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Dr. Fly

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.

No Rush to Dive In

I kept one stock long just in case the rally continued, MOS, and it’s already down 2% from the highs. I hedged it with an FNGD long because the FANG stocks are weak. The bull market isn’t back. These pops are almost always followed by drops. Be patient and let the trades come to you late in the day. The risk to buying early is you risk a reversal. It is rare to see markets up and continue up throughout the entire session. Although we’ve had plenty of fierce rallies in 2022, the highest probability trade has been to be SHORT.

Over in Stocklabs, the last oversold signal has thus far yielded a 12%+ gain in TQQQ. It only flashed once, so my allocation is only a third. This account is dedicated only to the OS signals, +15.5% YTD.

It’s good to see stocks bounce, especially commodities. The reason I sold it simple: best to lock in what is assured than to gamble on uncertainty. At the moment, I am +185bps for the session.

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As you readily know, I am long a pastiche of commodity names into this morning’s commodity bonanza, whereby the EMERGENCE of stagflation rears its ugly face again.

Copper is bid +4%, Oil +3%, and Natty +5%.

My game plan is the same everyday: take profits during the first 10 mins of trade and then relax and oversee my profits as they sit quietly in my accounts.

The FREEZE GERMANY trade is on, especially since they only have 2 months of gas in storage and their little tanks are getting blown to pieces in Ukraine. But they of course are not looking to upset the Russians, only kill them. God forbid they might provoke them — Russian gas supplies might halt just in time for the winter months.

You hate to see it.

In other news, the supreme faggot of the UK Boris Johnson stepped down after his entire staff, save the cunt LIZ TRUSS, resigned.

So sad.

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Another fizzled rally and yet another cadre of bulls jumping in headlong to the concrete floor. Soon their heads will be bashed apart into pieces and their brains spilling out unto the hot pavement — courtesy of the very gay west and their losing war against Russia.

YOU MIGHT CHOOSE to ignore it but it’s not going away and the losses will become more elaborate and pronounced in the coming months —- as “the west” cucks themselves for NEOCON interests and blood sacrifices.

You may not realize it yet, but this is the opening salvo into another great global war and at the moment we are ill prepared for industrialized warfare.

Markets in the short term ignore these things until it can’t anymore and then we’ll get LARGE GAPS lower. The purpose of my trading now is to preserve my +54% YTD gains, whilst at the same time aim to improve upon them via incremental moves — most easily achieved in market divergences. I am hoping for another spike in energy prices, which could provide a rally in heavily beaten down shares. I will not pretend to understand all of those charts are broken and betting on oil now is most likely a losing bet.

ERGO, ALL BETS WILL BE HEDGED. We are one bad headline away from a down 10% session.

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This is not a good reason to rally.

FOMC: “with inflation remaining well above the Committee’s objective, participants remarked that moving to a restrictive stance of policy was required to meet the Committee’s legislative mandate to promote maximum employment and price stability”

But we rally nonetheless, at least for now — because markets want higher. How long this rally will continue remains to be seen. I took some longs in various commodity stocks with only a 5% hedge long UVIX.

I do feeeel the commodity trade could be a trap here and oil might gap down again. Ergo, I won’t go too heavily long and will balance it out with other areas of the market. By the end of the session, my hedges will be 15-25%.

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The losses in commodity stocks this past month is nothing short of staggering. We have seen this before and I’d be lying to you if this wasn’t reminiscent of the great bubble collapse of 2008, where we bore witness to oil collapsing from $140 into the $30s in short order thanks to a global collapse of economic activity.

Here are some notable losses in commodity names the past month:

XOM -18%, SHEL -22%, COP -31%, RIO -25%, DE -21%, VALE -27%, FCX -36%, CNQ -29%, EOG -31%, NUE -19%, FANG -30%, MOS -28%, TECK -40%, CRK -47%, X -32%, CLF -35%, BTU -28%

You get the drift.

One would surmise these losses would abate soon.

Let’s look at DE for example.

April -9.2%
May -5.2%
June -16.3%
July to date: -4.2%

Great names have been taken to the woodshed, all due to various reasons. The primary one is America hitching itself to the losing Ukraine. Let me repeat it: we are hitching ourselves to a sure loser in a war against a world power that is gaining allies on a daily basis and the world is becoming more and more bifurcated between the liberal world order and something opposite to that effect.

