Tuesday, March 10, 2009

Woot Woot! and Orphan Soot

When the widows and orphans are recommending getting short, you've got to have you guard on...and your shorts off!

You saw what I saw today, so I really don't need to recap. Shorts ignited account-fuses lately and blew soot into their own frenzied faces today. Citigroup was up 50%! ...to about $1.50/share. The market was up 380 Dow points! ...to about lunchtime levels of last Wednesday.

Even pigs fly on occasion if you wind them up enough.

Nothing I do requires any tremendous genius. I leave wave counts, price targets and sunflower seed models for other guys. But the ability to recognize pattern shifts and then adjust quickly makes a definite difference. Trade the style you are best at. My style is crazy-time.

As a matter of fact, I'm terrifically unsure just what the hell is my next step. That's true much of the time, but it is especially true tonight. Usually I bring a thesis to each day, but always what I am trying to do is react with the market at hand. That worked well today as I was on guard for a potential blow-UP. The longs in my portfolio and others on Sunday's eligible long-list were quite live and still look tonight like they should advance further. But having said all of that, I didn't like today's rally.

It was all bangers and mash to be sure. Glorious green cascading from virtually every industry screen. And based on the severity of the internals I was willing to bet my dog's left nut we were going to close on the day's highs (not to worry - he's already gelded. I pawned those off in a previous bad run).

But as much of a bullish case every vibrating TV-head this side of Jon Stewart is floating tonight, the fact is this rally was not so constructive as it was classically bearish in style (too-far-too-fast or basically all-at-once action). These are the moves consistent with an ongoing bear and consistently, they do not follow-through; not even the next day...even. Look at the past five or six of these 5%+ beauties - we traded lower the next day and lower-still further out. As I mentioned over the weekend, a slower, more back-and-fill upward bias is apt to indicate a bottoming pattern. This? Well, not so much.

But frankly I'll be surprised if we sell-off tomorrow. There remain too many frothy shorts in the pond and I think the gut-shot (all the way back to last Wednesday's price levels!) may not yet be enough to shake these bears. On top of that, one of the drivers of this bounce is the upcoming hearings on tweaking the mark-to-market accounting rules and that pony show is not until Thursday.

So contrary to my better judgement I'm not going to risk Tripod's nuts again until this M2M meeting is just about underway. The pattern so far remains as thus: The market rallies on an announcement of policy changes or strategy tweak and ultimately turns tail once details (or lack thereof) are defined. I'll push that bet until it pops; tomorrow is a wild-card, but sometime Thursday is perhaps the better (re)entry.

I will short an up-open tomorrow, since I can use the open-price levels for an easy benchmark and simply cover-up if the market is not retreating soon after. But in general I will try to keep relatively market-neutral until the House Financial Services subcommittee hearings begin to define the new-new rules and the market begins to show us the new-new hand.

For all I know we're at the dawn of a new day, stocks have bottomed and Britney Spears is going on sixteen. I'm not a fan of knowing. I prefer reacting.

And like it or not, I've already got a jump-start on shorting an up-open tomorrow. I fired fresh short-shots in the aftermarket during Cramer's latest mouthing. Bank of America was trading ~1.5% higher from the closing price before he muttered something about something about some technical something and I was happy then to short BAC up almost 7%; ave. 4.99 (I keep the Cramer volume very low or off and just look for his pet-stock symbols). Unfortunately he seemed to have struck a chord (not impossible, just ridiculously uncommon), as it is now trading 5.13, or 8.5% above the closing price. This is a quick trade (win or lose), based on the faith that his mouth amounts to more hype when it is open than it does by the next session. The fact that BAC kept right on higher, now more than an hour after the squelch, is concerning; my position size is 5.3% of accounts.

I was heavily long the Russell 2k and even those nasty Financials during the day today, but I let those uglies go before the close and I'm presently flat, following the new BAC short.

I don't have time to explain a great deal during the market, but I have been able to steam-stream my trades via the Tweedfeed >>> Tell a friend...don't do what this guy does.

This was too much of a brag post perhaps; sorry. I know you have but the future on your mind - as you should. But since I cannot spout any great shakes just now on what's the set-up for tomorrow, where the low-hanging dollops of market cream are lying, etc., I guess I just got carried away.

Is Britney really only seventeen?

Total Position: currently 1.03-to-1 net short, (54% invested)

Currently long (according to size): WNR, SNDA, PMCS, HMSY, ARST, IOC

Currently Short (according to size): AAPL, BWA, ALV, BAC, ELOS

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