Sunday, December 30, 2007

Dear Prudence

consolidation after that nice rally. got my Dow 15000 hat ready for 1Q 2008. industrials have the nicest charts. sick with the winners in this rally. Oil stocks getting very heavy. could see a nice selloff in the larger names as rotation out of the winners into tech should be a good trade for the next year.

happy new year to all of my fans and wishing you and yours a healthy and wealthy 2008.

Tuesday, December 18, 2007

La Grange

So looking at individual stock charts, I see nothing pretty in the financials, retailers, or transportation sectors. Can staples, energy, utilities, and tech carry the load? They are going to in order for us to make new highs come 1Q 2008. Take a look at any beverage, food, or drug stock. Good odds that they are consolidating for a move upward. If you want to play the beaten down ones, at least buy write them to take in some income. You may have to wait a while to get some good traction in those suckers.

I made some sales at 1522 SPX and am fully loaded again at 1455. Look for a quick rally from these levels into 1490-1515, then a pause. Come January expiration, we should be ready to rally out of a flag into 1550 territory.

See Barry Ritholtz's Big Picture for some great economic insights, especially the negative real interest rate discussion. With all of this central bank liquidity flooding the system, it will keep a floor underneath financial assets for a while.

Wednesday, November 28, 2007

Cheap Sunglasses

So I am scanning the media this morning and one of the TV shows has a market analyst whose bullishness on tech in 99-02 is noteworthy. This morning, he was the "bear" in the conversation. That is all I needed to know, 300 points later on the DJIA and it confirms most market moves. This afternoon a report on how to "hedge" your home from losing its value. A little too late? The market is a forward looking discounting mechanism. If you listen to what the money honeys are saying, its too late to act. I would take some profits SPX 1485-1495 in order to reload on a pullback, but still looking for a rally above 1540 in Q1 2008.

Gold had a nice dip last week, but I did not buy it. Oil missed 100, probably headed for 78. Aggressive traders could buy put spreads on oil ETF's. Volatility will crash on the way down. This is a commodity play, not an equity play. Stay away from energy stocks unless the chart looks like a breakdown.

Volatility is still high, would be a seller of OTM options vs stock, especially in financials.

Thursday, November 15, 2007

I found my thrill, on Blueberry Hill

Had the trigger ready to put some shorts on at 1495 SPX, just a bit outside, would have been nice. Ah the beauty of the market, you can get another shot if you preserve your capital. One way to do this is to trade options. Yes, that is the derivative of choice by myself. Having grown up in the pits with my values on paper, it is the only way I can make rhyme or reason of any trade. Today I will start on some basic strategies:

I. Buy writes. Get long a stock you like and sell a slightly out of the money call. Very simple, able to earn good returns with some downside protection. What every investor is looking for. Of course I look for large cap names that have a nice spread between the 30-day historical and implied volatility. Stay away from any event like earnings or merger plays. You want a flat to mild up trending stock. For example, if you bought KO when it broke 50, wrote 55 calls all year, rolled the last one up to 60, you would have easily turned a 20% gain into 30%. That buys a few extra cases of diet coke.

II. Straddles. When a stock hits a 52 week low, I like to buy the ATM straddle to see if we bounce or break. Look for more than 15 day paper, and keep the trade on a short leash. Some recently good trades were on the financials as panic selling created the waterfall and then a mild bounce.

Thursday, November 8, 2007

Bad, Bad, Leroy Brown...

Long and wrong. What to do. I think we hold em and let some go on a rally back to the 1500 level SPX. Hate to double dip in this volatile environment, but still some names are being stomped. Would nibble on more big cap tech here if underweighted, add to financials if flat. Probably the best move is to buy call verticals going long deltas and skew.

Tuesday, November 6, 2007

Pour some sugar on me.

With all this bad news, the market holds. That means it wants to go up and watch the shorts go screaming for the exit. I see new highs come year end. I also see the far-east settling down. Waiting for a good entry in gold, seems it makes a new high every day. Once we get a bounce in the dollar, since everyone is short, gold will come down also. My view on crude is stay with the trend, looking to get long also, but not at these levels.

Stay with the winners in equities: tech, drugs, and consumer staples. You can bottom fish, but tax selling ain't over in some others. Financials are good values, but you will probably have to wait a year to get a good rally in them. Small caps are under owned, look at some charts for breakouts in beaten down names.

Still like buywrites with the VIX over 23.

Countdown to November 17

Tuesday, October 30, 2007


You notice this guy on CNBC who is the current star "journalist". You see his book is out on the shelves. No wonder he has the latest word on everything. I don't call that unbiased, just clean business. Call it for what it is, let the buyer beware. If I made a statement without disclosure, I could lose my job, how come reporters have that option?

Now back to our regularly scheduled market, time to take a breather after a 68% retracement of the latest downdraft. I would not be surprised to see a test of 1515 SPX before we make new highs for the move. Still like the short vol play after 3Q earnings, tax selling, and mutual fund distributions. Set up them buywrites.

Friday, October 26, 2007

Hey Delilah

So the market did not crash on Monday, or Tuesday, or Wednesday. In fact, we have held the 1495 SPX level quite easily. With a retest early in the week with afternoon rallies closing out the days. Money managers are busy setting up their end of year holdings. Have you seen MSFT this week? Long tech, out of anything financial seems to be the game.

