AN IBC SPECIAL COUNT DRACULA EDITION: Saying Goodbye to China

This afternoon I visited a China antique shoppe in search for collectibles. As soon as I walked in the man who owned the store picked up the phone and started to argue with a customer, naturally about money. Inside of this den of inequity, I perused countless counterfeits and subpar goods, faux antiques and shit, of the first order.

Tonight, I preside over a coffin and in it is the entire country of China. Their indexes are sliding a calm and collective 4% tonight, a rather decent showing in comparison to last night’s -7.5% drubbing. Their index, mind you, is down 35% over the past month and it has a lot lower to go.

Why you ponder?

Because the entire dog-eating country is a fraud, corrupt vagrancy disguised as prosperity. These people haven’t the slightest idea what they’re doing. I entreat them to sell their US treasury holdings and use the proceeds to build ghost cities. But they won’t. Do you know why?

CURRENCY RESERVE STATUS.

The Empire of the United States doesn’t compete with any other nation. No one is able to hold a candle to us, due to fiscal and military supremacy. We are the greatest nation to have ever existed and our implosion will  cast tidal waves around the globe 10x over– with a pain that will be feared for thousands of years to come. People will one day talk about it and whisper the tales of when America went haywire, causing nightmares in small children and retarded adults.

Count Dracula Fly writes to you this evening to inform you that the market is irrevocably fucked for at least two years. Yes, we will play bounces and make some money on the long side  within the next week. But the great Chinese dragon is dead, leaving a trail of moronic US CEOs in their wake, scurrying about, trying to ponder how to meet earnings estimates for 2015.

They will not.

The deflation is real. Only a complete reset of the system will make things like they were. Until then, we’ll be stuck in a vortex that grinds us into flakes. Oddball currency crosses between the euro, dollar and yen will continue, assuring that a completely new set of speculators get fucked on a daily basis. The very best hedge fund managers will go away, like China, never to be heard from again. If you’re not careful and faithful to the “do no harm doctrine”, you too will be fucked, the reader, reduced to traveling hobo about the trains–begging for scraps of bread and hot water laced with hallucinogenics.

But you wait for the dip buying opp. In the meantime, the Chinese stock market experience will continue to delight the Devil, thrusting submentals into action in a purblindly and harmoniously methodical, intoxicating waltz, reminiscent of the actions of better men, American men, in 1929.

Morton’s fork.

Sleep well and good night.

We are about to go negative, reversing a 400 point move.

Here are some scenarios that might play out.

We close at the lows and everyone blows their brains out tonight. Then, after you’re dead, China rallies 10% tonight and we re-rip higher by 400 tomorrow.

Or, China tanks again and we dive into the blackest and hottest areas of hell tomorrow, reversing any semblance of decency and decorum, retesting the lows from yesterday, down 500.

Or, Asian trade is unremarkable and we sort of trend sideways for the next week or two before moving higher.

Like I pointed out in a blog in Exodus today, a V shaped recovery isn’t in the cards, based upon previous algorithmic readings.

I am still 55% cash and only bought back some GG today, thinking gold might reassert itself as a safe haven. Truth be told, the more I look at the facts, the more I believe we are entering a long, painful, period of market action, aka a bear market.

I bought back half of my GG position that I had sold north of $15.50 a week ago. I will complete the purchase of the entire position into strength, not weakness.

Back when I was starting out, I had a real bitch of a margin clerk. She had dead eyes, and a serious demeanor, like a shark. At around 2:00pm, she’d make her way around the office, like a mafia hitman, demanding payment, else face the consequences. Often times, we’d hide from her in the bathroom, lobbies or head out for an extended lunch. Sometimes we’d go play arcade games in Times Square and try to forget our misery by playing the games of children.

It was a sad time to be in this business, back in 2000-2002. No one wanted to invest in stocks and to look at client accounts, post crash, was simply depressing.

Guess what? You young fuckers might get to “enjoy” it now, for at least the next two years.

China goes offline: your whole business ignites into flames–like a homeless man wrapped in burlap.

The margin clerks are make the rounds now. Expect volatility into the bell.

I’m okay with letting stocks sashay back and forth, tricking investors and traders alike, until 3 o’clock. I do not want to be a seller today. The overwhelming prognosis from experts everywhere on Twitter is to fade the rally. Therefore, I will fade them and buy the bell.

Big up days always scare the shit out of prospective longs. It’s the follow thru day that makes them believe, pile into stocks, and completely and thoroughly annihilate short sellers.

I will likely allocate half of my cash today, amongst a series of names, then call upon a sundry of Voodoo physicians to conduct seances to call upon the dead, perhaps Jay Gould and JP Morgan for starters, to help offer counsel during these arduous times.

When I say “they”, I mean bankrupted fucktards who just got wiped out playing the long side like an animal. Those guys are being washed away with the sands of time now. I bet you think I don’t want to buy this open? You’d be wrong.

