An Objective Look at the Price Action

Sometimes it’s easy to get caught up in the emotion. Geez, if you were to just spend a day on Twitter, viewing the outright panic mongering by would be gurus, you’d never buy a stock again. What we are seeing here has happened before. You just don’t remember it too well, due to all of the marijuana intake.

At the moment, the S&P is down about 12%, month to date. The last time the market melted down in August was back in 1998 when those commy pricks (Russians) had an economic collapse. As a matter of fact, it started on 8/17/98 and it spread throughout Asia. Hence the phrase was born, “The Asian Contagion.” Due to Russia’s overwhelming debt, they decided to devalue the Ruble and fuck creditors. The immediate result was a market in crisis. Commodity prices plunged and equities crashed. I remember the exact moment because I was so dead in the water, I was out interviewing for low end discount house gigs. As I was on one of these hideous interviews, the “boss” brought in his “top producer”, who boasted an annual income of 98k. Just one year prior, I made about 80k, my first year in the business. It was at the very moment, seeing these fucking pikers in front of me that I knew it was my duty to make it in the business.

I borrowed money from credit cards, skipped lunch 3 out of 5 days, worked Saturdays, and got lucky.

I put all of my money under management, and all new money, in one stock, BYND, and scored big. The market meltdown, the end of the world as we knew it, back in August of 1998, never materialized. Following a 14% drubbing, the S&P rebounded in September by 6.3% and some more in October by 8.1% and never looked back.

Aside from 1998, we dove lower in February of 2009 by 10.75%, only to rebound by 8.3% in March. In October of 2008, the market crashed by 16.5% and dipped some more by 6.9% in November. The only other occurrence of a double digit decline in a single month was September of 2002, when the S&P dropped by 10.4%. Shortly after, the market roared back in October by 8.2%.

The trillion dollar question: is this time different? Is this “the end”?

The world has been ending for as long as I can remember. However, somehow, someway, this bitch of a market always seems to come ripping back.

Aside from the fundamental thesis behind the refiners, I am having a very difficult time finding stocks to buy here. The trends are fucking woeful and have the distinct look of being “on the other side of the mountain.”

I’ve looked through all of my screens and all I find is silver/gold. However, the problem with silver is the outside chance a rip your face off and skull-fuck you rally derails the metals, at least temporarily. I like both AG and EXK. But the last thing I want to do is hedge myself out of a good rally.

NVDA is tempting, as well as TZOO, VHC, ARMH and LNG. At the moment, I am much more interested in procuring conch ceviche, than gambling on a somber Friday afternoon.

In summary, I am likely to make do with what I have. Although my upside will be less than before, should we rally, my downside is somewhat contained. Going out a month or so, should the economy remain in flux, I see no reason to be long equities, aside from the temporary hyper-cocaine rallies.

As always, things can change materially. I am not about sticking to an ideology, but raping the trading ranges. At the moment, like it or not, the rubberband is tightly coiled back, readying to spring forward.

NOTE: My year to date gains are around +6%

Aside from the fundamental thesis behind the refiners, I am having a very difficult time finding stocks to buy here. The trends are fucking woeful and have the distinct look of being “on the other side of the mountain.”

I’ve looked through all of my screens and all I find is silver/gold. However, the problem with silver is the outside chance a rip your face off and skull-fuck you rally derails the metals, at least temporarily. I like both AG and EXK. But the last thing I want to do is hedge myself out of a good rally.

NVDA is tempting, as well as TZOO, VHC and LNG. At the moment, I am much more interested in producing conch ceviche, than gambling on a somber Friday afternoon.

In summary, I am likely to make do with what I have. Although my upside will be less than before, should we rally, my downside contained. Going out a month or so, should the economy remain in flux, I see no reason to be long equities, aside from the temporary hyper-cocaine rallies.

First off, I want you to know that I don’t get mad at any of you, really. All of my pent up, homicidal anger is directed towards people in my profession. Why? Sorry, I really don’t know. I guess it’s the same reason why lions want to eat zebra. I just don’t like people in my industry and I make every effort to direct my children away from it. It is filled with the greediest, most dishonest, reprehensible people on the planet, save the law profession.

I hear a lot of people bragging about not losing money in this downturn. That’s great. However, even more, these same people are boasting a bearish outlook, yet find themselves long stocks to “hedge” their shorts. Sorry pal, the only thing you are hedging is your low IQ. Look, only pussies hedge themselves out of big trades. If you are as doom and gloom as you say, take 50% of your assets and get short, with conviction. You can keep the other 50% in cash and use it to get long options for scalp trades.

The reality is, these people are not good managers, but scared money. They’ll never hit the grand slam because they are singles hitters and have warning track power. For some people, that’s okay. For me, I am all about the fences.

Having said that, I am still almost 50% cash due to my belief that “weekends are scary”. God, who knows what will happen?!?! At least my DECK is moving higher, following an absolute drubbing.

Should the market regain its footing, the refiners are the best place to put your money, due to margin expansion. Fucking crack spreads are north of $37 now and the WTI-Brent spread is 31%! If WNR isn’t your thing, look at HFC, DK or CVI, all solid companies in a kickass space.

Best case scenario for the longs, today’s lows stick and we run up into the bell. Worst case, this little rally runs out of steam and we cascade into le belle.