Speaking of financials, speaking to a prospect the other day, he asked my opinion of a beaten down mortgage company, suggesting he thought is was a buy. I said, how could it be a buy if the CEO just cashed out after they sold a convertible to a larger institution. Hey, I used to watch the CNBC Dennis Koslosky interviews with him sitting in Bermuda also. That stock was a buy at 8 too after crashing from 60, but the CEO was a crook, not a bad business model.

Saturday, October 20, 2007


So here is the scenario, middle of October, options expiration, news about currency dislocation all over the tape, two middle market baseball teams in the World Series (probably), market coming off new highs from the summer, a really bad selloff on Friday: 1987 redux???

If I was still a floor trader, probably take one of those 10-1 shots here on some cheapy puts. Something like buying a lottery ticket and you know what the last number is. However, now that I work with clients, I am already positioned with some cash and was able to be a net buyer on the day. If there is that "Black Swan" event, our portfolios are pretty diversified and bonds and commodities will do well.

Looking for 1495 SPX to hold, I would start to get nervous with a weekly close lower than that. Buywrites looking real nice here with VIX blowing above 21.

Thursday, October 11, 2007

Smoke on the Water

A few things are making me nervous about this market run:

1. Oil making new highs on expanding economy. Wait, I thought oil was a commodity not a consumer staple.

2. An old time naked put seller V.N. has closed up shop again after covering his out of the moneys. Last time he was forced to cover back in 1998, we had a 5% drop the next month.

3. Talking heads confused once again how the market can go from bad to good in a few weeks.

4. No real interest in the MLB playoffs.

I like buywrites on some defensive names here.

Monday, October 1, 2007

Do Do Do, De, Da, Da, Da

No blogs from me because nothing has changed. The trend is up as we make new highs on the DJIA and NDX. Best September in 9 years, Citi trades higher after missing earnings. Bulls still in control. For those with conservative bents, I would sell at the moneys against some longs to pull in some income here. If we rally, then you made some nice gains, if we fail, then you've lowered your basis for a fourth quarter rally.

The Mets got what they deserved. Lollygaggers.

Seems the Yankees are hot, but I don't think their pitching holds up against the Indians.

Wednesday, September 19, 2007


What? The market rallied? The Fed cut 50bps? Who would have believed this reading all of the so called experts. The charts never lie. Another 1.5% and we are back at new highs. Once again heading into earnings season, if we hold that 1475 SPX level, 1650 is in the cards for year end.

So the Mets are now playing like minor leaguers. I cannot catch a break anywhere. My surprise pick in the NFL this year, the Oakland Raiders. They took Denver down to the wire on the road, I like them make it interesting in the AFC.

Sunday, September 16, 2007

All Along the Watchtower

Hurry Up and Wait. That is the tone of the market these days. Did anyone notice the friggin rally on Friday? We gap down 100 and trade up 30. You think the shorts are in charge, I beg to differ. Sure volume is not what it was on the down days, but it never is. Price is the leading indicator on the upside. When we get a close over 1500 SPX this week, then the fireworks will begin. Fed shmed, I see 25bps with "easing" language. That should keep the bull market in tact from a psychological view.

Take a look at the consumer staples charts, they are quite strong as they should be. A falling dollar, slowing GDP, pricing power, all good things. Think about it, are you going to stop buying your favorite soft drink for a $.03 increase? I think not. The wife just bought 3-12 packs for $9.99, last year that deal was $8.99. Less than a penny, but multiply that by a billion and it shows on the quarterly earnings.

Oh by the way, did anyone see the Notre Dame offensive line? Cause they were not in Ann Arbor yesterday. Maybe there is somthing left in Lloyd Carr's tank. I'll take a win over Ohio State please.

Monday, September 10, 2007

The Longest Yard

Ohio State, USC, App. State, and now Oregon. The NL playoffs can't come any faster. Yes my fall is over, time to concentrate on the pitching matchups against the Dodgers or Padres. I think a healthy Pedro will take the Mets back to the brink.

Speaking of the brink, a lot of my technical brethren are calling for the market to retest the summer lows. September is normally a weak period, Financial stocks in bear markets, the Fed on hold. That is why I like the upside here.

Wednesday, September 5, 2007

Every little thing she do is magic

Will the Fed cut rates? That is a question that was asked to me on Labor day. My unqualified opinion is not will they, but what happens if they do? Right now the markets are discounting a cut, so will it be a sell the news type of reaction? Will a 25 or 50 bp cut really effect the credit markets? Not really, but supposedly it will be a psychological buffer. All I have been saying is stocks got cheap, Bear Stearns did not go out of business, and fear ran real rampant on a 7% pull back in the indicies. If you are playing the home game, I would lock in some of those short term trades by the end of this week in time for Fed Watch 2007.

By the way, $%^* Appilation State.

Friday, August 24, 2007

I write the songs the whole world sings.

It seems some of you are not in tune with my song titles these days. I guess any Barbara, Barry, Neil or Englebert are not cool (hip, phat, jive) enough. Its always that damn rock and roll. Ahh to be young again.

How about those Texas Rangers. They scored more runs in one game than they have since the All Star Break.

Thursday, August 23, 2007

Memories, like the corners of my mind...

Investors have a long memory. Most people can talk about the details of the exact trade that made them a lot or crapped them out. Those that lived through 2000-2002 saw 30-80% declines depending on sectors. A mere 10% dip off of 4 years of gains is pretty tame compared to the last down market. That is why I expected the market to have a nice bounce, the small fry did not sell. This move, for the umteenth time, was all about liquidity not valuation. If earnings are short, then I will change my tune.

Monday, August 20, 2007

Who took the kishka?