I am dying to put money to work. I just don’t like the cross-currents of moronic Fed officials holding rate hikes over our heads, like the Sword of Damocles. I do like those BBY numbers, which bodes well for GPRO, AMBA and AAPL. The market should rally 5%+ over the next 5 days. We should get a continuance of the rally tomorrow and then the short squeeze should commence by Thursday.

If you’re like me, heavily cash, sidelined like a paradiddle, bide your time and wait to see if the animals completely fuck this market with their sell orders. The opening tick is over. Now we will drift throughout the day, ebbing and flowing between fear and greed. The best time to execute a trade will be near the bell in preparation for tomorrow’s continuance.

At the top of my buy list is to average down in CYBR, ONCE and add to SBNY, AAPL and start a new position in either SHAK or NFLX.

Futures are lifting off and all is well in China, following a clown-car like -5.5% open. Right after those communist bastards (extra Red Scare) fixed their markets higher, Japan followed suit. Commodities are up and all is well again.

Here is what I am wrestling with now.

This feels different. Previous market dramas were caused by superfluous events: Greek-German comedies, Federal Reserve maladies and a series of stupid things purported by Congress and let’s not forget the end of the world as we knew it: Ebola. All of those, sans the end of the world zombie causing virus, were fixable, short term events. But this is permanent: Chinese fuckery, largess, slowing the growth engine of the world.

If the China story is truly dead, I’m afraid today’s “drop” will look like child’s play 1 year from today. You will reflect upon NFLX at 98, down from 129, and view it as absurdly expensive, same goes for AAPL, AMZN and every single well to do growth stock in the S&P 500.

Buying today’s close was the brave thing to do. Those people will be rewarded tomorrow. The coward will sit here and watch, lament over missed opportunities, and pray for the market to correct. “The Fly” is not a man, such as this. He transcends short term moves in stupid-to-do stocks. Immortal and without emotion, he blazes a trail that will last for the next 10,000 years.

Enjoy your rally and be sure to thank your Chinese friends for their manipulative government. But this isn’t over yet.

I watched you smug bastards on the teevee declare “the bottom is in” to “head back into the shark infested waters” because the sharks like people who bought dips. Had I taken your advice, I’d be strewn across the pavement with vultures picking away at my carcass.

It’s not that simple. Bottoming out is a process and to buy this afternoon was the equivalent of buying into an 800 point melt up. No thanks.

Now we descend into hell because that’s where China resides. We gave up our country a long time ago and transferred it to China. We enjoyed the frugality of cheap labor and goods. Now that cost savings will wreak havoc upon this nation for generations to come.

But don’t worry. The central bankers are owned, lock, stock and barrel. The syndicate of global oligarchs will pressure them to act, in order to reflate things again. You’ll have another shot at liquidating at reasonable levels, another shot at “playing the bounce”–because that’s what we are: “players” in a sordid game.

We’ve replaced human beings (cost savings) with the ability to think and react rationally to outsized moves for computers, prone to break and bust loose Armageddon on the capital markets every 5 years or so. We are reaping the seeds that we’ve sowed. I know this sounds awfully dramatic and the markets aren’t even down 15% from their highs. But we have 19 trillion in debt and the majority of our industrial output is done outside of our borders, exposed to fucked currency moves and the caprices of maniacal governments.

Regarding the markets: look towards China and Hong Kong this evening for signs of encouragement and get those handy-dandy (extra Blue’s Clues) buylists ready for a possible opening cascade tomorrow morning.

I closed the session with over 60% cash and I still got my brains blown out.

Looking at this rally off the lows, I am disgusted with myself. I prepared for this very moment, a buy the dip scenario of epic proportions, gap down of largess magnitude and I did nothing. Truth be told, I tried to execute a few orders, but my limits didn’t hit. I missed at least 10 points in NFLX, PANW and 10%+ in CYBR, AAPL, TQQQ, just to name a few.

Naturally, now I feel like a complete fool, ashamed to have missed out on this run and do not want to chase the rally, out of double fear for being wrong again.

This is the battered wife syndrome. Also, I am a dumbass deer under the scope of headlights, watching the cool cars pass by, filled with drunkard passengers popping champagne corks into the faces of onlookers.

Lucky for me, I’m not a human, but a deer, so they’re ignoring me for the moment. Maybe I’ll venture out into the middle of the road to get a better look.

Apparently Tim Cook, CEO of Apple, emailed Jim Cramer today and told him Apple was doing well and that iPhone sales were not slowing. This had a profound effect on the shares of Apple, propelling that stock into the black. Lots of stocks are going green now and the mood appears to be turning positive.

Do I have the slightest fucking idea if this rally will hold? The fuck should I know. Crazy people are whip-sawing this tape, reducing the layman trader into clown-dust. My gut tells me this Apple news is enough to start a rally. The cynic in me says “we’re just gonna sell this fucker into the bell and the world is going to end in Asian tonight.”

I tend to brood, really badly, when things get bad. Sometimes I feel I was born to preside over the fall of man, to become a leader during the apocalypse, tribal and wearer of the African Jungle Mask. So pardon me when I say, “I’ll be eating a few sandwiches while you chase this rally.”