Recovering Large Cap Growth PM. How I invest my own money is nothing like how I had to play the insane benchmark game.
Joined May 7, 2014
165 Blog Posts

Stopped Out While Running On The Beach!

FullSizeRenderWhile running on the beach I was stopped out of half my positions for a modest loss.  Obviously I was not expecting this to happen.  Basically there is an outside chance we go bat shit crazy parabolic.  Why do I say that?  The DAX, SHANGHAI, CAC and now the HSI have all gone parabolic this week and all are up huge YTD.  The SPX and DOW are basically flat YTD.  The Fed this week may have inadvertently set off the parabola phase of the bull market.  I will not use their names since they are fools who may have unwittingly unleashed the bear killing Kraken.

No Name number one said that if the economy weakens we will do QE4.  A mere 2% from the highs and we get talk of QE4.  Mind you these dopes were just thinking of lifting off on rate hikes a month ago.  The other No Name said that if the market goes up we will raise rates and if it goes down we will wait on raising rates.  So there you go folks…the stock market owns the Fed.  The implications are staggering.  There is no more pretense as to what this fake economy is all about.  So this can go down two ways.  1) The Market tests the Fed’s resolve and we get our correction that we have been trying to set up for the last year and they unleash QE4 or 2) The market participants lose their minds and lever up even more in the belief that the Fed will never let the market go down and we have a parabolic rise to top this off.  Trust me, for the health of the investment business you want to see a correction.  Parabolic rises are multi year ending moves that devastate economies.  Think Japan in 1989 and the US in 1929.  I certainly hope the Fed understands what they might have done and if not I hope someone on the inside tells them.  They should come out and talk the market down before lift off.

I am still 60% thinking correction and 40% the Kraken Parabola.  We are at important levels with the technicals, VIX and BBs suggesting an imminent correction.  I will revisit my risk positions as this evolves.  I will either re-short or get long.  Make no mistake this market has become a traders market. Fundamentals have long ago left the building because if they did matter we would be rolling over as S&P numbers are being cut at peak margins and peak valuations.  I still suggest telling non-investment folks to start raising cash and taking some profits for a rainy day.

Comments »

A Public Service Announcement: Time To Reduce Risk Substantially!


I have been blogging for almost a year.  For those who have been following me know that I Have been stalking the top of the US equity market and in that time the SPX is up about 9.6%.   About a minute before the close on Thursday I increased my short exposure to 175% from 100%.  This is the most exposure I have had since beginning this journey.  I do not not advocate shorting this market if you are not a professional.  Shorting is not for the faint of heart.  I think it is time to spread the word and save our relatives from pain.  I advocate increasing cash positions.  I will post more this weekend about why I have such high confidence in my stance.  Happy Easter to my Christian Brethren!


Comments »

Ben Bernanke Is Now A Blogger…God Help Us!

On Monday we were greeted with a Tweet by Ben Bernanke introducing his new blog.  His first two blog entries were to discuss why interest rates are so low and why Larry Summers Secular Stagnation thesis is wrong.  Well well well! Where do I begin.  I feel an epic rant coming coming on.  I will try to contain myself.

Apparently the reason why interest rates are so low is not primarily due to the Fed but primarily due to the state of the economy.  Ahh I see…of course.  This guy sounds like my 11 year old son trying to spin his way out of why his 9 year old sister is crying and there is a red mark on her face.  “Did you hit her?” “Yes but she….” As you can imagine whatever comes out of his mouth next is just utter nonsense.  He is not supposed to hit his sister.  Interest rates are low but not because of the Fed but because of the economy.  Just absolutely absurd.  If we did not have a Fed the interest rates would be set by the market.  Ben needs to understand that the Fed does not exist in a vacuum but that their actions have an effect on the economy in complicated feed back loops.  Had we let capitalism do its job many companies would have gone bankrupt in the financial crisis and the recession would have been worse but guess what we would be recovering by now with a true secular recovery and a real bull market.  We would have restructured the debt and recapitalized companies and households with debt loads that could be serviced by the existing income.  Instead we have kicked the can down the road and put impaired private debt on the Global Governments balance sheets which will make the the last down turn look like a cake walk compared to the coming horror show.