My buddy Rob and I attended a party held by Kinky Friedman hawking his new line of cigars. Smoked a "Texas Jewboy" (of course). Very smooth, a little tough draw but and overall good time. Not my preferred corona, but one of the better torpedos I've had. Very interesting character Mr. Friedman is. Although his politics may be far off the norm, his causes such as animal rescue and human rights are pretty much right on. Just found out a cigar bar is opening in my neighborhood. I guess my life insurance premiums are going through the roof.

If you looked at the market technically on Thursday's close, and added expiration, what happened was pretty in line. It was a coiled spring, just needed a push (thank you Sr. Bernake). As the yen begins it decent back to 120, we should see some upward push on stocks for a couple of weeks. Still need to close above 1500 SPX to reverse all of the techincal damage of the past month. I would use this time to take some quick trades and/or reduce risk.

Two weeks to college football season gets going. My Wolverines are #5 in the coaches poll. Big games include Notre Dame on 9/15 and Ohio State on 11/17 (my 40th, so a couple of tickets including flights to Ann Arbor would be a nice gift).

Thursday, August 16, 2007

Its Raining Men....

Actually, its raining stocks. They are all on sale.

Getting into the pennant races. Yankees making it interesting in the AL, Mets with a small lead over the Braves.

I really do not like Starbucks. Too much money for a mediocre product.

You really need to check out Cousin Keith, his writing is fantastic.

Monday, August 13, 2007

I want to Rock and Roll all night, and party everyday.

Looking at a number of charts. Had a lot of hammers and dojis (for those who candlestick), MACD crossovers and over sold stochastics (for the technofiles). With a retest of 1425 on the SPX, we will rally from these levels. My guess is a break of 1500 on the upside.

It is no longer flooding here in Texas, finally summer has arrived. 100 degrees and climbing. In the pool with the kiddos, on the golf course scrubbing up some clients.

For those who smoke cigars, I highly recommend the Cusano 18's. After being a Montecristo 3 for most of this decade, I find the Cusano a refreshing smoke at a reasonable price. Had one the other evening with a little Ruby Port. Ahhhhhh.

P.S. New line of cigars out from my man Kinky Friedman. Need to check out the Texas Jewboy.

Tuesday, August 7, 2007

Good Day Sunshine.

Borrowing from Bull Durham:

"Its a simple game. You hit the ball, you catch the ball, you throw the ball. Some days you win, some days you lose, some days it rains."

Any other explanation of why things happen on a day to day basis in the market is pretty lame. There is no PPT, no black ops options team. It is fear and greed that causes individuals, traders, and fund managers to do what they do.

Saturday, August 4, 2007

This is the end, my only friend the end.

So this is what happens on Fridays. Market down all day and a massive dump into the close. My guess is next week the shorts get rammed on Friday. Remember, the market will trade to cause the most pain. Right now it is the bulls. Speaking of bulls and bears, it seems our friends at BSC are getting a lesson in risk management. The stock is now priced with a 20% decrease in earnings based on this CMO mess. They will be acquired before any talk of bankruptcy becomes real. I heard Cramer blew a gasket on TV the other day. Quoting the most important philosopher of the last century, What a maroon.

Wednesday, August 1, 2007

Blood on the streets in the town of New Haven...

Well, the SPX closed below my target of 1465 yesterday. What does that mean? I would use this doom and gloom to snap up the best quality financials, housing, and natural resource stocks. Oil seems to be getting frothy. For a short, it would be in oil stocks since they would have to correct soon. Remember, sell when you can, not when you have to, and buy em when they are on sale. It looks like Nordstrom's anniversary out there.

Friday, July 27, 2007

We have nothing to fear, but fear itself.

When the market corrects a quarterly move in one day, most people get the feeling we are heading for some kind of disaster. Because of electronic trading and globalization of markets, what is happening is an overnight readjustment of risk. In the past, this would take months, the past 2 years we have seen it take days. I would use this opportunity to pick up battered names that are still in uptrends.

Thursday, July 26, 2007

An Okie from Muskokee

One of the most consistent ways to make money on Wall Street is to buy what is called deep value. Usually, these are companies that are down on their luck, but have good management and sound financials. These are not trades, but if you take a long term outlook, they will be a great part of your portfolio before long. Examples are energy stocks from 1998, tobacco in 2000, and tech in 2002. My pick today is housing. Every day we see the bad news coming out about the housing market. The stocks have already discounted this as they are hitting 52 week lows. With many trading under book, find the solid management and buy and hold.

Monday, July 23, 2007

Just a Good Ole Boy

If I was a betting man, the trade here is to fade the flight to quality. Maybe get long some closed end hi yield funds which are at 52 week lows, and short treasury ETF's. The flight to safety is a lot like out of the money put buyers after they have taken a hit. Sure it lets you sleep at night, but you are locking into a bad position usually. This was a pattern that I saw in the merger arbitrage game. When no one needed puts, they were cheap to own. Once the proverbial shyte hit the fan, the out of the moneys would trade at ridiculous prices. For example, back in early 2001, GE was trying to buy HON. With GE trading around 50, the deal was worth 52.5 for HON share holders. The spread, where HON actually traded, was 2.50 or 50 for HON. The 40 puts were trading at $.80. Guess where the stock opened after the EU slammed the deal? Thats right, 39. No real protection, but you had to own them.

Wednesday, July 18, 2007

All My Rowdy Friends are Coming Over Tonight.

Isn't it funny how Hank Williams Jr. is more popular because of Monday Night Football than his entire career? I guess its a family tradition.