Just this afternoon “the west” declared they might affix a price cap of $40-60 on Russian crude. Are they so crazy that they believe this would be accepted by Russia?

Nevertheless, I am tempted to buy commodity dips here, but would prefer to begin adding late in the afternoon. I already own OXY, hedged with UVIX. I am likely to compile a short list of stocks for ownership by the session end. My goal is to have a high sharpe on my portfolio management and avoid large drawdowns. To do this I avoid intra-day swings by being in cash and only get aggressive in the late afternoon, but never without hedges.

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Retail Boom Due to Lower Energy Prices?

The market is processing lower energy prices now, as WTI and all commodities continue to get hit based off the notion of demand destruction. It seems investors want their cake and they also want to eat it whole, betting on both demand destruction and also higher retail spending. It would BEHOOVE any of these investors to actually think this one through, seeing it makes entirely no sense. Nevertheless, the market is a genius in the long term — brainless dolt in the interim.

I had a sundry of stocks this morning that went nowhere and I moved to cash, as I always do before 9:45am, +10bps for the session. There are numerous runners in retail sensitive sectors — but I am likely to sit this one out in favor of LAMENTING my brand new existence amidst contractors and the incessant complaints of a one Mrs. Fly who would find fault in the heavenly father himself — if presented in front of us and all of his magic tricks and secrets to the universe.

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Never fooled, often right, “The Fly” did it again, turning an otherwise moribund day into one filled with joy and excitement. I closed the day +55bps, reversing a -65bps deficit, and now find myself long a sundry of retail stocks into what is almost sure to be a good trading day tomorrow.

However, due to the nature of western leadership and their wanton ineptitudes, I hedged with a 15% weight in SOXS.

The day inside Stocklabs was filled with the normal level of discord and controversy, starting off with a member sharing a loan for $650 to his brother. The only catch, this loan was in exchange for his brother’s soul, sort of like a deal with the devil, only this deal comes with a clause that it REMOVES you from your home and golfing clubs.

Other members chimed in with the usual FIRE AND BRIMSTONE nonsense, whereby a loan to a brother was on par with the bombing of Hiroshima. Most of the hardliners spit at the idea that anyone without money should be entitled to enjoy their lives, and certainly not do anything to break up the toil they’re expected to partake in, in order to pay back said loan.

After that, we delved into boats and how stupid the owners of these boats are for having them in the first place.

As all of this happened, I, once again, methodically LEANED into the market with the power of 1,000 SKELETOORS and bought stocks based off the catastrophic 10% decline in crude.

Tomorrow is another day and I am certain it will be a profitable one.

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I just couldn’t help myself. The decline in WTI is now -10% and I got to thinking this steep decline would create the perception that inflation was abating and also induce retail spending to boom.

These assertions prevented me from remaining in cash and in favor of a large retail allocation. Because of this, I am now UP for the session.

The biggest movers are now found in biotech, SAAS, but also apparel, online retailers and department stores.

My best sense, markets rally on this COLLAPSE in crude. This is the type of drop that draws attention and its best not to overthink it.

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WTI is down 6% now and copper is off by a staggering 4%. The NASDAQ opened down more than 200 and is bouncing off the lows now, led by stocks as stupid as RBLX and DASH. I was leaning long, luckily hedged with a 15% weighting in SOXS and went to cash and locked in a 65bps loss for the day.

What is going to happen is this: FOOLS and BELIEVOORS will be lured into this tape only yo have their heads CLEAVED off their shoulders — as the global recession narrative whirlwinds through the portfolios of FOOLS.

I will not buy CHWY or XPEV or COVID-19 vaccine plays — because I value my game plan more than the small gains and feeling of temporary success that might be gleaned from catching a pivot point higher.

I shall not be fooled — because I know we will trade materially LOWER. If you are still bullish then you are still in denial.

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If you thought the US had problems, take a look at energy dependent Europe. Their windmills and solar panels, apparently, can do nothing to stave off what looks like the onset of a full blown collapse and of the Euro economies.

The euro is now at a staggering $1.02 against the dollar, the lowest since 2002.

NASDAQ FUTS are -90.

What will be interesting to watch is if this economic pressure can lead to another debt crisis, on par to what we saw with the PIGS in 2012. Italian bond yields have been diverging against the Bunds and it will be important for those to tighten, otherwise the whole kit and kaboodle might come undone.

Related: the Ruble is down 10.7% against the dollar this morning.

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