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Random Thoughts: Respecting Important Levels

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Trading is like a good diet. You can trip, but you mustn't fall.

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  • Pharma is perking up and testing DRG 320. I own some calls in this complex but positions aside, I respect the importance of this level.

  • Given the run in Schering Plough (SGP) and Elan (ELN) (both up more than 20% from the January lows), I've have made some sales to respect the process.

  • Google $500. See it, please.

  • Market breadth, while negative, isn't horrid, which has left a window open for further upside testage.

  • Proactive patience has always served me in good stead.

  • Trading is like a good diet. You can trip, but you mustn't fall.

  • Jeezums! A Mercury Retrograde post-Bowl Monday? This calls for a steak sandwich... and a steak sandwich!

  • As a wise man once said, this too shall pass.

  • The bungee of discord was likely the easy trade and S&P 1405 looms large. I'm conscious that we've got room to S&P 1450ish (lower highs) but I've got more powder than positions following Friday's freaky fray.

  • What I do have, so you know, is partial and paired, with some pharma calls on the long side and a snivlet of financial puts against it. I do have a handful of situations as well but for puposes of this post, I'm talking broader, market, trading stuff.

  • Early eyes? Reddish, as they nestle betwen Super Sunday and Super Tuesday, and pinkish, at least as far as the banks are concerned.

  • The 3% pullback in the BKX is easily the standout action in the early Monday muck.

  • Hey, I can think of worse "stops" than Gisele.


Minyan Investment Perspective

I was speaking with someone over the weekend as they weighed their investment alternatives. After listening for a bit, I stopped and said "You know, it's not about figuring out what the market is going to do, it's more about what YOUR needs are. That, above all else, should dictate your decision making process."

I wanted to share the takeaway with hopes that it provides utility at some level. For contextual perspective, this particular person is eyeing retirement and wants to protect her nest egg.

  • Only "risk" what you can afford to lose. Once you identify what you're "open on," you can determine the appropriate allocation.

  • Once you determine that speculative exposure, the next step is to juxtapose a time horizon for that risk.

  • If you're looking to preserve capital, make sure that it's in a money market that is backed by treasury bills and avoids the word "enhanced" (which likely means it has a commercial paper, CDO or other exotic instruments imbedded in it).

  • Understand that there are agenda in play and remain proactive rather than reactive.

  • Avoid stock tips and the lure of fast fortunes. There's no such thing as a quick fix. Well, maybe there is but they're few and far between.

  • Capital preservation, debt reduction and financial intelligence are three core holdings to any portfolio.


R.P.


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No positions in stocks mentioned.
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