As posted previously, index break outs are usually short lived. Too many other factors are at work. Earnings season is upon us so crank up the volatility and keep to your discipline. Right now I like some tech names that have not really participated in this quarter's run up.

Back in baseball, the Yankees are toast. Yes, stick a fork in them, they are done. Its time to get Metsmorized.

Thursday, July 12, 2007

Spirits in the Material World.

So did you catch Live Aid? Yes, the one 22 years ago, not the terrible music played last week. Does anyone really care about the Police getting back together? Sting is by far the most overrated musician of the past 20 years. I liked there stuff when it first came out, but it really doesn't have any staying power if you know what I mean.

Massive short covering today. Especially the retailers. Sears misses and guides lower, all the hedgies get short any other retailer, and the first rally they scramble to cover. Index breakouts rarely work as a trade, I am guessing we get some overbought signals over the next week.

Friday, July 6, 2007

No Reply at All

Big jobs number coming. We will see if that 5.25% is tested on the 10year and how it hits the market. I would not chase any rally here.

Tuesday, July 3, 2007

Ramblin' Man

Market has pretty much stabilized as bond yields come down. Today's action, as the 10yr bounced off of the 5% line, will lead us the rest of the month. If the market gets comfortable with 5-5.25%, and we get liquidity back in the hi yield and CDO's, then we can have a continuation of this summer rally. Me thinks the market could hick-up further down the line as earnings will not surprise as last quarter. Still like 1465 support in the SPX.

Enjoy the 4th.

Tuesday, June 26, 2007

Green River

Hedge funds blowing up, credit spreads widening, SPX below 50-day MA. Just what the doctor ordered to put some volatility back in the market. Like I prevously stated, all the sideline cash is in, so there should be less support and more time in this correction than the last 3 or 4 we have seen over the past 2 years. My guess is a nice downdraft occurs after the Fed meeting. Hey, they need someone to blame it on.

Hearing a huge 4-way trade in NBA. Does it really matter?

Thursday, June 21, 2007

Video Killed the Radio Star

Just imagine this, your favorite broadcaster decides after years of being on the sidelines, analyzing the game, he could jump right in. I mean what if Howard Cosell jumped in the ring to fight Larry Holmes, or Jim Nantz became the next coach at Kentucky, or Matt Lauer was running for mayor of New York. Sounds funny, but it is happening on Wall Street. Yes, one of the long time market cheerleaders, Ron Insana, is building a fund of funds. Because of the 20 years spent reading news reports of what analysts said, CEO interviews, and having lunch with money managers, makes him the right man for the job. I guess we can all go short now, since this is definitely a sign of a bubble in the markets. Moops.

As they Mets take a month off from playing baseball, I am looking forward to the pre-season hype for college football. Here in Austin, its all Longhorns, all the time. I think Colt McCoy has a good chance of getting back into the quick pass offense that he was successful with last season. The rest of the Big 12 seems weak, so it should be another BCS bowl for Coach Mack Brown.

Sunday, June 17, 2007

Don't Stop Believing

Yes its been one week since the Sopranos ended. But life goes on. I think that's what David Chase wanted to put across.

The market had a nice bounce off of the 50day MA,(thanks Muckdog). With options expiration out of the way, and summer vacations starting, my best guess is the sideline cash has been put to work. That means the next dip, is going to be slower, and further. Probably a break of that 1515 pivot makes a nice short trade into the 200day around 1460, into late summer. Based on the earnings and now a normal yield curve, trend is still up for the next 12-18 months.

Getting back to the Mets and Yanks, El Duque getting lit up by his former team. I don't think the Mets have it with a starting rotation collecting Social Security.

Thursday, June 14, 2007

Season's in the Sun

So when bonds have a massive selloff and that takes equities with them, which do you buy? Based on the action of the past week, you take stocks. My mantra is to buy em on sale, smoke em when you got em, not when you have to. In english, usually things get out of whack on the down side fast, so you should always have cash for these moves. But how do you get cash? You need to sell them either when they are going off the charts, or when you hit a mental stop.

Off to see the Spurs sweep.

Tuesday, June 12, 2007

Take me out to the Ball Game...

Took in my first Round Rock Express (AAA, Houston) game last evening. John "Bob" Saccamanno had the big stick with 2 boppers. The later came with 2 on in the 6th to straight away center field. We'll see him in the show.

The SPX bounced off of that 1515 pivot I mentioned the other day. Mid day strength could not hold especially with the 10-yr note above 5%. Apple I-Phone news out so the stock reverses an all time high. Even with an upgrade today, you probably have seen a short term top in the name. Support in the 97-99 range for you dip buyers.

Keeping a keen eye on the Gold chart. Looks like the bugs have left and trend is down. As the dollar rally continues, watch for more downside action in the commodities. With gaps in material stocks from last week takeover rumors, it may be a good time to play some of these on the short side.

Friday, June 8, 2007

"Sweet Ginger Brown"

So I bluffed the first pot of the night. I had a Jack and like an off 6, raised once, took the pot. The rest of the night went quickly. Had Jack Ten suited on the big blind, rest of the table folded except for me and the short stack, he goes all in, I call, he beats me with pocket Queens. Next hand I fold Ace of spades, deuce of clubs, flop comes all spades, guess what floats on the river?

Watched some of the celebs in action, Kevin "Hercules" Sorbo was the most popular player, not so much the best. Also, the Major League Bubble gum champ of 1977, Kurt Bevaqua, at the table.

Many thanks to Rob at KASE 101, I think the turban would have worked great.

P.S. the market rallied off that fib line at 1500. First resistance 1515.

