FRI. JUN. 20 THOUGHTS

Well, it ain’t original, but we’ve got to keep sticking with what is working right now. This feels like a mishmash of everything that has been on this blog to date really, but really, here goes. It is summertime so volumes are down. Money is rapidly flipping from sector to sector. The price of oil and the financial stocks are making all the headlines. And harking all the way back to yesterday, stocks are reacting more to financials than to oil prices at the present moment…until/unless the price of oil makes the market sit back and watch (on an intra-day basis). Why is this case? Does anybody really know? Ever? Which brings us to two recurring themes: first, don’t fight whatever is prevailing. Don’t ask why whatever it is that is prevailing works. Just know that it does. Inevitably, the answers will come later. If the Dow falls 1000 points and oil falls 10 dollars a barrel, but suddenly a major bank becomes insolvent, we’ll know that the market was falling because there was indeed a problem with the financial sector. Second, as always, what works today specifically may not work tomorrow specifically. Oil’s massive price drop yesterday afternoon –building on an already rather large decline- forced people/funds/entities to take notice and the market took off. So, as has been the case this week, focus on the financials with a glance towards oil and everything else because while the condition of Citicorp is at the forefront of the minds yet the ferocity of a move in commodities and/or another sector could at a whim change the feel of the market for today as well as most days as oil comes back into play.

Very interesting set-up for the day. Markets in Asia traded higher, but bourses in Europe have trended lower amid reports of Israeli military exercises with an eye toward a pre-attack on Iran. Oil has soared in the early going. Furthermore, there are rumors that Merrill Lynch is going to warn (which the company has not denied). Add to the mix that today is a quadruple options expiration day and all the ingredients are there for a pretty active opening and closing in particular.

IOC- one of the most preposterous closes that has ever occurred was in this thing. It closed nine points higher from its last tick. Not an error. The best trade here is if It opens around 35 or so to short it there; otherwise, just an anomaly to monitor.

HBAN- pre-announced positive data last night. When investors are expecting the worst and the worst doesn’t happen, short covering happens. Best trade (maybe of day0 is if HBAN trades well below the range of last night…was locked in 5.70 to 5.90 most of evening…if you can buy this below 5.40 pre-open, do it. Post-open, probably a very difficult A-B-A2.

FITB- issued guidance as well, but should track HBAN. Likely a buy at 9.95 near or just after the open with a tight stop.

ESLR- likely a buy on continued momentum; if it opens negative, buy thru unch.

CAL/UAUA- all mergers talks are off. Airline sector may get decimated with price of oil skyrocketing.

FWLT/MDR- Cramer

ABK/MBI- downgraded last night. Precarious situation which may lead to rumors of default- particularly in ABK- today.

MF- downgraded and in position to lose all ground from yesterday. With stagnation, a short thru 7 is a possibility later today.

STI- getting hit again; worth watching.

ROYL/FPP/PDO/MXC- all small oils rocketing in earlygoing…likely some A-BA2s setting up.

Keep your eyes on oil stocks and financials. All of them.

Good luck today.