan AC)

  • So Big Ben opened the door for lower rates and the dollar is higher again? While gold and crude get hammered?

  • Could it be that some markets aren't in agreement with the optimistic equity realm?

  • By the time the world wraps his keppe around stagflation, will deflation be upon us? Or are we way early on that as well?

  • So many meetings, so little time... how can I choose?

Tears for Fears - 10:41 AM

  • Over at the Sunset Grille, there is some serious dandruff forming for metal shares. It hasn't confirmed, mind you, but it's clearly concerned.

  • Hey General Electric (GE), come on down! You're the next contestant on Your Price is Red!

  • I'm not the sharpest tool in the shed but I've been consistent in my thoughts of "asset class deflation vs. dollar devaluation." Through that lens and in that vein, I've been wary of slippage in the energy and metal space as a precursor of equity pain. They all went up together, right?

  • Can Billy Joel be far behind?

  • Or will Hank and Ben star in Saving Private Hoofy?

  • Some smart cookies like Snoop Tony Dwyer and John Roque are looking for higher prices still. Just trying to see both sides of the trade as we collectively find our way.

  • Did you happen to catch soon-to-be Professor Das and his views of Socialism on Wall Street? Fine writing indeed.

  • Hopping into the first of many melds today---it's that time of year--so thanks kindly for your patience as we take care of business in the 'Ville. As always, I hope this finds you well.

Lunch Meat and Meetings! - 11:43 AM

Why is it that the days that I find most "exciting" are the ones that usually include the most amount of mindmelds? I mean, honestly, crosstown melds in the middle of the trading session? Don't these people work? Sigh... a few thoughts from the vette before I must jet:
  • S's over N's, or N's under S's, as the Dell (DELL) smell spread red to the semis and beyond.

  • We spied the chip dip earlier, which serves as yet another lesson that you can learn a lot just by watching.

  • After moving out of the rental business on the opening (read: selling remaining long side trading vehicles) and fading (read: buying puts into) S&P 1490, I've flipped on Otto the auto-pilot as I chew through my to-do's.

  • As I ready to hit the crosstown traffic, I've got select upside situations vs. a spate of S&P puts. Nothing huge, but I like my longs and want some downside gamma.

  • NYSE internals are still 2:1 positive, so you know, and the financials are well bid. The possibility remains that, with everyone leaning against the rate cut, we're seeing a rotation out of tech and high beta and into the beaten down banks.

  • Maybe that lasts until December 11 (I'm not smart enough to know) but, while I respect the power of a corner animal, I don't see the FOMC as a panacea. There's too much debt and too much damage for a quaint 10% correction that held at the August nose, er, lows. Or, at least that's my take.

  • Gotta jump, Minyans---I'll be back as soon as I can. Fare ye well~



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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