Wednesday, June 6, 2007

You got to know when to hold'em...

One of the greatest concerts I have ever seen was Kenny Rogers at Foxwoods Casino. Pre-botox, he was the man. He did this thing where he picked a guy in the audience, asked him if his wife/girlfriend dragged him to the show. Then, he said "I'll make this worth your while. I'll give you $10 for every song you recognize." As he rolled thru the hits, he kept on doleing out the cash. The guy took home around $100.

Speaking of the Gambler, I was invited to play in a charity poker game tomorrow night. All I keep thinking about is the scene in Ocean's Eleven with Brad Pitt and the young Hollywood crowd. "You don't want 4 cards, you want to fold. Ok, I fold". Maybe I can beat Haley Joe Osmet.

The market has started its long overdue corrective move. Fibonnaci retracement on the S&P looks first at 1500, then 1465. Since the moving averages are upward sloping, shorts should be quick and cash nibbling at the support levels.

Sunday, June 3, 2007

Ain't Love a Kick in the Head

Catching the original "Ocean's Eleven" in the background, not as slick as the re-make, but probably way cool for its time. Hey anytime Cesar Romero takes off the make-up, its got to be good.

For any of you who grew up like me collecting baseball cards, you remember the color and style of the different years. Especially when you "flipped". When I was in elementary school, we flipped kind of like playing gin rummy. You had to match the other players cards. I vaguely remember some kind of shift in your hand when you had double of something that would always give you an edge. When I moved across town at the age of 12, they had a different way of doing it. Something about "Larry's". I never caught the grasp of it and now have only that brief memory of what, at that time, was the only subject I could concentrate on. Check out this link as the author describes his deflowering in relation to his baseball card collection:

Of course, I was the type who hated the kid who's Dad bought him the complete set. That's cheating in my book, I would scrunge up $.75 or so to get that 3-pack every week. Somehow, you always got stuck with a lot of trips that everyone else had. But you looked cool at school with the big "wad" of cards wrapped by that industrial strength rubberband.

Thanks again to Topps, without whom, I don't think I could have made it out of 6th grade.

Thursday, May 31, 2007

He stopped loving her today.

You ever notice that people want something for nothing, and nothing is never good enough. Using basic calculus, then something is always the least. A bird in hand is worth two, whatever. As long as my stock is going up, nothing is wrong with my stock and vice versa. Guys like Steinhardt and Robertson couldn't grasp this in 1998-99 with the Nasdaq rally. They hung it up. I guess when you amassed a few hundred million, its easy to retire. Very simple, pick your entries carefully, define your exits, take some risk out of the equation when you can, let the rest ride.

I mentioned spin-offs before, here the street is giving you a great entry. The big holders don't want these little stubbies on their books, so they dump'em. As long as you give yourself some room (remember time and price), then they can work fantastically well.

Wednesday, May 30, 2007

China Girl

Thanks for all of your commentary to my patriotism. I enjoyed the quote "the only time I feel red, white and blue is when I do laundry". Still holding back the tears from that. Well its back to business.

Woke up this morning, and the idiots on TV blaring the "Shanghi Swoon" alert. If a market goes up 30%, then down 10%, then up 40% in 6 months, do you really think it can't be down 6% in a day? The fact that it is the largest Socialist country on earth doesn't surprise you that they can get more tax dollars by raising fees on stock transactions? Doesn't anyone remember 1999? Beuller?

While I am on a rant, last night I read an article in one of these wealth advisors magazines. The supposed "financial writer" who contributed to this article on OTC derivs really blew my mind with his ignorance. He compared a bond fund that sells the CDS on its holdings is equivalent to covered call writing in equities. When in real life, we all know that the fund manager is simply doubling his bets. It is actually the equivalent of selling puts, not calls on his bonds. But that really doesn't matter, does it?

One item flying low on the radar is the amount of spin-off activity. While not as sexy as private equity cash deals, spin-offs allow you to trade like an arbitrageur with a hell of a lot less risk.

Monday, May 28, 2007

Memorial Day 2007

Hopefully, we all paid our respects today along with the BBQ and swimming pools. Its great to be an American, but we all have to take time out of our hustle and bustle to think about how we got here. The sacrifices our ancestors had to make in order to provide us with our special brand of freedom not seen anywhere else. How many articles have you read today that criticize our government? Never before the United States was around would the public have the liberty to speak against our leaders. We have massive infrastructure and superior social services for half of the cost compared to others. From 1945 to 2001 we lived undisturbed by foreign advances and were allowed to pick and choose our battles. On a day like today we must look past individual needs in order to view our common goal.

Thursday, May 24, 2007

You Want the Truth, You Can't Handle the Truth.

Yep, stayed up all night just to catch Jack Nicholson explode in the courtroom. I'd say its one of the top 3 movie monologues. Alec Baldwin in Glenngarry Glen Ross and Mel Gibson in Braveheart are my other faves.

