Just When You Thought All Was Lost: A Win is Born

Even I started to doubt the very essence of life this morning, the symmetry that gives us planetary significance. It was a lot to take in, the specter of a PPT signal being ignored by the masses, discarded like some sort of deformed baby during Spartan times. Alas, all is well and I am back to kicking older men down and into idle sewer pipes again.

Markets are soaring on news that General Putin and his rag tag bunch of vodka whores surrendered to The Ukraine and have decided to NOT place laser images of President Obama eating a banana on their capitol buildings.

JAZZ is most impressive to me, following a two day rout. I like the shares up to $200.

I find most of my trading dollars long China, for a variety of reasons. Right now my chinese holdings are XNET, ZPIN, VNET and DSKY.

Celebrate and rejoice by popping corks of champagne into each other’s faces and throwing fistfuls of cocaine at the kids playing outside (just kidding on the last part).

I just read my previous post and then punched myself in the face, drank a shot of whiskey, and then bought some shares of newly minted chinese burrito DSKY–for the win of course.

As you were.

I was expecting moar. Why bother buying more stocks on a lazy Friday, ahead of a scary weekend?

The only thing that’s working for me is TLT. Aside from that, it’s pure garbagio out there. It’s a sea of red for me and I am tempted to buy some utilities. Please talk me out of it. The day I buy the utes is the day I deserve to die in a fire.

With the US bombing Iraq, oil can be a good play here. With Putin talking to Merkel, the whole market is at stake. The German and Japanese markets have been dreadful. On the other hand, both Hong Kong and China have been great. Which ones are important? Should we just chalk it up to “summer time nonsense”? Or, is this a prelude of things to come?

The real question that I have for myself, which touches upon my over-arching opinion is this:

If we are traveling the path of 2000, which I’ve said for months now, is it possible that the August blow off top will be absent this time around? Will we just break down, 2000 style, without that last final push?

I am a slave for symmetry and would hate to concede bad timing. But if I am to listen to my own advice, it would be to tread very carefully here. The decline of 100-200 tech and biotech stocks back in March and April was a warning. The true decline might still happen. I am talking about Armageddon for names like FEYE and SPLK–the sort of loss you don’t walk away from. So many of these stocks are trading 20-25x sales, into an economic slowdown. If we are to have a sense of normalcy, those stocks should trade down to 5-8x.

You do the math.

All of you who were mocking The PPT‘s oversold signal and decrying this market to be dead are going to be forced to dine at Mcdonald’s restaurants for the rest of your lives. Futures have gone from -13 to +5 and the world is rallying. After hearing the cries of the canaille to “get short” the exact opposite has occurred.

I know what you’re thinking. You’re thinking this doesn’t matter because the market is just gonna sell off anyway. But you’d be wrong and will proven to be wrong by next week. Do you know how I know?

DON’T WORRY ABOUT HOW I KNOW AND JUST SHUT THE HELL UP, you upright walking pigs.

I like chinese stocks, and lots of them.

The last time The PPT missed an oversold signal was November of 2011. It did and it didn’t. Within a day or two of the signal the market dropped off the table, down into the sewers, then quickly spiked like a banshee from hell–hitting overbought within days. Tomorrow will be the 7th day since it flagged OS. We judge the signal on a 10 day hold and looking at the NIKKEI getting samurai’d to the face and our futures tanking lower by 1%, odds are this signal will miss. Granted, if we rally hard next week, PPT can be redeemed. However, the point I am trying to make is this dip is sort of an outlier. The market is exhibiting unusual characteristics, likely fueled by geo-political events.

After today’s sales, I am about 15% cash for trading accounts, 7% cash for personal and 25% weighted in TLT. I will not short anything into the hole. Instead, I will cut losses as I deem fit, raise cash along the way, and attempt to catch the next inflection point to make up losses.

For me, 2014 has been one giant whirlwind of fuckery. One jack in the box surprise after the other. We remain trend-less, violently meandering between ranges, grinding momo traders into dust.

Best case scenario: we gap lower and rally off the lows. A few things are certain: Congress is on vacay. The President is an idiot. And Janet Yellen is in way over her head.

You’re better off swiggin from a bottle of corona than playing this tape, unless of course you’re buying The Option Addict’s earnings plays. There’s no denying the obtuse nature of this tape, one that is scared of its own shadow (extra Saul Rosenberg).

I started a new position in XNET today, based upon the fact that Chinese stocks seem to be immune to the debauchery that is afflicting everything else. I am also tempted to sell one or two names for losses, as my patience is wearing thin.

TLT is breaking out; stocks are breaking down. The appetite for risk is absent. No one cares. Apathy.

I started a position in newly minted burrito stock, XNET–for the win.

I am out of gold/silver.

How do you feel about that now?

In the halls of history, TLT outperforms most in the month of August, flaunting 10 wins out of the last 12 years. The world is always on edge during August, since so many bad things happen when junior is at the turret. God knows danger lurks behind every corner. Market crashes, wars, disease, famine: you name it. Everything you’re scared of happens in between the months of August through October.

That being said, breadth stands at just 35% for the session. Stocks are steadily going lower. An alien visiting our planet for the first time would definitely think our market was destined to go lower–a bear market that wasn’t supported by the Federal Reserve chairman. Such an alien might believe Janet Yellen was actually short stocks and was more interested in her egg salad for lunch than leading the free world towards the path to prosperity.

TLT is going higher because you’re all scared. You’re all scared because TLT is going higher.

Do you get the picture yet pal?

This being August, the last month of the year to take a decent vacation, don’t expect acts of brilliance to translate into the tape. You see how the market is trading, right? It’s the sum total of all of the idiots who are left manning the office, as the meaningful people are out doing drugs on a beach somewhere.

Yes, of course, seeing the NASDAQ flirt with break-even sucks. More so, breadth has gone from about 65% to 56% over the past hour. This is not what I signed up for; but it’s what I got nonetheless.

Summer trading is often listless, frustrating, and unprofitable. I can still hear my wife telling me to “go to cash” just before the summer, 10 years ago or so, because even she knew that I hated trading during the summer. I say “even she knew” because Mrs. Fly has zero interest in this business, despite it affording her the many luxuries she’s become accustomed to.

This is a grind-fest, where everyone ends up on the losing side. You get short, the market rips. You get long, Putin invades Ukraine. At the end of the day, you have to make a decision and pick a side.

Where do you think stocks will be by Xmas? If you’re trading and cannot think so far out, trade smaller. I’ve always viewed the months from June to September as a time of year that I needed to survive, in order to make the real money heading into the New Year.

Things aren’t always what they seem. The market selling off now might trick a bunch of people to get short, only to get squeezed into the bell. This is a perfect time to unwind and eat a few sandwiches.