iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
22,445 Blog Posts

Manufactured Uncertainty

Why are we going lower? Is it because the economy is weak? No. How about the Euro debt crisis? Nope, not that either. Are we trading lower on valuation? Funny, definitely not. Think for a second and tell me, why are we trading lower?

Is it the debt ceiling? NO.

I am sure you expected me to say yes. The truth of the matter is, even without the debt ceiling, we’d still be trading lower now, sans the added bonus of panic. The market is stuck in a range because we are digesting massive gains. That’s it. We need a catalyst to trade up to new highs and the economy is not good enough to provide one. Coupled with the dreadful earnings coming out of the tech sector, there are zero reasons to chase stocks. We keep continuing this circle of carnage, where big money sells to retail near tops and buy it back from them at bottoms. The sad truth is, the playing field is not equal, mostly due to resources.

Look, when you’re managing $10 billion, you have room for error. Retail guys with $500k in stocks can’t handle the extreme lower ranges and always opt out near the bottom. I would not be surprised to see people dump out here, ahead of a debt deal and miss out on an epic debt ceiling deal rally.

See, that’s what just happened today. If a deal got done last week, we’d sell off on that news. However, now that we are much lower, we have all but guaranteed a massive short squeeze rally upon confirmation of a deal. What you have to ask yourself now is “what is the high probability trade?” Granted, your bet may be wrong and you’re simply going to have to deal with the consequences. There is no room for mediocrity.

I will try my best and position wisely, with the intention of growing my +16% to 25% on the next upswing.

Remember, the market is uncertain until it isn’t. Everything is a mathematical equation. I try to focus less on the individual names these days, in favor of macro moves. If I sense we are going to spike higher, I have a handful of “go to” stocks that will get the job done for me, irrespective of underlying fundies.

My sense, an inflection point is coming soon. Stay light, but don’t get caught short, else end up on the receiving end of a “fuck you, you’re dead” funeral card.

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47 comments

  1. TraderDR

    The market has been acting like shit since June – typical summer bullshit.
    When the trend returns so will I but for now very lightly trading and waiting.

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    • The Fly

      Can you say “JACKSON HOLE?”

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      • Trading_Nymph

        Fly…DON’T EVEN say those words!!!! lol, OMG, I am sooooo sick of the Clam. BTW, I am still amazed how everyone is hiding in the Aussie and NZD..they can’t hide there for very much longer.

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  2. HalfBloodPope

    But people are drinking “green” coffee. Is that not enough to force markets soaring upwards.
    Aside: If I have one more person ask me for a “natural” cure to something I will literally go nuts.

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  3. JakeGint

    The Recession is Coming! The Recession is Coming!

    Part Deux. This time, with higher interest rates.

    _____________

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    • The Fly

      I am not sure if you are joking. However, I’d put a recession at 70% probability within 1 year.

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      • HalfBloodPope

        Pharmacy = Recession Proof

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        • dishobgyn

          in my field they always ask about Natural Estrogen (and they refer to plant estrogen or phytoestrogens.) and in reply I tell the fuckers, what is so natural about a stupid plant making mammalian hormone. But just the fucker comes from a plant then it is better.

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          • yabollox

            A hormone is a hormone.

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          • dishobgyn

            dont tell me, tell them.

            plus what is a plant doing making animal hormone?

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          • Raise taxes, Cut spending
            Raise taxes, Cut spending

            I wish a plant made phyto-testerone.

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          • The Equalizer

            Depends on the plant and how much the client paid. For example, is it a banana or a cucumber?

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      • Indie

        It is manufactured because spending cuts will OBVIOUSLY impact on economic growth.

        So…

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  4. Bullish

    Do you prefer to look towards relative strength winners or losers (from the current downturn) in a potential debt ceiling spike?

