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
23,417 Blog Posts

The Hardest Market Ever

There are no easy trades. As a short seller, you must worry about unprecedented policy response from central banks. As a long, you must be wary of the insurmountable amount of debt, coupled with the lack of growth, plaguing this market. This market is especially hard because of record cash on corporate balance sheets.  This cash will be put to work, eventually, as is the case today with NETL and GLBL. If you shorted NETL on Friday, based around a market melt down thesis, you are bankrupted today.

The European trading session is dreadful. There are rumors that Socgen is going to bust and Moody’s will downgrade several big French banks. The CAC is down 4.6%. That is not a garden variety sell off.  Last night, the Heng Seng dropped by more than 800 points and our futures are looking pretty good, down just 16, with all things considered.

The reason why I went to 70% cash on Friday is because I am unwilling to risk client accounts on the premise that the Fed will save the day, at a time when German officials seem to be preparing for a Greek default. This is NOT priced into the market. Moreover, we’ve yet to see analyst revisions for S&P earnings. Right now they are estimating earnings of $95 for 2012. That’s fucking gorilla gay. At a minimum, earnings are coming down 10% to $80. At 13x, the S&P fair value is 1040. However, considering the massive headwinds ahead, a 10% earnings reduction is conservative. Judging by past recessions, earnings need to come down by 30%, putting fair value at 875. Or, this is all one big clusterfuck and the Fed starts QE3, pushing the market to 15,000.

I’ve never experienced such a hard tape and I’ve traded in all of the cool market meltdowns, sans 1987.

Nothing can be trusted when everyone is lying. As an investor or trader, it is your job to survive and preserve capital. There will be easier tapes. Until then, I will remain in a cash heavy position, trading quickly between overbought and oversold ranges.

UPDATE: I swapped out of my TZA for TNA

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56 comments

  1. MarshalN

    Indeud, this is just crazy

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  2. tutti

    With the exception of longer term plays that I’ve owned since early ’09 which I’m simply managing, I am not doing anything. I haven’t made a trade in many weeks. This market sucks. Good to know that I’m not the only one finding this IMPOSSIBLE. Thanks for the honesty and not some gorilla marketing bullshit that you are up a bazillion %…

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  3. Dinosaur Trader

    “Nothing can be trusted when everyone is lying.”

    Yep.

    -DT

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  4. Yogi and Boo Boo

    Yup. Tough markets build character in the strong, and break the weak.

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    • tutti

      Yogi, my favorite quote is a play on that, which is taped on my desk- “Smooth seas do not make skillful sailors”

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      • Yogi and Boo Boo

        Indeud. Good analogy. I scared myself shitless when I was younger while bringing in my dad’s boat at the end of the season. I got caught in what were the biggest seas I’d ever seen, on what was otherwise a calm day. Changed my head forever.

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        • ALLPROz

          Same thing happened to me as a kid flying my little single prop Cessna. Storm rolled in out of nowhere half hour out from destination and had to force land in a open field, Yes…changed my head forever as well.

          What doesn’t kill ya…

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          • Yikes!

            My 7th jump in AFF (Accelerated Free Fall)training my pilot chute got wrapped around my right leg and my main never came out of the bag. I tried to cut away but with the pilot around my leg the chute wouldn’t move. Pulled my reserve 1000′ above the ground and thank god it cleared the main or else I wouldn’t be typing this right now.
            An hour later I was back in that fucking plane jumping again but that’s the kind of shit you do when you’re in your 20’s. If I still continued to act that way now I def would NOT be here.

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  5. riggedgame

    The big boys are trying to keep the public from BUYING here. The early action of TNA and TZA suggests we are in a GO LONG zone here.

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  6. TraderCaddy

    Pretty much done for the day (unless I see another opportunity).
    SMH + about 2%

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    • HalfBloodPope

      Golf does sound like a good idea on a day like today. Fall golf in northeast, does not get much better than that.

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      • TraderCaddy

        Real nice here.
        High only going to about 88 today with a little less humidity.
        Probably going to mow the lawn later.
        We were at Rays-BoSox game Sat. night and spent the weekend in Tampa so the lawn needs a mow (or so my wife says).

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        • Yogi and Boo Boo

          Rays going for that wildcard, aren’t they. I can’t believe how easily they dismembered the Sawks.

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          • TraderCaddy

            Mgr. Maddon has the team believing they can win the World Series one game at a time.
            He never says anything negative about his players.
            The game game Sat. night (6-5 in 11) was a great game to go to.

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          • HalfBloodPope

            Love the underdog story. Best in sports.

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  7. checklist

    I agree, nobody has an edge right now. A call for a depression or second great recession is just as rational as a call for an ongoing recovery with this being a growth scare like last summer. Its all in the hands of governments, who are frankly acting amazingly badly. In the US we have repubs and tea partiers in congress who, in all honesty, seem like they want to tank the economy so as to win in 2012. In Europe we have Germany playing some dangerous games.

    On the flip side, a proper set of government action could send the markets and economies skyward easily enough. Even another extend and pretend in Europe combined with some exhaustive selling and some kind of prudent action here in the US could cause a pretty extended rally.

