The Fed Gameplan

At this point, it’s useless to talk about the mirage called “Chinese growth” or how fucked the U.S. is, with its new/cool moral hazard laden zero interest rate policy.

For most of you, pikers at home trading the web, the next 2 hours is all that matters.

So, with that in mind, I suggest avoiding being too short or too long. The tone is already bullish. So, I would not be surprised to see the market sprint into the close. On the other hand, if the market “sold the news,” that would not surprise me either.

With my money, I will refrain from overreacting to today’s market trickery. If anything, I might execute some trades, after 3:00.

As cool as the market is today, with GS and MS leading the way, big money is still piling into treasuries, in a very Madoff sort of way.

On the long side, I like FAS, ABX and CBL for a trade.

An elderly women, named Bertha, sitting in a wheeled chair, slaps thick slices of liverwurst and olive loaf onto thin slices of rye bread. As the conveyor belt proceeds, aged Orwellian machines crank out ample amounts of mayonnaise onto the lunch meat and bread combo.

Then, the sandwich is wrapped in recycled cellophane, and tossed onto the dirty factory floor, where it will wait to be packaged and delivered.

Twenty hours passes and Bertha’s mayonnaise delight is still on the factory floor, being kicked around by janitors and mayonnaise machine engineers. Then, all of a sudden, “Gus the delivery guy” spots the lonely lunch meat, picks it up, then places it with today’s fresh batch.

Gus travels far and wide to deliver these delicious concoctions, to a small 7/11, just north of The City of Retards.

Gus arrives at his destination and places the sandwiches in decrepit sandwich bins, when a small man walks in and grabs one from Gus’s hand.

The small man hops along to the counter and pays for his sandwich, which cost him $3.39.

Just prior to taking a large bite out of this liverwurst/olive loaf/mayonnaise holy trinity, he rips off a label that says “Made by Bertha.”

I bought 10,000 ABX @ $33.56.

Disclaimer: If you buy ABX because of this post, Santa Claus will carpet bomb your chimney this Christmas. And, you may lose money.

If you are trading on a Fed day, be careful. Historically, Fed days offer misdirection and heartache for investors. Because of this, typically, I opt to do nothing, with exception to day trading.

Meaning: I have no interest in adding to short or long positions, prior to the Fed decision. Even after the Fed decides, the market can drive one crazy, knee-jerking back and forth.

Nonetheless, following bad news (GS, home starts), the market is very optimistic this morning. It makes no sense to bitch and complain about “what the market should do.” Instead, look at what the market is doing, and trade accordingly.

For now, my short term swing trades/day trades will be on the long side.

Specifically, I am looking at commodity names, especially in Ag, and select tech. When I decide on the exact names, I will post them.

With regards to my shorts:

They will suffer today. However, I am not in them for one or two days moves. So, in the meantime, I will utilize some of my cash to scalp a few trades.

NOTE: The news is horrific and the market SHOULD be down. So, on any slip up, I will be sure to stop out of any longs that I decide to get into.

Think big picture stuff for awhile.

GS just embarrassed themselves with a loss of $4.97. Sidney Weinberg is rolling over in his mausoleum.

Chinese vehicle production is down 15.9%.

Chinese iron production is down 16.2%

Chinese steel production is down 12.4%

In order to finance “stuff,” China is considering a tax of sorts on their coal industry. Analysts believe, if done, it might reduce the value of Chinese coal stocks by 40%.

Latest CPI figures point to deflation.

U.S. housing starts at a new low: 625,000, down 18.9%.

U.S. interest rates are approaching 0%, a la Japan. The only difference: Japan runs account surpluses. We are big ass borrowers.

The value of U.S. homes declined by 2 trillion dollars in 2008.

And the silver lining:

BBY beat the street this morning.

Maybe things will not get worse?

Look, stocks are always the best value, when things look the crappiest. That’s what the asshole dip buyers are betting on. They are “betting,” not investing, that the U.S. economy will somehow, miraculously, rebound and send stocks through the roof. In my opinion, barring any short term moves, this is pie in the sky gobble-grabble (that phrase means nothing. I just made it up).