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    • The Fly

      I look at stocks that tend to outperform on a historical basis, coming from down periods to up. Data is provided in The PPT

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  5. dishobgyn

    tomorrow they are going to come up with some bull shit that a deal is in sight and the MF market will rally.

    the macro news will get the market where it wants to go faster. it is a catalyst and not a cause – effect

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    • The Fly

      Trade the ranges. That’s all.

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      • dishobgyn

        I got caught with some day trades and got the “fuck you, you are dead” card today. But not as bad. I was lucky I had bought some Chinnese burrito yesterday and they did pretty good.

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  6. Mr Genius

    Cut the bs.

    The market is going to trade up from here bc the PPT range is calling it oversold.

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  7. outofmiddleclass
    outofmiddleclass

    Quality post fly

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  8. HalfBloodPope

    Dr. Fly,
    Do you approve of the following PPT screen? Monthly change as appropriate.
    http://ppt.ibankcoin.com/screener.php?fundamental_score=o3.5&hybrid_score=Any&technical_score=u2&num_up_months=o4&custom_win_ratio=o75&month_num=7&min_vol=on&ex_china

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  9. HalfBloodPope

    I do not think that hyper-linked correctly. See HalfBloodPope – Down Now July Seasonality.
    Thank you.

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  10. Terminator

    Coffee is good for you and chocolate too.

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    • jay the coffee guru
      jay the coffee guru

      i usually prescribe a reach around twice a week, its very healthy and keeps the lining of the heart fresh and elastic.

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      • DMG

        Doesn’t a ‘reach-around’ infer you’re taking it up the arse?

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  11. theedge111

    I have to agree with you Fly. It’s been a nice ride down in PUTS on the homebuilders and financials.

    I expect a bounce on the debt deal. However, if its a piece of shit bill that does nothing to fix the debt issue I think the rally wil be small and short because the street will worry about a downgrade from are clueless ratings agencies.

    If the deal has some teeth then I could see a moon shot higher.

    I think we head much lower by year end.

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  12. Raise taxes, Cut spending
    Raise taxes, Cut spending

    It is great to see that the USA is finally getting serious about dealing with it’s deficit. However, whatever plan is finally passed, the US economy is going to see maybe a trillion dollars a year not being spent; taken out of the economy. That is a lot of money and it is bound to be a drag on the markets. Turning off the Reagan/Bush deficit firehose of borrowed money will be good for the financial health of the government but will cause a huge upheaval in the broader economy as payrolls are reduced drastically. When those tea-partier start losing their jobs they may regret focusing so much on spending cuts instead of a more balanced approach.

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    • Mike

      Liberal Fuck…

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      • JakeGint

        Right, I don’t know why we have a private economy at all. Heck, why not let the Gobmint pay EVERYONE’s salary?

        You haven’t had much economics, I’m assuming.

        Start w. Basquiat.

        _______

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        • Raise taxes, Cut spending
          Raise taxes, Cut spending

          You’ve had 30 years of right wing supply side economics and look where it has landed you. The definition of insanity is doing something over and over and somehow expecting a different result.

          I think a little common sense is in order.

          The operative word is “balanced”.

          You are about to enter a period of reverse quantitative easing. The economy will contract and the issue for investors/traders is how do you position yourself for it.

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  13. go2jupiter

    You are a smart mofo Fly

    Respekt

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  14. Yogi & Boo Boo

    Once again The Fly shows the true meaning of “entitlements”. Soon the white robes and sandals will be upon us. Well done sir. Well done.

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  15. seethetrend

    Well said, FLY.

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  16. Random

    Any thoughts on how DECK and WNR will do when they report after the bell?

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  17. kedzilla

    Hopefully Exxon just carries the S&P higher and we begin to squeeze those who short a genetically enhanced bull market infused with Bernankeian DNA

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  18. ruggyup

    It’s all becoming more nebulous. Drop into an air conditioned oubliette and wait until Jake’s recession comes and goes. It will happen, Minerva never lies.

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  19. Justina

    It is an issue I must find more information about, thanks for the posting.

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