Energy Stocks Menaced by 9% in Harrowing Trading Session

It’s all fun and games until your stock drops 15%, just because it can.

This is the prime reason why I’ve opted to forgo common stock trading for 2016, in favor of a methodically disciplined trading program using the Exodus algorithms.

These are the sort of losses you don’t walk away from. You fucking die because of them.

I think the market got ahead of itself over the past two week, with gains in sectors that deserve to be liquidated. I could see the S&P grounding itself after a quick 5% pullback, then grind higher until the end of April.

Don’t make a mountain out of a mole hill.

While the energy sector was off by an astounding 9% today, it’s still higher by 30% from two weeks ago. I will not permit the emotions of the day cloud my judgement. This was an arduous day for longs, a good one for bonds and utilities. Aside from that, it’s only one day and that doesn’t forge a trend.

Tonight’s primaries might stoke things a bit, especially if Trump lands a knockout blow to the catamite, Marco Rubio.

Just yesterday the stock was hitting 6 mo highs. Today it’s eating gravel.

Via Briefing.com

CAT noted that 2016, overall, is similar to the second half of 2015. They have seen no big changes relative to the second half so they expect 2016 to follow their typical seasonal pattern of a weaker Q1 and Q3 and a stronger Q2 and Q4.

Oil and mining are the weakest businesses for the company. These businesses typically have the largest backlog for CAT, which speaks to the decline in their backlog.

In China, the company thinks that what is happening with their economy ‘makes sense.’ They do not think that you can drive an economy that big that fast with only fixed capital investments.

CAT is generally ‘okay’ with the shift to a consumer lead economy that the country is trying to make. That being said, they did note that demand has come down in China, although it seems to be stabilizing.

With CAT, a strengthening dollar impacts sales negatively but is typically a net neutral impact on profits as costs fall. The company does not expect for FX to have a material impact on profits Y/Y.

This stock deserves to be lower, if there is such a thing.

Whitney Tilson covered his LL short back in December. Almost immediately, the stock surged ahead on a deal with the FTC that only turned out to be fake.

Long are now entreated by news that Tilson is short again and this time is out for blood. In a mind numbing 132 page thesis explaining why Lumber Liquidators is a horrible company, Tilson suggests the specter of cancer causing wood is likely to cripple the company and possibly lead to its bankruptcy.

Subsequently, LL is plunging.

Here are a few key pages of the Kase capital report.

I don’t see how this company can survive, given the news that their wood can in fact cause cancer. Who the hell would buy this stock?

A few random notes.

The bubble basket of high valuation stocks in Exodus is up 9% over the past two weeks, off more than 2% today.

My prime barometer of risk, TWDFM (these will definitely fuck me) are getting smoked today, but up sharply over the past two weeks.

The FANG stocks have been grossly underperforming, up just 1% over the past two weeks. They’ve played second fiddle to the Renaissance found in low brow reflation stocks.

The market is smartly reallocating out of the fast trades, the bullshit dead cat bounces, and into companies of substance. As you can see by the graphic above, FANG is vastly outperforming today. This is undeniable in its bullish meaning for stocks and should provide succor for asset allocators who opt to purchase real companies over fading stars.

Let’s be clear (no Obama), stocks had to sell off sometime. If we gave back 50% of the recent move, we’d still be in good market standing. In no way is today’s 100 point drop something to fear, or even the 10% drops in commodity stocks. Those stocks are up 50% over the past 2 weeks.

But one thing is abundantly clear, for better or for worse: markets are slaves to the price of copper and crude now.

I’m sure there will come a time when this correlation eases. Hell, just 12 years ago no one gave a shit about crude. Nevertheless, if you’re wondering where stocks are heading next, look no further than those two commodities.

Non risk assets are outperforming today, measured best by XLU, TLT and FXY.

I warned you against chasing those rogue, vaudeville, onion patch stocks. Now look at you, losing vast sums of money, which will, inevitably and invariably, lead to the dissolution of your marriage, whereby your belongings and children will be taken from you–leaving you desolate and broken amongst the hard rocks and dirt.

All of this could’ve been avoided, had you comported yourself with a modicum of decency by avoiding buying into tommy rot stocks into feverish mark ups.

Stocks are trading off today, deservedly so. I took the time to compile a galere for you, a testament of truth in this small, yet meaningful, rivulet of financial bloggery.

The ark floats.

I call this pastiche: ‘DEATH TO COMMODITY STOCKS’

Draghi will disappoint Thursday. Prep yourselves.

If you listen very quietly, you can hear the ark crashing through the turbulent waters, its zebra and giraffe thrilled to be locked inside of a floating city, away from the many dangers that land based living quarters might pose.

Stocks are mildly put off this morning. It’s a lazy man’s sell off, one lacking substance and vigor.

There is, however, a significant bounce taking place in the bond markets, which bears notice.

While submentals pile into stocks like ‘sex with REXX’, men of intelligence and decorum board the ark.

The analyst community is absolutely dumbfounded by iron ore’s 19% rally yesterday and have come up with a half dozen reason as to why it happened. One of them had to do with a flower exhibition in a busy steel district in China. I kid you not.

The easy and short answer is short squeeze.

Regardless, experts agree everywhere, worldwide, that this shit right here isn’t going to last.

For Goldman, iron ore’s rally “will likely prove temporary,” the bank said in a note that maintained an end-of-year target of $35 a ton, while Citigroup said it’s still bearish and Axiom Capital Management Inc. said the jump was probably just a blip. BHP Billiton Ltd. added to the chorus, saying the advance didn’t change its mid- to long-term outlook.

“There’s clearly what you would describe as an extreme short-covering event going on,” said Wayne Gordon, executive director for commodities and forex at UBS Wealth Management. “The rally is there to be sold because the fundamentals of the market, being supply and demand, do not stack up.”

Australia’s Roy Hill holdings Pty, the venture backed by billionaire Gina Rinehart that’s ramping up output from a new mine in the ore-rich Pilbara to produce 55 million tons a year, was also cautious. While the spike was an unexpected but welcome surprise, “the consensus, if you look at the forward estimates is down, $30s, $40s,” Chief Executive Officer Barry Fitzgerald told reporters. “We expect it to be somewhere there

This is really big news for Solarcity. The granola eating hipsters at Whole Foods inked a deal to retrofit 100 of their grass fed stores with Solarcities panels. More importantly, and this goes without saying, this could lead the way towards retrofitting all 431 stores.

If successful at Whole Foods, I could see Howard Shultz from Starbucks getting shamed, with his enormous carbon footprint, into doing a similar deal.

Via Briefing.com

The plan aims to increase the production of solar power and offset some need for traditional grid power while helping Whole Foods Market (WFM) save money.

In total, WFM plans to retrofit up to 100 stores with rooftop solar. SolarCity, America’s #1 solar power provider, will deliver solar power services for many stores across the Whole Foods Market portfolio, in locations such as Connecticut, New Jersey and New York. SolarCity will custom design each solar power system to maximize the amount of grid power offset and expects to begin installation this spring.

SCTY is up on the news.