Let’s Review the Tape

Terrible day in stockville. Breadth is abysmal and losses are mounting, except for players in the world of medicine.

Up on takeover rumors after canceling an event, shares of ACAD are through the roof. This name has a lot of important biotech investors in it, like Baker Brothers–who owns more than 20% of the stock. If you’ve been following along, Baker Bros just made a killing in PCYC. Their other two large positions are GEVA and SGEN. I am long the latter. Aside from that glimmer of respite, everything else is acting rather medieval, with marked exception to REITs–up thanks to rates going lower.

So, let’s summarize.

Economy good: rates rise, banks go up thanks to yield curve, REITs, Utes suffer. If rates go too high, market throws tantrum and tosses everything into the sewer pipe.

Economy milquetoast: QE is a possibility, yields are down, REITS, Utes thrive. Stock market rips to new highs.

Economy bad: QE is all but assured, yields plunge, then maybe rise off sovereign debt fears. Stocks initially rise off QE prospects, then plunge after idiots gather around a fire and declare “The Fed has lost control” and we’re all fucking doomed to depression.

If you can fit your trades into those themes and where we are now, with respect to these idiots cycles, you will make a mint.

In summary, Wall Street is like a story of three little bears playing out. They hate hot and cold porridge and love the “just right” medium type. Without question, Wall Street is filled with a bunch of drama queen drug addicts, who don’t know their ass from elbows when it comes to knowing what’s best for America. To denigrate positive employment numbers because the proverbial punch-bowl might be taken away is reprehensible. Then again, humans are a disgusting breed of life-form.

We will reach a place of equilibrium soon, an oversold condition in these markets. The PPT will tell you when it happens and we will act upon it. Anything more than that, at this point, would be idle guessing on my part.

 

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