Cousin Keith over at Turbulence of Dreaming would like me to translate some of the terms I use. Let's look at the previous post:

Yes, Gordon Gecko, Boesky, and Dennis Levine are all back. made a lot of cash insider trading in the '80s both fake and real Private equity investors, not junk bonds, are the new rocket fuel for the merger game. idea here is that Wall Street needs to do deals in order to survive Adam Warner (AMEX Alum) over on the Daily Options Report brings up some really good facts. Blue Horshoe loves everything. another former market maker from the American Stock Exchange who blogs it real good, reference to the movie Wall Street Market opens up to new highs and sells off on Greenspan. Yep, that's correct, my great uncle Al said that China was a "bubble"and the spoos decided to hit the mattresses. My grandfather's name was Greenspan, the stock market closed on its lows after trading to a new high, reference to The Godfather WRONG. Its Moors not Moops. Seinfeld episode where George plays Trivia Pursuit with Bubble Boy This market has been toppy for 2 weeks already. NDX way underperforming, 30-yr rates backing over 5%, dollar, gold and oil all reversing trend. Liquidity drying up so assets need to be sold.random thoughts on what my gut tells me is going on in the markets after being involved for nearly 2 decades. I would wait till the price hits 1450, by then all the suckers will be out. Mr. Valentine sets the price. where the SPX index chart shows some support, and a Trading Places reference Happy Shavuos to all, and to all a good night. what Charles Dickens might have said to his Jewish neighbors on the day we celebrate when the Law was received at Sinai.

I hope this helps Cuz! using old school exclamation point because I can't remember how to do those smiley faces!!!

Wednesday, May 23, 2007

Because its Wreckable.

Yes, Gordon Gecko, Boesky, and Dennis Levine are all back. Private equity investors, not junk bonds, are the new rocket fuel for the merger game. Adam Warner (AMEX Alum) over on the Daily Options Report brings up some really good facts. Blue Horshoe loves everything.

Market opens up to new highs and sells off on Greenspan. Yep, that's correct, my great uncle Al said that China was a "bubble"and the spoos decided to hit the mattresses. WRONG. Its Moors not Moops. This market has been toppy for 2 weeks already. NDX way underperforming, 30-yr rates backing over 5%, dollar, gold and oil all reversing trend. Liquidity drying up so assets need to be sold.

I would wait till the price hits 1450, by then all the suckers will be out. Mr. Valentine sets the price.

Happy Shavuos to all, and to all a good night.

Tuesday, May 22, 2007

Its Fun to Stay at the Y-M-C-A

Dow 30 closes in red for 2nd day in a row, I guess we are in a bear market.

Many of the people I meet are willing to make less money then make a simple move.

Where are those Yankee fans now?

Looking forward to that 3-day weekend.

Thursday, May 17, 2007

Pizza in a Cup

I've been asked what is the difference between making markets in options, trading merger arb spreads, and building diversified portfolios. The answer is your risk/time ratio. That is how long do you have to get out of a bad trade or position. In the first two cases, you would take on large risk, but have a small time frame. In the last case, we look at a longer time horizon hence taking less risk. This also allows us to rebalance quite frequently in order to capitalize on volatility.

Very scary to be leveraged up on the long side here. Gold/oil has started to diverge which should create a squeeze in dollar/yen as it has the last 2 years. 10yr also backing up to 4.75 which should send in the asset allocators soon. But I forgot, TTID.

Wednesday, May 16, 2007

Wasting away in Margaritaville

So Buffett doubled up in JNJ, Soros in MSFT, and Lampert in Citi. Couple of observations:
1. None of these stocks are going to be takeover candidates, just investments.
2. When you have $1billion to invest, you really can't park it in any old tech stock.
3. As investors, these guys are good. As traders, you could do a lot better. One of Buffets top holdings, Coke, has done nothing until this year. You would have done better in cash and waited for the breakout.
4. Markets will be liquid until they are not. Just last week C traded 15mm in blocks at the 53 level. Where were those buyers in March at the 49 level? Running screaming "sub-prime" disaster. Hey in 2000 we had the biggest M&A activity of all time, did not keep the investors happy forever.

All I am saying is be careful. Diversify and do not chase. There are times to load up, but I don't see this as one of them.


Nasty long tail evening star. (Candlesticks are so cool.) Market trades lower from open, makes a new swing high, closes on the lows. On Bloomberg this AM, analyst sees Bank of England raising 2 more times and FED lowering by end of 07. Makes case for overweight Europe vs US in equities and large cap names that have non dollar exposure. Bank of Japan decision this week, keep eyes on 120 dollar/yen.

Missed the Country Music Awards last night, did Kenny Rogers win anything? Go Utah, would love Jazz-Cavs Final, all three people would be watching this on TNT. Whats with the World Series going later in the year? November in Boston, that is really the place for the Fall Classic.

Too all you local Austin Independent Businesses from the meeting yesterday, thanks for the drink tickets, 12 year old Glenlivet really hit the spot on a Tuesday evening.

Monday, May 14, 2007

Hollywood Nights

Nothing has changed, but nothing really is different either. GOOG once again taking the NDX lower. Nice divergence with the DJIA. Saw the same thing in February before a little jig. Options prices getting a nice pop, odd for expiration week. Feels like summer already. Watch Gold here around 670, 50-day MA with a triple top near 700. Funds will pile in on a break of the range.

Thursday, May 10, 2007

My Kind of Town

88 and Sunny this afternoon in Austin. No complaints from this New Yorker. Caught most of the Utah/Golden State shootout last night. I think GS has it tough with only Baron Davis to carry the load. The Jazz are playing tight D and nobody can match up with Boozer.

Finally, the dip buyers get stopped out. Chart support for spoos in the 1450-1460 range. Still watching 120 dollar/yen as to global liquidity. OIH trades lower even though spot crude up. Will be interesting to see how Asia trades over the next week, leading or lagging?

Wednesday, May 9, 2007

Its time to play the family feud.

Door #3, market rallies as FED continues its vigilence over inflation.

Can you spell c-o-n-u-n-d-r-u-m. I thought you could. Now repeat 3 times, I will not fight the yield curve. Gee, a lot thats done, I guess, TTID. (this time its different).

