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Random Thoughts: Energy Continues to Lag

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Clowns to the left of us, jokers on the right and here I am, stuck in the middle with you.

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  • Right on cue, Ms. Tyler steps on stage. Or is it Mrs. Tyler? Not sure - for all we know, when it was time to step to the altar, she simply turned around...

  • Is this whole "dollar devaluation vs. asset class deflation" thang resonating with anyone else?

  • T-minus 26 hours until Big Ben chimes in with his rate cut decision. Seven out of ten traders who chew gum believe we see 25 bips. One point two of them believe we get 50 bips. Either way, some snippage is expected.

  • And then? Stocks "better" rally as they'll have one less bullet in the year-end gun. If they don't, that dreaded double top in the S&P will remain front and center on the ursine mantle. Lower higher on lighter volume and all that jazz.

  • It's pretty crazy that UBS (UBS) posts a $712 million loss (and takes a $4.4 billion write-down) and folks breath a sigh of relief.

  • Would $100 billion in write-downs "matter"?

  • How do I write down last night's pizza?

  • Mallied?

  • We again asked the question yesterday "If the drillers can't lift with crude's current 'tude, haven't we seen this downside movie before?"

  • JP Morgan strategist Bruce Kasman is halving his 4Q GDP estimate, from 2% to 1%. That caused my uber-slick sales maven Darol to openly ask if stagflation will emerge in '08. The writing has been on the wall for some time, Heavy D, but the trade will arrive when the collective perception begins to perceive it.

  • Meanwhile, we continue to dance while the music plays and watch our tells for guidance. And above all, make sure that your time horizon and risk profile are in synch.

  • We saw some real supply (of the seven figure size variety) in the XLE (energy spiders) this morning.

  • And those drillers? They're off 3% now. Just like that.

  • Where is that money going? High beta tech, for now-- Baidu.com (BIDU), Apple (AAPL), Google (GOOG), Amazon (AMZN) and Research in Motion (RIMM) continue to trade with a bid.

  • Yes, it's narrowing leadership but it's still leadership, if that makes any sense. At least for the time being.

  • History tells us two things. Narrowing leadership is a bearish tell and the financials lead the tape.

  • Can that reverse? Yep. Until it does, be careful please. Or, lemme put it another way, manage your risk. On both sides---the last leg of "denial-migration-panic" is always the most acute.

  • Clowns to the left of us, jokers on the right and here I am, stuck in the middle with you.

  • Steinbrenner and Al Davis. Do I know how to pick 'em or what?

  • And please Joel, please get off the babysitter. It's only Tuesday.

  • Remember that odd-lot put buyer from yesterday? He scooped another 20,000 QQQQ March 49 puts, which brings his tally to roughly 150,000.

  • There are two ways to look at this: a size bet against tech (given the narrowing leadership) or future demand when he turns to cover.

  • I gotta tell ya, I could be a Tempur-Pedic spokesman. It's like climbing into a cloud each night.

  • You know what got weak in a blink? A stock that's been strong for a mighty long time: Goldman (GS). Levels to watch include $240 (there now) and $234, if and when.

  • While I'm watching the slippage in energy (and metals, for that matter), I'm not yet in long-term accumulation mode. Why? I wanna sell hope (seems like I've been doing that for a while) and buy despair (it hasn't felt like that since 2003).

  • Granted, most of the money is made between the 20 yard-lines (read: catching cusps is tough) but I'm practicing my right to be patient. If you're "feeling it," you can always trade "in between" with partial positions.

  • So, Zoë (yes, I have a cat) was at the vet all day yesterday due to a rash (and no, I didn't give it to her). They shaved her neck and put a lampshade-style collar on her, which allowed me to tool on her all night. "Hey Zoe--how was the party? You musta been drunk--you've got a lampshade on your head! If I plug in your tail, will your head light up?"


R.P.


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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Position in GS, SPX
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