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Random Thoughts: Will the Next War Be Bulletless?


Tying up the final fifth of our freaky week.

It's been some month this week, eh? If you're anywhere close to the frazzled state of mind I'm in, you're likely ready for our requisite respite and some pre-season football.

As such, and given I've already scribed some vibes on the selective short sale ban in Europe-and why I believe it'll ultimately fail-I'm gonna dive right in with a slew of random thoughts.

The only thing I'll ask, with a smile, is that you don't shoot the messenger.

Will the Next War Be Online?

I've been marinating several items in my crowded keppe and as they coalesce, I wanted to share them with the Minyanville community. I'm admittedly "thinking out loud," but that's entirely consistent with our mission to provoke thought and stimulate discussion.

Top of mind is getting to the bottom of what the market has been trying to tell us. My fear, of course, is that it will be obvious with the benefit of hindsight.

Yesterday morning, while in the shower (where I have my best thoughts but not in an American Beauty sorta way), I had an epiphany.

I've openly opined that An Unfortunate Needle Is Pointing to War (both in the 'Ville and earlier this week as a guest the Dylan Ratigan show). Take me at my word; it's a tender message, and one that isn't particularly pleasant for the speaker or the audience (we've been there before).

My question to you is: What if we witness an "online war"? We've already seen strong signs that cyber-warfare is mounting, and it's important to remember that the end-goal, in both war and terrorism, is economic destruction.

The world is digitalized, from communication to banking to the exchanges themselves, so lemme table for discussion a sobering thought: Would the most damaging war not require a single bullet?

Cue the grassy knoll and the tinfoil hats but stranger things have happened. Imagine if bank records were wiped clean, the data fed into your financial quotes was compromised, air-traffic control systems froze, communication platforms (and archives) crashed or the energy grid was infiltrated-wait, didn't that happen in 2003?

Food for thought as the screens are green.

(Editor's Note: Also see: Cyber-Warfare: Investing in the Modern Battlefield and Ten Cyber-Security Stocks for the Coming Cyber-Wars.)

Random Thoughts:

  • I wrote yesterday that IF I gave advice (and we don't do that in the 'Ville), I would offer: "Don't panic, but sell rallies and rotate out of fixed income and commodities." The Dow, through to peak, has rallied over 600 points while fixed income and commodities have gotten hammered. It's a broad brush, I know, but I stand by that view.

  • I don't know if it's latent emotional scarring or a troubling sixth sense but I can't shake the feeling that the last time the market traded as it has the last two weeks prior to 9/11. We can only hope that the market isn't sending the same message, it's clearly telling us something (and it's not the work of handful of shameless bears).
  • Yesterday we wrote, "We're oversold to the point where a Snapper can appear at any time (ala Turnaround Tuesday) but it still feels like most folks are hoping to sell higher levels. Well, that and the fact that the rise of the machines (HFT) is pushing the tape around.

  • Meanwhile in Trollop-Ville, this was Thursday's front page spread on USA Today. Hey, at least I'm doing my part to put in a bottom!

  • If you're currently enjoying a Buzz trial, we'll gladly include a signed copy of The Other Side of Wall Street as a gratis gift with every annual subscription. I would hope the content and perspective pays for itself, but a small carrot never hurt anyone-and it's good for the eyes! Lettuce know and we'll get it done! If you haven't already, take a free trial to our Buzz & Banter.

  • Individual stock tells remain Deutsche Bank (DB) and Barclays (BCS) as European banking tells, Goldman Sachs (GS) and Bank of America (BAC) as stateside reads, Netflix (NFLX) (nice bounce off the 200-day moving average) and Apple (AAPL) (widely perceived to be best-in-breed) for tech, market breadth, the dollar and the action in Europe (reaction to news).

  • Why do the masses still look for advice from the same people who never saw the crisis coming in the first place? It's the definition of...insanity, but that too will pass before the second side of the financial storm passes.

  • Does anyone else feel like a pony yo-yo?

  • How much of this is an oversold bounce, how much is short-covering and how much is getting in front of the perceived regulatory shift?

  • 50-handle moves in the S&P, 100-handle moves in NASDAQ and 500 point Dow swings are tough to digest, and they're not healthy in more ways than one. Identify an approach that works for you and allows you to sleep-and eat. As we've been saying for some time, there will be fewer and newer players by the time we get to the other side. Our goal in Minyanville is to get there together.

  • Have a fantastic weekend, Minyans; you've most certainly earned it.

Twitter: @todd_harrison

Follow Todd and over 30 professional traders as they share their ideas in real-time with a FREE 14 day trial to Buzz & Banter.
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