The Market Needs to Pause

I heard on BBG radio this morning, as I drove my kids to school, that France is enjoying the lowest rates since the 1740’s? If so, I want to know why rates were so low back then, with all of those barbarians running about cutting each others heads off?

Anyone?

Markets are soft on the open; but do not expect them to stay down for long. On the other hand, do not expect any significant upside either. We haven’t had a 1% day in over 40 trading days, which is lending to the steady deterioration of the VIX. By the way, is there any better investment than XIV (inverse VIX)?

I’m just a little skeptical here. I don’t like to follow the herd for too long, as it makes me very uneasy. When the markets were dropping, I refused to jump onto the world is ending bandwagon. Now that everyone loves stocks again, I am on edge. I’d feel a lot better if I could buy a shallow dip. Nonetheless, I almost fully invested here, with less than 5% cash. I am overweight biotech and will be vigilant to take profits and cut losses quickly.

Let’s assume that the wretched decline in ‘bubble stocks’ a few months ago was a harbinger of a greater doom to follow. I believe it’s fair to say there was nothing ordinary about it. The result was CATASTROPHE! strewn out across a Wall Street more accustomed to ribald field parties than preservation of capital, myself included. A minor drop of 50% across the board will make people change perspective, seek out a higher being, and generally despise the day they decided to take the series 7.

But here we are, a month or so removed from the second coming of the dot com crash, and everything is firing on all cylinders again. The monsters who once infected my comments section, declaring that I’d never pick a winning stock again are all but a memory now, following a string of wins reminiscent of last year. The base ingratitude that unleashed a hell-fire of death threats from yours truly has morphed into happy tidings and greetings from atop the capstone, bestowing a cornucopia of well-timed investment ideas.

Let us assume this is all a pre-requisite for a much larger, hideous drop, one that intends to catch all sleeping and with pants down. I believe there is a roadmap to be followed and I am about to give it to you.

NASDAQ Circa 2000

Feel free to peruse the data in the link provided above. For those of you who are unable to read, being stupid, raised outside of barns and small Canadian towns, feel free to ask others in the comments section to describe it to you. It’s important that you understand your history, young Prince, for I believe we are going to repeat it.

I will squeeze what I can from the market and heed caution by mid-July. After a small dip, I will redouble my efforts 100% long and squeeze some more until late August, when I intend to reverse course and go short. The circular narrative will be complete by October, as the homosexuals on CNBC trip over themselves to describe devastation designed to relieve retail from their dollar denominated assets.

In the meantime, I like PRTA, TEDU and SGEN for the win.

We’ve enjoyed estimable gains these past few weeks. To indulge oneself in the felicity of his dreams is to be long the stock market during times like this. Sadly enough, my TEDU reversed off its $12 high, but still stands at a robust +30% from my basis in little more than a week.

All of the David Einhorn bubble basket stocks are through the roof today, led by FEYE and SPLK. It’s an important distinction because not much else is working. It’s suggestive of the sort of chicanery one would expect in a tape that is readying to rip heads and peni off. If I was a little short seller, discussing the bold characteristics of Wall Street 2.0, I’d cease to exist at once. There isn’t any hope for a bear in this tape.

Might I suggest an alternative?

Despite it being 90 degrees outside, go make yourself a fire and pull up a chair close by. Drink some of your finest brandy and toast to better days. After you’ve completed your brandy, wrap yourself in a thick burlap blanket and toss yourself into the fire. The Lord of Light will appreciate this sacrifice and look after your loved ones when you’ve been reduced to a small piece of heart muscle.

As for me, I am up about 0.5% for the day, lowering my losses to manageable levels. Very soon I shall up the ante and make larger bets.

UPDATE: I sold 25% of TEDU position and bought PRTA.

The epic run in TEDU continues.

My winshippery continues.

COV is being acquired by MDT.
SNDK is buying the company of Steve Jobs’ retarded old partner, FIO.
LVLT is buying TWTC.
LLNW has received a bid from a “questionable source.”