Caught a "private equity" fund manager on boob tube today. Guy sold his internet biz to EBAY in 2000 so it makes him a market guru today. Says this rally is saudi fund managers putting petro dollars to work. Could be, but I thought they were buying the T-Note? Theory is the same, world consumption of oil brings riches to Saudi Princes, who buy our securities, which keeps down interest rates, which increases consumption. And so on and so on. So I guess until oil hits $35 again, we are in a bull market. Interesting fact he brought up that they do not buy oil stocks. Hmmm, OIH underperformed today, maybe.

If you want to see how far the FED can go, check out Volcker's crew in the '70s. Fun stuff.

Same as it ever was.

Roger Clemens back with the Yankees. I'd say pretty good chance he underperforms this year.

Market opens lower, dip bought, shorts afraid of FED. Two scenarios. First, FED unchanged, market sells off on "profit taking" and "wording of statement". Second, FED CUTS, market euphoria creates blowoff top. Balance, focus, power Danielson.

Monday, May 7, 2007

Dude Looks Like a Lady

Key tells in today's market:
GOOG testing 465. Market telling us they like MSFT/YHOO.
Leaders in materials and consumer stocks like AA, ATI, XOM and KO.
Transports down with lower energy prices.
VIX moving up with new highs in SPX.
Still watching 120 dollar/yen level for global liquidity.
Nasdaq definitely the laggard, flight to quality of big caps.
These divergences create fuel for the bears, but no trigger yet. Need to see what happens on the next dip. Will the FED create selling event?

Too bad about that Investment Banker at CS. Only made $7.5mm on insider trades. That's why he got fired, should have been up $20mm at least.

Friday, May 4, 2007


Mergermania is the name of the game. Liquidity provided by private equity and hedge funds fueling the fire. Ivan Boesky on the comeback? Smart play by Microsoft, if you can't beat Google head on, use that monster cash flow to buy Yahoo. Makes a lot of sense to me. Look for analysts to start cutting growth rate on GOOG if the deal goes thru.

Not really an NBA fan, but the Spurs look like champs. Held AI and Melo's Nuggets to 80 the other night. Parker and Ginobli look like they are playing a different game than the rest of the guards in the league. It remimds me a lot like Showtime in the 80's.

Starting to feel the heat, high of 90 today in Austin. Its like a sauna in here.

Wednesday, May 2, 2007

I'll Be Back

News flash. Our presence in Iraq has done nothing to stem the infighting between the Sunni and Shiite. Palestinian factions threatening to advance their cause thru suicide bombers in Israel. Gasoline prices firmly over $3.00 at the pump. Inflation ahead of the Fed "comfort zone". GDP showing slower growth prospects. The dollar falling against all other major currencies. The DJIA making new highs. Seems like old times.

Watch dollar/yen at the 120 level. A major battle is brewing here and will give direction as to global liquidity and risk tolerance.

Sunday, April 29, 2007

Fat Cats

The NY Times hits the nail on the head with this:

"I think one of the significant issues of this business that we are all struggling with is that there is an inverse correlation between compensation and drive,” said Mr. X. president of an investment advisory firm. “In many cases the incredible wealth that is created by this incentive compensation structure has a propensity to dull the senses and dull the drive."

You want someone who is hungry and has a vested long-term interest in your portfolio. That is why my clients come to me: the short term skills that lead to long term results.

Saturday, April 28, 2007

Holy Halibut, Batman

Yes, Alec Baldwin will not get Father of the Year '07. He still is one of the best character actor's of our time. My favorites Baldwin roles are in: Glengarry Glen Ross, The Confession, The Cooler, Married to The Mob, Outside Providence, The Juror, and The Hunt for Red October.

Is Brady Quinn the next Brady? Tom or Greg is the question. Personally, since Vince Young was not the highest QB drafted, the NFL obviously does not know talent. Watch both '05 and '06 Rose Bowls and tell me that there are any better players around. All you need to do is draft defense that will keep him in the game, and you will win 10 every year. Go Titans.

Stocks were mixed with Mister Softee saving the day with in line numbers. Gas/Crude crack spreads at widest ever. Probably some hedgies short and covering a la Nat Gas spreads last year. Will we sell in May and go away? Tune in next week. Same Bat time, same Bat channel.

Friday, April 27, 2007

Texas Flood

Being a Financial Advisor in Austin is far from my days on the floor of the American Stock Exchange or the commodities options pits. But the markets remain the same. To invest wisely over the long haul, you need the knowledge of what happens on a day to day basis. Upside gaps get filled, weak hands create buying opportunites, and a psychologist is a trader's best friend.

A-Rod has come back to earth, who really cares about the NFL Draft, the NBA playoffs, or the Democratic Party Debates? Wouldn't you like to see both houses of Congress in the State of the Union address chanting "Rudy, Rudy" instead of that lame golf clap anyway?

Wednesday, April 25, 2007

She was a Day Tripper

So I finally had my office desktop replaced after IT decided that having someone on call every week to run diagnostics was not going to fix the problem. I told them that 6 months ago, but I am not an engineer.

Did they forget the DOW 13K hats today on CNBC? Couple of large value funds long a ton of AMZN blew the doors off the competition today. Like I always say, buy the fund manager, not the fund style. Yesterday X dips after beating earnings, today ATI does the same. I guess comparing materials stocks '06-'07 to fiber '99-'00 is too easy. Another round of short covering/long chasing takes us to new highs. Does anyone care about the FED anymore?

