Random Thoughts: Navigating Earnings and Europe
See all sides as we piece together this puzzle.
Of course, Europe is but one of our current focuses, albeit the one that matters most. Earnings are also front and center and while financials are notorious for looking ahead (on earnings) rather than dwelling on what was, we would be wise to watch Citigroup (C) and Wells Fargo (WFC)— which I thankfully covered in real-time on Thursday as a function of discipline—as well as JPMorgan (JPM). As go the piggies, so goes the smoke.
I continue to trade around my Research in Motion (RIMM) position from the long side despite the 34% rally off the December 2011 lows (and no, I didn't catch the bottom). While I remain of the view that it works higher, I've decided to only play the stock (I punted the odd lot March 20 calls) as I don't like owning fat-tailed options (and these puppies are pumped). I continue to hold the stock, buying dips and selling blips.
What else? Glad you asked. In no particular order:
- The more meaningful development overseas is that Greece's creditor banks have broken off talks with the government after failing to agree on the size of the debt haircuts. Stay tuned.
- The action in commodity land is worth a mention; in a correlated world, higher commodities—and yes, that includes oil—is asset class positive (including stocks).
- We noted last week that overbought conditions can be worked off as a function of time or price. It would seem, at least at first glance today, that the former storm is in play.
Is Turnaround Tuesday actually Wednesday if the markets are closed on Monday?
- Tom Petty. Cinco De Mayo. Austin, Texas. Booked!
My grandfather sure would get a kick out of seeing his name in the Wall Street Journal.
- Indeed, all a man—or the Federal Reserve, for that matter—has is his name and his word.
Through a macro lens, there is still massive binary risk. The tape acts fabu, all things considered, as fund managers are using any and all weakness to increase exposure. That will work until it doesn't, which is why the onus is on us to respect, but never defer to, the price action.
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Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at email@example.com.
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