Instead we have an abortion of a recovery that was forged in a forced credit expansion.  Ben in his wisdom decided to solve a debt problem with more debt.  That is the definition of insanity.  To keep doing the same thing over and over again hoping for a different result.  It stopped the bleeding temporarily but solving a debt problem with more debt needs continual expansion of credit in order to prevent defaults on the outstanding debt.  The problem is that eventually the market reaches a point were it say no mas!  We may be close to that point.  How do I know that? Currencies, commodities and credit spreads are suggesting that we are quickly approaching the end game.

In his next blog he decided to challenge Larry Summers about secular stagnation.  He does not believe we are experiencing that.  I contend there is secular stagnation and that his Debt creation is the direct cause of it.

Ben since you decided to enter the blogosphere I challenge you to debate the fact that I believe your policies have caused secular stagnation and your QE is directly responsible for the deflation that is currently raging across the globe.

In May of last year Einhorn commented on how his meeting with Bernanke scared the crap out of him:

“I got to ask [Bernanke] all these questions that had been on my mind for a very long period of time, right? And then on the other side, it was like sort of frightening because the answers weren’t any better than I thought that they might be. I asked several things. He started out by explaining that he was 100 percent sure that there’s not going to be hyperinflation. And not that I think that there’s going to be hyperinflation, but it’s like how do you get to 100 percent certainty of anything?”

Read Ben’s blogs for yourself and you will come to realize that these folks that you think are Gods have no idea what the hell their policies do in the real world.  They are academics who are clearly book smart but do not operate in the world in which you and I live in.  They have never managed P&L risk.  His blogging does not come at a good time for the omnipotence of the CB meme.  The more he talks the more people will realize that Fed Chairs are little men and women behind the curtain and not the all powerful OZ! God help us all!







Comments »

A Philosophical View To Peaks And Valleys

Alan Watts is a British born philosopher who popularized Eastern Philosophy for a Western audience.  I came across his musings on peaks and valleys (cycles) and how they go together.  As I was listening, it struck me that the Fed and all the other central banks are deathly afraid of the valley.  Valleys must not be allowed!  The super leveraged economies of the world can not handle a growth scare because a recovery that was born and baptized in credit needs constant credit creation (more debt) to sustain itself or it implodes.  The longer they delay the inevitable and stretch this stock/credit cycle the deeper the valley once we descend.  Sit back, relax, open a bottle of wine and listen to the soothing voice of Alan Watts as he waxes upon the inevitable decent into the valley.  In fact he believes the valleys may have more meaning than the peaks.

Food for thought: Since the inception of the DJIA the stock market has averaged a 4 year cycle from low to low.  Some cycles are longer and some are shorter.  Prior to this cycle, the longest 4 year cycle ever was 77 months which ran from October 2002 to March of 2009.  The advance from that low was 60 months into the peak of October 2007.  Currently we are in month 72 of the current advance with the last ATH in February of this year.  So unless you think that we are already going to meaningfully exceed the longest prior 4 year cycle record of 77 months, it is likely that this cycle ends in the next 5-7 months.  If we are in a secular bull market then the average decline into a 4 year cycle low over the history of the DJIA is in the range of 25-30%.  If we are in a secular bear we know that all secular bear market four year cycle lows will take out the prior 4 year cycle low which, in this case, is 666 on the SPX.  So whether we are in a secular bear or bull a meaningful correction is coming very soon.  Unless the CB’s can continue to deny mother nature this cyclical math suggests that time is running out and the piper must be paid soon.  Could I be wrong? Absolutely! However the CB’s better have some more magic and fairy dust because we are long in the tooth in time.  I am always asked what will be the catalyst?  The catalyst is that time has run out.  Price and time…people always forget time.


Comments »

What Happened To The V Shaped Bounce?

