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
19,515 Blog Posts

A Year of Crashes

The indices are up and mega cap stocks have glided throughout 2014, unscathed, basking at new highs. But back in April over 100 tech/biotech names crashed to the tune of 50-70%, as the ‘bubble basket’ capitulated. After that, the market drifted higher and many of those tech stocks recovered some of their losses. During the summer, oil started to weaken and it never looked back, as well as all commodities, soft and hard.

Looking at the net result, from then to now, is nothing short of catastrophe. Oil, gas, gold, silver, even ag, have all been summarily tossed into the great incinerator and smoked out for the rest of the world to choke on.

Let’s not kid each other any longer, friendo: this is a severe bear market, wrapped inside of a bull. The headlines speak of new highs and elaborate pornography. The internals are just fucked.

I’d like to wish you well, tell you that everything will be fine; but I’d be lying. What happened to tech during April is now happening to oil. The difference between the two is one is meaningless horseshit and the other is saddled with hundreds of billions in debt and is an integral part of global growth.

Over the past six months, the following prominent oil stocks are down more than FIFTY FUCKING PERCENT.

NADL -81%

CRR -73%

SN -69%

SGY -65%

OAS -65%

HK -65%

LPI -65%

PWE -62%

SDRL -61%

CVEO -60%

SD -60%

TLM -55%

PDCE -54%

CWEI -54%

CJES -52%

CIE -52%

DNR -52%

BCEI -51%

RIG -51%

TTI -51%

WTI 50%

Pray tell me, who needs a bear market with a bull market like this?

ALERT: Caine Thaler’s Investment Income Report has launched! In light of market conditions, we’ve decided to grant you the first report FREE of charge. Enjoy.

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20 comments

  1. Marc David

    FIG?!

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  2. fluxcapacitor

    Tough to make sense of it.

    After suffering involuntary penis removal in everything from JDST, COH, YELP, GPRO, FEYE, and about 18 of the last 20 OA plays, it sure as hell feels like a bear market.

    Yet the S&P is within 1% of all time highs, up 12% YTD, with a very healthy chart and firm long-term trendlines below.

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  3. freebie

    Trading blows I’m just gonna buy a 2x long S&P ETF for the long haul. How can you beat that?

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  4. J Livermore

    Who called my name?

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  5. Adabese

    Who the fuck called my name ??!!!!

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  6. tmmdn0

    Fly I love your macro perspectives.
    Truly you have an ability to summarize the most convoluted market behavior and make it immediately comprehensible.
    Thanks for your efforts.

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  7. halfbloodpope

    I was long Bill Cosby.

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  8. dewey dortmunder

    I hate to appear technically inept but there is no there there as far as Mr Caine Thaler’s Investment Report is concerned. I’m blaming this iPad and Steve Jobs.

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  9. ho_chi_min

    Simon adabese in the house

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  10. bonobo smores

    Thanks for the report; very helpful; did I miss something that explains the meaning of the thumb colors?

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  11. bchu12

    WTF r u talking about?? Gold is basically unchanged for the year.

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  12. mtpennybags

    Indued

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  13. mack19

    I manned up and took an unlubercated loss on EXK finally. At least I have enough trinkets to barter for an olive garden pasta pass. Long Pasta.

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  14. BlueStar: Contrarian Investor
    BlueStar: Contrarian Investor

    You are correct sir. A shit show of a year for all involved except etf holders in QQQ spy and DIA. Total farce. I like it better when you are a bull.

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  15. heaterman

    To my way of thinking the utter collapse of nearly all commodities can only mean that demand is in the shitter. We “common folks” as the Racist in Chief is so fond of calling us, have no spending money and everyone is leveraged to their eyebrows.

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  16. imanoldbluesman

    This author totally misses the big picture and cant’t see the forest for the trees. Low oil is incredibly BULLISH for the market outside of the energy sector. Investors have more money to spend on consumer goods and to invest in the markets with cheap oil, businesses have greater profit d/t increased consumer spending and lower operating costs. Moreover weakness in gold and silver is also very bullish as thesr commodities have always been treated as hedges against the economy. When the economy tanked in 2008 gold and silver soared as a result of the fear and lack of confidence by many in the economy. Its weakness now indicates just how far we’ve actually come since that time. Get yourself a big saddle and ride this bull for all its worth!

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  17. banellie

    I do not see any reason to be bullish on oil; the fundamentals are just not there. Oil has already dropped significantly and we still haven’t heard of production cuts. It will be time to turn bullish once we hear of major production cuts across the board. We know at this current price in oil is still too high because we still have a glut of oil. 82% of shale is economical at $60 oil, only 4% of shale oil production needs prices above $80 to be economical. This is why I think we will see oil panic down below $50 a barrel. Some of these companies will turn the spickets up even more to make up for the decline in oil prices. This could even lead to more oil production in the short term, thus putting more pressure on oil prices.

    The question to ask is what will it take to stabilize oil prices? Reports indicate that we are still going to produce 1 million bpd more next year adding to our increasing oil glut. This is not bullish so I think we will need to see some real panic in oil to halt production. I am thinking sub $50 oil with a panic well below that so these oil fracking companies pull their heads out of the sand. We need to cut production by over 2 million barrels to stabilize prices from what I am reading.

    We might have a snapback rally because some stocks are oversold, but over the long term I think these companies are a clear short. I believe peak earnings have hit for all oil companies for a long time to come, and in the long run it is always earnings that drive a stock price higher or lower. If you want to try and catch a falling knife in hopes of a snapback rally that is more than fine by me. The short term doesn’t concern me with this trade because it will be highly volatile.

    I am thinking the new normal for oil prices will be around $50 in the coming years. Through well technology making fracking more efficient this could be a real possibility. We had an oil boom, and all booms eventually end in a bust so be very careful when investing in this sector. Typically oil busts last for years or decades.

    The only other chance of stabilizing oil is through a large demand increase and I don’t see that in the cards. China is slowing down, Europe is a mess, Japan is well Japan, Russia is on the verge of collapse, the Ruble is at 54 right now and their currency interventions aren’t working worth a shit. So that leaves India to pull the weight of the world and that will simply not be enough. I don’t our GDP increasing hugely anytime soon either since real wages aren’t going up and that is what really drives our economy and inflation.

    The target plays would be to short the companies with the highest extraction costs and companies that are unhedged. I had to rush into this trade after OPEC decided not to cut and I shorted WLL, CLR, hes, and XLE. My largest position is xle followed by clr, and then wll. These are not perfect but like I said I rushed into the trade in the premarket starting at 2:02 Friday morning. I shorted CLR right away and I was the first trade of the day to give you an idea of how early I shorted these companies in the premarket. I rarely trade premarket but this was the highest conviction trade I have had in a while so that is why I placed bets in size. Upon further research I want to short OAS also because they have some marginal acreage in the Bakken region. I am still looking for other oil shorts but there are currently restrictions on shorting a lot of companies. I also don’t know what the best companies to target so any help would be greatly appreciated ?

    I made this oil short a pretty sizable bet, 22% of my portfolio is short oil spread across multiple names. It is now down to 20% because of the declines in oil stocks. I will also be looking to short OIH at some point. I have a pretty high conviction that oil is going much lower because we haven’t solved the oversupply of oil. I have placed my bets and will let the chips fall where they may. I am open to hearing any opposing views or flaws in my thesis.

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