In other words, all indicators are pointing to a weaker economy in 2009. While it’s true, if you wait for the economy to turn up, you will miss the lion share of the stock market gains, since it is a forward looking Indian Casino. It’s also true that in order to presume the economy will turn, one needs a modicum of good news, something/anything that can be a “mustard seed,” to borrow a phrase from the Great Larry Kudlow.

In my opinion, we’re just not there yet.

However, that does not mean men in green leotards will sideline themselves today. For the love of green grass and purple goats, THE FED IS GONNA CUT RATES TODAY. YAAAAA-HOOOOOOOO.

Short sellers are responsible for the following events:

The Bubonic Plague

Hiroshima & Nagasaki

The Kennedy’s

The General Slocum Steamship disaster of 1904.

The Influenza Epidemic of 1918.

The Ukraine Black Famine of 1932.

The Lisbon Earthquake of 1755.

The Collapse of the World Banking System of 2008.

The Bhola Cyclone of 1970.

The China Floods of 1931.

The Collapse of Lehman Brothers of 2008.

The 8th Century Hail Storm at Roopkund.

The Iranian Blizzard of 1972.

The Peshtigo Fire of 1871.

AIG

The Shaanxi Earthquake of 1556

Mount Tambora

The Bengal Famine of 1770.

The Dutch Famine of 1944.

Fannie Mae/ Freddie Mac

Holodomor

The Stalin Purge

General Motors

and many many more.

[youtube:http://www.youtube.com/watch?v=fuhaFdBuwp4 450 300]

All of the “important people” have closed out 2008, with huge losses or minor gains. Most people I know have zero interest in navigating the last few weeks of a horrific year, considering all of the tax loss selling and soon to be going out of business hedge fund industry.

There will be forced selling, coupled with asshole fund managers desperately trying to throw hail mary’s, in order to save their jobs.

They will not value pick. These idiots need fast money FAST. They will try to jerk heavily shorted names, like BKE, higher. Also, they will dump capital into commodity plays, trying to regain magic in a bottle.

The only problem: that strategy will fail, thanks to the millions of people who have been flame broiled in those names this year. Sometime soon, there will be waves of tax loss selling, that will punch the fucking mustaches off of those who are buying dips.

Nonetheless, do not expect to have fun trading this market, any time soon.

As for me:

I still have a few victories to claim in 2008. I might not make any huge bets, coming down the stretch. But, I will set myself up for egregious victories, during the first two weeks of the New Year.

As you know, “The Fly” always begins the New Year with success. To be honest, I can’t remember the last New Year when I did not knock the cover off the ball, if I might be so bold as to say so.

With regards to oil:

The ramifications of knifing oil prices have not affected the stock prices of the big oil producers, like XOM and CVX, yet. There seems to be some sort of idiotic theory running around that oil is poised to double, in a matter of weeks. That’s asinine. Furthermore, anyone who invests like that should be forced to invest with Maddoff, right now.

NOTE: This is my last post for the trading session. I have many errands to attend to.

A parable of sorts, for you asshole dip buyers.

I had lots of errands to run this morning. After all, it’s fucking Christmas and I do not have the time, nor the inclination, to just sit here and blog, and shit.

Much to my delight, the market reversed and went lower. This is especially amusing after my weekend capitulation post, exclaiming the virtues of depressed economies and inexperienced leaders.

Never mind that. That was “silly ol’ Fly” playing a joke on ya. Why, he was just clowning around, while shooting “Fuck Face Frank” out of his clown cannon, into a field of stringed beans.

I am heavily short oil here. Thus far, this so called short position of mine has yet to yield returns. Let it be known, I shall win this battle, through attrition, once all of the old/asshole oil bulls retire to their fucking mausoleums.

Banks are getting smashed, which is pretty cool, since I sold half of my FAS on Friday. My FAZ position is almost free to run like purple pony in an open field of grass and daisies.

Finally, SRS is a steal down here, as well as FXP. Flip a coin and decide which one you like more. Nothing else seems to work. You might as well try random choice for a change.

Off to the local shopping center.