The Big 3: Short Juice, a Real Cycle, and Nvidia Earnings

And here's what was pumping at $122 a barrel in my head today:

1. Scale the Wall of Oil

2. Pair Trade: Buy Mortgages; Short Real Estate

3. Visualize NVDA Moving Higher

1. Remember, if you're wanting to short oil, that you want to use any moves in the $120 area to scale into those bets. Don't make a stand.

2. From the record $1.3 billion losses at homebuilder DR Horton to the embarrassing desperation of the UBS $17 billion loss, it's clear that many asset prices related to real estate are still wildly overvalued. The real estate cycle itself is a few years behind the mortgage cycle, so a great arbitrage pair trade in concept would be to buy mortgages and short actual real estate against them.

3. NVDA reports Thursday after the close. It trades at 8x enterprise value to cash flows (See Codywillard.com for an explanation of that) and we know that IBM, Intel, and MSFT all said biz is pretty good. I like NVDA as a very risky trade into earnings.

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