The hits keep on coming. We’re no longer beholden to childish things, such as earnings. Therefore, the market is free to run like naked people on the beach. Granted, the Iraq situation is somewhat troubling, to say the least. Being the #2 country in OPEC, Iraq stands to make a lot of oil men plenty of money and soon. God willing, that dirt filled nation will descend into anarchy, as large swaths of armed “George Washingtons” make their way around Baghdad shooting at government officials. The price of oil will skyrocket to $150 per barrel, sending the prices of your favorite oil stocks through the roof.

We’re all super capitalist now, so it doesn’t really matter, does it?

With oil going higher, I expect solar to do even better. It’s trading like a leveraged play on energy and has always correlated nicely with an up market. I like TSL until $15.

There’s all sorts of crazy things happening this morning, like BLUE up on astounding clinical data and IMAX approving a large share buyback. The world is awash with liquidity. Are you man enough to take it?

I’d like to wish my favourite father, Dr. Benjamin Bernanke, pleasant tidings on this fine day. Being the father of modern economics and the savior of mankind, I think it’s only appropriate that we keep him in our thoughts today and hope that his vision for the future can be continued by our new mother, Janet Yellen.

And also with you.

Do not let your short position in OPEN get you down, seeing it ripped out from your chest cavity and placed on the tabernacle. The saintly shares of YELP and ANGI shall follow suit.

NOTE: PCLN is acquiring OPEN for $103 per share. Expect to see those short YELP and ANGI perish today.

Ashes to ashes. Dust to dust.

Amen.

I can’t get mad at Obama for abandoning Iraq. It’s like getting mad at crazy Dicky for leaving Vietnam. The Iraq war was bullshit to begin with. Just because 5,000 soldiers died and our treasury was fleeced by contractors to the tune of $1 trillion during “the war years” doesn’t mean we should defend those bastards indefinitely. I find it abhorrent to read the statements of our chicken hawk politicians who want war, perpetually.

Is one American solider worth a grain of Iraqi soil? I say no and to hell with them.

As an aside, I find it suspiciously convenient that oil prices are jacking higher because of the conflict. Did they go lower when we liberated Iraq? Has the price of oil budged, at all, since the 2008 crisis? It is a tax people. The price of oil is funding a lot of politics. They will keep the price above $100 for as long as possible. They know US production is on the rise and current prices are unsustainable because of it. I’m gonna stop right here because I hate getting into conspiracies.

Stocks traded down. Airlines took a few line drives to the scrotum, setting up for a buy the dip opportunity. And, Le Fly shed 0.2% on the day. I had been up more than 1% at the highs of the day.

We’ll get em’ tomorrow.

All of the ‘good news’ coming out from Iraq is lending a hand to the rout in stocks today, which is also helping out all of the doom and gloomers in bloomers long GLD. Nonetheless, there’s a choice to be made here.

Do you remain long, weathering the storm and hoping we’ll be back to business as usual again?

Or, is it time to shift away from tech, biotech and overweight energy/gold?

Or, would you be chasing the energy/gold trade here, sort of a sell on the news scenario?

One thing is for certain: the gold and silver trade has been the best trade of 2014, thus far. It’s amusing since it was the worst trade of 2013. That goes to show you, just because a sector or a stock is down and everyone hates it, that doesn’t mean it’s not a solid contrarian bet.

Here are the biggest losers in the gold space over the past year. Perhaps they have the biggest upside potential now.

NAK
DRD
ANV
GORO
BVN
GFI
TGD
TRX
RIC

The biggest silver losers.

CDE
AG
HL

Industrial minerals

AAU
AXU

Conversely, do you buy the airlines here, down more than 5%, off this move in oil?

I sold out of GIMO for less than a 2% loss (I have zero patience for underperformance these days) and swapped those dollars in the retarded shares of TSL.