Usually we get a violent snap back when we have a close below the 100 day MA on the SPY.  One occurred yesterday.  I would not call this a bounce yet.  Has the character of the market changed?  That remans to be seen.  Yellen our High Priestess speaks at 3:45. Nice timing.  Have a good weekend everyone!

Comments »

100% Short: My Third Eye Is Tingling

For the first time since stalking this equity topping process in March of 2014 I am 100% short my capital.  I started shorting this morning.  I am letting my IBB puts from Friday run.  The semis, transports and bio’s are getting slaughtered today.  Transports took out the March trading cycle low.  I suspect the Dow and SPX to follow.  I have stops in place. I suspect the narrative will soon shift to how weak the economy is and earnings expectations coming down.  March lows on cash SPX needs to be defended or its game on to the down side.  I will cover quickly if wrong but my Third Eye is tingling.  I predict QE4 by September/October.  The Fed is behind the curve.

Comments »

Biotechs Will Pause!

The run up into the solar eclipse has made Biotech investors giddy with speculation.  Pre-Market the IBB was $375 now it is $366.  This looks like an exhaustion move to me.  The rate of ascent in the IBB chart looks like it wants to fold back on itself.  Last time we had this rate of ascent in March of 2014 we had a 14% drawdown.  The Fly has flagged the overbought situation here.  I hope you don’t mind if I take advantage of your profit taking. I have purchased some Biotech puts out three months into the frenzy this morning.

Comments »

Janet Just Told You The Economy Stinks!

The Fed is not behind the curve on raising rates its behind the curve on easing.  They have lowered their growth projections fairly dramatically.  The venerated dots just moved quite a bit.  After this sugar rush in equities today and perhaps some nominal new highs reality will set in.  There is currently a dollar shortage.  The only way to curb that is to start printing.  QE4 IS COMING! The Fed now has ZERO credibility.  Lower equity prices will force the printing.

Comments »


Another FOMC meeting and another idiotic focus on the whether or not the word “patience” is going to be removed form the minutes of the meeting or not.  This is completely absurd and sad.  Here is the deal in my humble opinion: IT DOES NOT MATTER!  The bottom line is the only way the bulls win tomorrow is if Janet recognizes the specter of deflation and announces QE4.  Absent QE4 then the economy and eventually stocks are going to implode.  Lets have a look at the fundamental scorecard shall we.

Bears have:

1) Both Global and US GDP are being revised lower.

2) Oil is crashing again as I write this.

3) High yield debt and emerging market debt spreads are quietly widening again.

4) S&P earnings continue to be revised lower due to a myriad of reasons.

5) Insider selling is at epic levels.

6) Currency crisis across the globe with a parabolic Dollar wreaking deflationary havoc worldwide.

7) Yield curve is flattening and bonds are rallying again.

8) 80% bull to bear ratio.

9) Putin threatening to use nukes if we give tanks to Ukraine.

10) Greece losing its mind again and 3 year bond yields above 20%.


Bulls have:

1) 24 central banks have eased since January.

2) ECB QE has started.

3) The Fed might leave the word “Patient” in.


Basically Bulls are bullish because fundamentals don’t matter and all that matters is central bank liquidity.  So if you are long its because you believe that central banks are omnipotent.  Its a good belief system.  It has worked for six years straight.  I get it, I really do.  I was with the bulls until last year.  The difference now is that the Fed is tightening by ending QE and merely thinking about raising rates.  As a result the Dollar has gone parabolic and a deflation is raging from the emerging markets towards the center.  A strong dollar imports deflation and will cause revenues and earnings for US companies to go lower.  If you think that does not matter and that the multiple of the market will expand while earnings are re-rated lower go for it.  I am old fashioned and think that debt defaults, negative earnings revisions, receding dollar liquidity and a global recession will bring equity prices down.  I am a heretic.

I think whether Yellen includes or excludes the word “patience” is irrelevant.  The deflation Genie has been let loose from the bottle and unless she does full on QE the US stock market is headed south.  Nature hates disequilibrium.  Everyone is burning their currency and we are not.  Stocks will go lower to force Janet to burn our currency as well.

I leave you with Patience by Guns N’ Roses:





Comments »