On Friday, at the opening, I was already in the nautical mode. "Dive, Dive, ooga, ooga," I shouted as we took her down 100 straight
points. "Won't hold here, not with these bonds," I said knowingly to my partner,
. "We've got to take it down to 96.10 on the long bond, 6.65% yield to see what this thing's made of."
One hour later we were at the dreaded 96.10 level as predicted and the battle was on. As we approached that benchmark I began to desert the stock market entirely and switched all my screens to watch the action in the Treasury market. I wanted to feel every hit, to absorb every take -- if there were any -- to see if we could hold 96.10. As happens so many times on these vicious down days, bonds, not stocks, were in control of our destiny.
I was maniacally fixated to my
when we attempted to take out that level, and I began to narrate the 96.10 trading action to everyone in the room. I simply didn't know how much more we could go down below that safety level without the market's hull imploding. Every few seconds I would turn to Jeff and announce that we are holding 96.10, like that it was the bottom of the red zone on some rattled, steam-covered gauge, an inviolate place that, if penetrated, would lead to consequences only the wildest bear could imagine.
Normally, I like to be more of a periscope guy, taking advantage of the easy targets to pick off, while Jeff monitors the gauges. But with two-thirds of the year in our pocket, we only want to go after stocks we know won't hurt us if we miss. So instead Jeff and I both played defense, monitoring gauges, making sure that we stayed alive, even if it meant forgoing opportunities on the way down. They'd have to come later.
At the bottom Friday, when the market was down 200 points and we had taken about all of the pounding we could, we still stood at 96.10 on the long bond. It was awfully dark and murky down there, but 96.10 and down 200 on the Dow felt like the bottom to me -- at least for Friday. Even nervously contented skippers have to commit something when they feel they are at a trading bottom.
"We're holding 96.10," I would whisper every few seconds. "We're holding 96.10. Ninety-six ten. Ninety-six ten." Now a little louder. "Ninety-six, eleven. Ninety-six ten. Ninety-six eleven." Louder still. "Now ninety-six twelve. Looks like we are going to hold. Ninety-six thirteen. We're holding. We're going higher." (Yes, I actually narrate like this at the office, much to everyone's chagrin, but it is my firm.)
When you are relatively sure the bonds will hold for the day, Mrs. Cramer's manual says look for other signs of a classic bottom, gauges that measure extreme selling, or panic, then pounce with a stream of equity purchases if you see them being violated. On Friday, several times we flirted with the tick over minus 1000, a classic climax sign, her book says. And trin, another trader's crutch, approached 2.00 -- a sure harbinger of a short-term oversold condition. (These indicators measure buying and selling pressure: Tick readings over 1000 or under -1000 are signs of overexuberance or emotional selling respectively; trin readings of -.35 or plus 2 also measure similar respective extremes. Mrs. Cramer believes in these levels as appropriate places to sell or buy when things look either too great or too awful. They are not infallible; but she's about as close to it as I've seen on a trading floor. If she swears by 'em, they are good enough for me.)
And then when I was sure we would hold, I unleashed $50 million in capital in all of the usual names, the staple market names that everybody likes when they are down.
"We're climbing," I shouted once the cash had been sent hurtling toward the market. "96.14, 96.15, holding this level. Aoogha, aoogha, 96.14. Commit more capital. Commit more capital. Fifteen, fifteen, fifteen, we're holding 96.15. We're in good shape."
By 3:15, the 96.16 level on the bonds looked solid and we had exited the danger zone. The run from 96.16 to 96.21 was accomplished silently, as I was too busy assessing the damage to my portfolio caused by the chaotic drop down 200 Dow points and two full bond points to 96.10.
For a few moments, at 3:20 p.m., it looked like we could make a run for the surface and I felt positively heroic. I debated even getting off the desk for a game of ping-pong, the one vice we allow at
. But at down 100, a crucial psychological threshold, the momentum shifted. Sell programs -- or depth charges if you want to belabor the metaphor -- beckoned near the close, making any attempt to day trade out of the merchandise taken on at 96.10 moot. At the bell we finished well off the deep-water lows established at 96.10, but uncomfortably removed from the down 100 level that would have left most of us feeling a little better about the action.
In other words, we spent this weekend still in the sub, and far from the surface. Still in the danger zone. And now it's Monday. Time to get back on the bridge.
Our site was down for significant portions of the weekend. Weekends are inviolate time with my family, but I check the site frequently, and believe me, this was plenty disheartening. The message that came up made it look like we had closed for good. Here's what I can tell you. The people involved have been disciplined. I will not go into what went wrong; more incredibly boring Net stuff. I will tell you that the level of care and diligence that I believe in was violated to the point that I felt ashamed to be a part of this institution.
It won't happen again.
This story was orginally published August 11, 1997