    Its a crapshoot for both market direction and level of the economy…

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  8. heaterman

    It is indeud a time to pull in ones horns and embrace gentlemanly behavior rather than trying to barbarically rape the market.

    As is usually the case, prudence is the better part of valor.

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  9. J

    “The CAC is down 4.6%.”

    The frogs are panicky as there was some sorta nuclear explosion killing one person and injuring three people.

    The press has it fucking wrong as usual. They called it a nuclear power plant, however the explosion occurred at a processing operation.

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  10. TraderCaddy

    It’s not that hard in my opinion- in fact it is rather easy for short term traders.
    The out performers stick out like a sore thumb.
    Plus one has to remember that the market has predicted 12 out of the last 4 recessions- in other words it can’t.
    Plus a dollar rise could mean a rush into US based assets. It did it before in late ’90s and late 80’s (when Plaza Accord was dumped).
    Just have to be in the right equities- not multi nationals that rely on over seas for earnings.

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  11. J

    Respect the PPT. If you don’t own it, and want to short term trade your basically an idiot.

    I’ve made serious money with this alog.

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  12. Hermes

    I love how the US market says fuck you to the rest of the world. I guess all those DOD dollars weren’t wasted after all.

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  13. Big snacks

    This is a day traders wet dream… Buy when it looks horrible and fade the rallies

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    • TraderCaddy

      Yes.
      I have changed clothes twice today (Crap. Did I just write that-where is the edit button when you need it).

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  14. The Fly

    Judging by the first 30 mins of today’s trade, I believe the title of this post is justified. Unreal whipsaw.

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    • Bullish

      Indued.

      Last summer had been the toughest market ever, however this summer has taken the cake.

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    • J

      People have been absolutely keelhauled in these markets. It’s fucking unbelievable.

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  15. razorsedge

    humm, more on my tomatoes, i asked a horticulture guy about my over fertilizing, he said, dont do anything. dont even water for a few days. they will do better if they stress a little. if there going to survive they need to do it on there own.

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    • Bullish

      Get a new horticulture guy.

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    • Frog Playing a Colorful Accordion Song for Bernanke
      Frog Playing a Colorful Accordion Song for Bernanke

      Kind of like the markets. Unless you are a super quick millisecond trader, perhaps it’s time to stop watering the market with your money, as it is like a sieve.

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    • Yogi and Boo Boo

      @razorsedge – What are fertilizing with? If you’re only growing for yourself, you should thing about going organic. It will take a couple of years to get up to speed, but it’s much, much, easier. Once you get things stabilized, it’s pretty easy to keep things balanced.

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      • razorsedge

        fertilizer, was using mirical grow. was good initailly, but turned into unintended consequences made me think twice. so im goin all natural fertilizer now. compost make from natural waiste. started from scrath.

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        • Yogi and Boo Boo

          Good choice. Miracle grow will give you a bunch of weeds. Which just means more work pulling weeds.

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  16. The Fly

    Today’s tell is RKH and BAC

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  17. The Fly

    you daytraders are full of shit.

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  18. The Fly

    To say this is an easy market means one of two things:

    1. You have a genetic flaw that allows you to see dead people and retarded and nonsensical market trends, as there are no correlations.

    2. You are crazy.

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  19. Frog Playing a Colorful Accordion Song for Bernanke
    Frog Playing a Colorful Accordion Song for Bernanke

    Perhaps a daytrader might do well in this market, as long as they do not ever blink, which might cause them to miss a big market move, LOL.

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  20. Bullish

    I’m waiting for the people behind the pres to start doing the “Y-M-C-A”.

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  21. The Fly

    Serious, what in this trendless market makes sense? You buy the momo: crushed. You short into weakness: crush.
    You try mean reversion: crushed.

    Cash is king. Sorry for the cliche.

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  22. Mr. Pink

    This moron. Fly, where did you go to undergrad? Or do you just spout off dumbass shit on twitter all day as to entertain your followers? Genuinely the dumbest person I have seen on Twitter who is a ‘trader’

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  23. TraderCaddy

    I smell a soaring US market as soon as Europe closes shop.

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    • TraderCaddy

      Don’t be angry if you are short.
      Your position is based upon reading the news (already baked in) and hope.
      Trade what you see.
      Such as NAZ,chips, small regional banks doing well- don’t ask why-just buy them.

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  24. J

    Oh we forgot, it’s merger Monday.

    http://www.bloomberg.com/news/2011-09-12/broadcom-agrees-to-buy-netlogic-microsystems-for-3-7-billion.html

    Lol… Germany could go broke… the entire continent could, including Russia lobbing a nuke on Berlin and there would still be an announced merger on Monday morning NY time. It’s almost becoming a religious event.

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  25. Jess Peletier

    If this is the hardest market ever, obviously very little was learned during 2008.

    Sure, it’s harder than a raging bull market, but what isn’t?

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  26. kevin stout

    i read one part, SocGen is not going down. fuck all the noise in ur blog and following, they are sheep and will be slaughter accordingly. peace im out, tron.

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