How about a Reality TV ETF.

Tuesday, April 24, 2007

There's a lady who is sure, all that glitters is gold....

My morning routine:
5:15 clock radio alarm goes off. Get local news and happenings from Rob and the Morning Crew
on KASE 101.
5:30 log on to crackberry. See if anything pending from overseas. Check spoos, Asia and Europe. Bloomberg and Reuters usually have some lame comment from a large long side player like "the market needs to rest".
5:45 - 6:15 S,S,S.
6:15 Fonzie arrives.
6:30 hit the kitchen for breakfast and lunch detail.
7:00 pull out for the long haul. Sirius check with Howard, Ferrell recap from last night, check Bloomberg once again.
7:30 log on to workstation (if it is online, ready to put it in the woodchipper). Pull up Morning Research. Get good info on the Austrailian/Singapore industrial readings.
8:00 Check please.

We lost one of our greatest authors yesterday. If you have not read anything by Halbertstam, ping me and I will give some good insight into his work.

Put me in coach, I'm ready to

Odds that A-Rod hits in 57 straight games and bangs 75 dingers this year? Turned on ESPN just as the Yanks were about to lose another one to the Devil Rays, when Mr. April steps up and whacks a frozen rope to the cheap seats. I think he even may get a curtain call in the Bronx this weekend. Forget rotisserie, this guy is vindaloo.

Speaking of baseball games, I received a call from the Round Rock Express yesterday. They are having a game televised in June and want to fill the house. The offer includes a Nolan Ryan Bobblehead. It seems if I get this one, then I just need a Jerry Kooseman to complete the '69 Mets pitching staff.

So we are in the midst of earnings season and no blowups yet. I guess the analysts have lowered expectations or the CFO's have come up with more creative accounting. This rally feels like short covering and performance chasers than anything else. I see a lot of good charts but like to pull the trigger on pullbacks to support (see 1st week of March). In the immortal words of Sgt Joe Esterhause: Be careful out there.

Monday, April 23, 2007

Take us to Warp 5 Mr. Sulu.

You know your getting old when you ask your 8 year old to help you log on to Myspace. Between starting a blog and connecting to extended family in cyberspace, it seems my technological background has run its course. Heck, the only video game system I ever owned was the classic Atari. Remember those days mastering games such as Combat, Adventure, and Asteroids. I once spent a whole week trying to master a specific slope on Activision Skiing and breaking a certain time in order to get a free game.

Since I am pretty technologically inept, Tech stocks are usually not good indications of where I look to invest. Although I do trade a four letter name here and there, the trades are mostly chart based. One area I like for bargains here are the homies. Yes, I think the real estate market is in the crapper, but the stocks already reflect that view. Buying some of the big names in the group at 6-8x earnings is a good place for money right now. Someone usually shouts out at this point that you can't get too hurt falling off the curb. Besides, with the market making new highs, would you rather buy homies on the cheap or material stocks tied to the price of tea in China?

Sunday, April 22, 2007

We're Movin on up, to the East Side, to a deluxe apartment in the sky.

Well its Sunday evening and you are prepared to sit down and veg in front of the boobtube. In the past, you went CBS with 60 Minutes, All in The Family, Alice. Then Fox came with The Simpsons and Married with...Children. Lately its been ABC with Makeover the Home Improvement Edition and Desperate Housewives. Any way you like it, TV Guide has the ultimate couch potato hour tonite. Join Peter Brady, 8pmEST/7pmCST, as he saunters down memory lane with the inaugural Jump The Shark Television show. My buddy Jon Hein parlayed his 30+ years of watching television into a media franchise. My advice is to tune in, and start drinking heavily.

Of course those with recording capabilities should watch it after the Yankees-Red Sox rubber match on ESPN.

Never Forget

On this day of Rememberance, we stop, and think.....

Saturday, April 21, 2007

Friday, April 20, 2007

Feliz "el dia de la tierra" '07

Markets exploded to the upside on the 37th anniversary of earth day. Good earnings from the GOOG, follow thru on yesterdays reversal, expiration, all causing the shorts to cover and hit happy hour early.

Lunched at local establishment that claims to have ties to the Lower East Side, maybe of El Paso, not New York. Mets blow out Marlins to grab a piece of 1st with the hated Braves.

Family dinner outing tonite, wife's birthday tomorrow, probably go for a run early Sunday. I'll be back later that evening to preview the week ahead.

Keep your feet on the ground and keep reaching for the stars.....Scooooob.

Thursday, April 19, 2007

Spamming the globe

Technorati Profile

Put your tray tables up and your seats in the upright position.

Woke up this morning, got myself ready for a repeat of Feb 27.
China GDP up 11%, market sells off on rate hike fears, Spoos down 10.
Good thing Blackberry was working, never knew that the umbilical cord is actually used to make PDAs.

Reasons market rallied off of open: financial's earnings looking good. Sub-prime fears already played out. Everyone remembers that since that bottom in March, market has made new highs. Hence, buys the dips until it doesn't work. Tomorrow is options expiration, getting paid to have that gamma.

Merger arbitrage still active. Clear Channel gets higher offer, IPS trades up with material stocks lower.

Biotech madness continues with a nice double off the wall in left center for Amgen.

Getting a lot done in the banking world. Seems demand for capital at these levels is strong. Commercial Real Estate investors don't mind the 6% returns.

See you soon.

Getting on board

Joining the fray of the blogosphere. Here I will describe the weekly insights of a veteran Wall Streeter who is deep in the heart of Texas.