So we're looking down, down big. Proximate cause: Greece walking away from the table because it doesn't want to have to make even more cuts than it has. Who can blame them? As Paul Krugman points out elegantly in yesterday's New York Times, what exactly has austerity bought them? In the meantime, Germany's the biggest beneficiary of the eurozone's largesse and a relentless advocate of more Greek pain.
Possibility of Greek exit as the month nears an end? Now 50% according to Commerzbank, not that they are suddenly Jimmy the Greek of this situation, to analogize to Greece and gambling. Suffice it to say we could be down a lot more. But like the budget talks in the U.S. circa 2012, there's always room to maneuver, even after a deadline.
Secondary cause of the sell-off? Ukraine. No real peace agreement.
So if you bought the market last week because of a Greece settlement or a Ukraine peace agreement, you are looking at the futures and saying "I give up," or, "I have to sell."
I say, look at the game plan. Lots of good companies reporting this week, especially the non-economically sensitive Actavis (ACT) on Wednesday. This company has a history of beating its numbers and it also has the ace in the hole of closing on the Allergan (AGN) deal at a time when Allergan has raised numbers dramatically but analysts didn't take up the numbers of Actavis. Brent Saunders has a great story to tell.
You like oil? Think we have already hit the V-bottom? Then you buy some EOG (EOG), which has been among the best performers of the independents and has the lowest finding costs, so even as the price of oil has gone lower its costs of extraction have gone down a huge amount. I bet EOG announces a large production boost for 2015 because of its high grading of its prospects.
Or how about Nordstrom (JWN)? Reports Thursday. There hasn't been much of a break in this stock since the previous quarter and today Barclays starts it and Macy's (M) with a sell. That lowers the risk substantially on both, but only JWN reports although I am attracted to Macy's down here. If you listen to V.F. Corp (VFC), Skechers (SKX) and Columbia Sportswear (COLM), all on par with what JWN sells, I think you would have to want to play the long side on a Greek-Ukraine drop, understanding that you are going to hear plenty of talk about the need to invest more into the omnichannel. If you can get this one at $75-$76, that's a very good risk reward in my opinion.
Actavis, EOG (if you like oil) and Nordstrom -- only on real weakness: three buys into the usual European weakness.
Don't short Tesla (TSLA) because Apple (AAPL) might one day be making electric cars. Don't buy Tesla because you expect Apple to bid for it. Buy Tesla if you think that there really isn't a demand problem and the fourth quarter was just an aberration. Sell Tesla if you think, as I do, it was the beginning of a tougher stock to own.