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Random Thoughts: Read the News and Light the Fuse


The day we've been wary of has arrived.


Jerry Garcia famously crooned, "Gimme five, I'm still alive, ain't no luck, I learned to duck!"

That sentiment has been particularly apt the last few weeks, as headline after high-fiving headline ushered in a wave of supply. While Intel (INTC), JP Morgan (JPM), Goldman Sachs (GS), Apple (AAPL) and Microsoft (MSFT) screamed good earnings news, a chorus of bulls sang the U.S Blues.

I share this thought as headlines abound that European leaders will take "determined and coordinated action to safeguard the financial stability" of the Euro Zone. This isn't a shocker to ye faithful as we've pledged the Greek System for the last week. In the interest of brevity and out of respect for your time, I'll draw your attention to the following content:

I share these with the intention of establishing a credible context for what's evolving on the other side of the world. The sovereign incarnation of the financial crisis, whether it manifests through contagion or is temporarily contained, is a familiar script and one that should remain on our radar regardless of the quick fix currently on the table.

An early sniff at the "reaction to news" reminds me of the muted response to the "blow-out" Intel earnings, among others. Pre-market futures were marginally higher, the dollar--a critical ingredient to our global market stew--is higher (not what one would expect given the European "solution") and the tape continues to trade with a reactive feel to it (buyers are higher, sellers are lower).

Two items of note as we ready to exhale. First, Iran circled February 11th as the date they'll deliver a "punch" that will stun the world; it remains to be seen if today's claim that they've produced their first batch of weapons-grade uranium is the "event". Second, consistent with recent discourse and threaded with steady humility, I continue to trade around a short bias in the S&P and have set my stop on the other side of 1085.

Click to enlarge

Discipline over conviction as we continue to find our way.

Random Thoughts:

  • "Bernanke Says Federal Reserve May Opt to Raise Discount Rate Before Long," was yesterday's top story on Bloomberg. While I would venture to guess that a "tighter posture" by the FOMC is accompanied by more stringent regulation (short sales, CDS reform), the headline, in a vacuum, doesn't help an already unsure world.

  • We've touched on resistance in the S&P; support comes into play in and around S&P 1017-1025.

  • This takes the term "Chinese Take-Out" to an entirely new level. If derivatives are financial weapons of mass destruction, will U.S Bonds emerge as the never-ending army?

  • Social unrest? What social unrest? If I were to paint phase two of our "Tricky Trifecta," it would likely include angry public sector workers closing airports, ferries and boarder crossings, with revolutionary songs and tens of thousands of people shouting "Traitors!" sprinkled in to drive the point home.

  • From Jeff "Coops DeVille" Cooper's excellent daily report yesterday:

    "Beware of Trojan Bulls! If the market buys time here and traces out a longer rally than we have seen----something more than 2 to 3 days----perception will sharpen that another bullish correction has played out, one that echoes the correction process from six months prior.

    "Perhaps, but it is worth considering the same perception crystallized a week before the 1987 Crash following a seven to ten day rally. The masses, at the time, were convinced it was a bullish correction that mirrored a similar correction process roughly six months prior."

  • Did you really think we would get through "Snowmageddon" without some cold rain and snow from the fat man? I think not, Minyans; I think not.

  • I indulged myself by getting a massage the other night and the therapist told me she was taking salsa lessons, I immediately asked "Mild, medium or hot?"

  • If the European Union becomes the second incarnation of the sub-prime contagion, can we call it the EU1-SP1 Virus?

  • If I opted to take the west coast swing with Hoofy and Boo (rather than stay close to home to monitor the tape), would I (again) be stuck in LA as a massive storm shuts down NYC airports? (yep)

  • While we often wonder if sideways consolidation is (bullish) basing or (bearish) churning, does this picture speak a thousand words?

  • Given what's going on overseas, is it safe to say the markets have a Euronary Track Infection?

  • You say jobless recovery, I'll remind you of the myth that was global decoupling.

  • The risk to defining your, er, risk through a technical lens? It's not Gap Stores, it's not The Gap Band and it's not Michael Strahan's Gap... it's overnight gap risk.

  • Gosh, remember when folks aspired to work on Wall Street?

  • Helping 500,000 kids smile while they learn to earn, spend, save and give is what Minyanland is all about. It's way cool and totally free, so please help us spread the world.

  • That's about it from where I sit, other than to say "World, Hold On!"


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