Buyers Beware

Obviously The PPT is oversold now. But that’s not what’s interesting. Today’s close tied the lowest technical score ever. The last time we were this oversold was 2/17/09. Shortly after 2/17, the market traded way the fuck lower, in “fuck you, you’re dead” fashion. It’s one thing to be oversold, but another to be dangerously oversold. The market is whispering something to us, ever so quietly.

For the record, I do not want a collapse and do not stand to gain, being net long. However, let’s face it, we have nothing to run on anymore. For over a year we ran purely on POMO and Ben Bernanke’s beard. Now we have to run on cheap stocks and a good economy. Get it?

I guarantee you policy makers will throw the kitchen sink at this debt crisis and at some point the market will scream higher. Because of this, I will not be shorting anything. As a matter of fact, I will be a buyers of basic materials at the right time. My list will be furnished inside The PPT.

Today’s sales were in tech. I cleaned out of VMW, AMD, MU, CIEN and FFIV. For all intents and purposes, aside from CIEN, they held up well during this meltdown. Had I went long some basic materials, I would have lost a lot more. I kept AG, GSVC (illiquid), WNR (less than 2% position now) LCC and will liquidate into rallies.

My buy list encompasses the most battered basic material stocks, with the best fundies and highest % of shares sold short. I want to own stocks that are heavily shorted because the short sellers offer support underneath the stock, via covering. Also, they provide excellent tinder when the tide turns.

[youtube:http://www.youtube.com/watch?v=0p215rO0B34 603 500]

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0bama wants to raise taxes so that we can spend it on bridges and tunnels. Unfortunately, said bridges will likely be MADE IN CHINA. That’s right. This country is so fucked we’re actually outsourcing the production of our bridges to China, because of their slave labor. So what exactly are we doing?

Answer: importing slave labor.

I sold out of the majority of my stocks this afternoon because I genuinely feel we are at the precipice of a crash. The upside moves in TLT and UUP, coupled with the outright liquidations in commodity, tech and financial related names, has me thinking something very ominous is looming. Having said that, I left 30% of my assets long in the event we knee-jerk higher on policy announcements. Make no mistake, policy makers will announce something and soon. They cannot just let the ship sail into the sunset without trying to sink it first.

The reasons for selling was very simple and concise. I was down 4% intra-day and up 4% for the year. I cannot ignore such mathematical coincidences. I took it as a sign from the Gods and left the table a winner. When we do rally, I will be prepared to toss cash into the market like brokers throwing themselves into lit fireplaces tonight.

Everything is collapsing because cash calls reign supreme.

Coming soon: major EPS cuts, French bank rumors, Euro-Libor concerns, Italian 10yr bond concerns, US spending bill impasse, Rumors swirling around US investment banks and custodians, major hedge funds liquidating, and significant downside revisions in US GDP forecasts. The upside? Possible inflationary policy response aka “nothing new or special.”

For me, the choice was simple. My only regret is not selling yesterday.

[youtube:http://www.youtube.com/watch?v=WDUhTGXjEuk 603 500]

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I sold out of everything but a little WNR, GSVC, AG and LCC, raising cash levels to 70%.

More on this later.

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As you read this drivel, I am down a little more than 3% for the day, OUTPERFORMING most sectors thanks to my 30% cash horde. Truth be told, it is very tantalizing to buy stocks down here. After all, we are absurdly oversold, based upon normal metrics. But things aren’t exactly “normal” are they?

I am pulling a decent amount of money out of my banks today and tomorrow. Not because I believe there will be a bank run, but because it’s entirely possible. They’re all fucking liars and there is no way I can guarantee liquidity, if BAC-C-MS seizes up. Siemens is pulling money out of Socgen and the COO of Blackstone said he can’t get financing for more than $1billion in Europe.

$1 fucking billion.

I will not buy stocks, unless I sell something else. The 30% cash level is now permanent, due to looming catastrophe. If stocks bounce here and run, so be it. The penalty for being wrong here will be finality. We are talking about a major move to the downside, without curbs or government help. The Tea Party will have their dish served on hot platters of surplus coals.

On the other hand, there is no way I can short stocks here either. We are too oversold to short now. While some of you are addled with ADD and find a need to trade something every 10 minutes, “The Fly” is interested in big moves. Therefore, my only concern now is preservation of capital, not capital gains.

As the day progresses, look forward to margin liquidations on an industrial scale. There are so many fucktards long commodities, short dollars, it’s almost funny. Granted, it’s been a popular trade to be long GLD, short UUP. However, the pain trade has now been applied to the necks of gold bugs and they shall join the margin liquidation party soon.

It’s Hugh Hendry TLT all day every day because nothing is safe. Think about that for a second. Nothing is safe.

Food for thought: Public companies like SCMR are now trading near net cash. What is their cash invested in? You got it: treasuries.

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For today’s market session, I hired three violinists to play the shit that was playing in the Titanic movie, in order to set the mood. I am drinking brandy, ignoring EVERYTHING Mrs. Fly says to me. It’s as if she isn’t there, a ghost of sorts.

Early going, my losses stand at just 4% intra-day. I said “only” because I expect a great deal to come. However, the problem with selling anything right now is it goes against what my urinal shadows are telling me. So you know, the urinal shadow in the butlers uniform is a NET BUYER of stocks here.

Let’s put something on the table, shall we? Ben Bernanke is a fucktard. As such, I removed his iBC cocaine theme. He does not deserve it.

Hey, as the price of crude collapses, fucking hedge fund managers with vigor, jet fuel prices will drop. With that, airlines make money money. As logic dictates, profits will rise and the stocks will soar. HOWEVER, I am assuming people will still fly inside of airplanes. That’s the rub!

The market is singing beautiful tunes today. It is the songs of horror and desperation, designed by the devil himself. “The Fly” welcomes the end of the global banking system, so that he may begin his life of crime.

Oooooh, as my violinists go into diminuendo, the market is rallying. I need some fucking opera singers in here.

Developing…

[youtube:http://www.youtube.com/watch?v=-lwAc5UDdL8 603 500]

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Wow, I cannot believe my eyes. I am not just talking about the whoosh lower in futures. I am looking at T-bills trading at a negative yield and TLT north of $122. Euro Libor is at the 2009 highs and European markets are crashing. Moreover, the safe havens have been bombed, namely GLD. In this environment, everything trades lower.

If we are using the 2008 model, this is just the beginning. This crisis will be absorbed without TARP or bailouts. The political will is gone and we’re on our own.

Inflation was never real. I know Peter Schiff and others made millions off scaring people into believing that lie. But the truth is, the Fed can’t print money fast enough to offset the destruction of capital. Don’t take my word for it, go take a look at copper, oil and coal.

Regrettably, I missed this move to the downside. Hindsight is 20/20 and there is no point lamenting over losses. They just happen. As tempting as it is to deploy my 30% cash into this market, I will likely do the opposite. Despite being technically oversold, there are many other factors that take precedent.

This is it. This is the collapse that everyone said would happen. At this very moment in time, while our leaders twiddle their thumbs, the global banking system is collapsing. The only thing that has me scratching my brain this morning is Italian 10yr bonds, actually easing a bit here to 5.75%.

Aside from that, the European banks are way over-leveraged and our economy is in the grips of a deflationary vortex.

Good morning to you too!

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