FRANKLY, I’VE FOUND THE HOLY GRAIL

So I’ve been spending the last few hours trying to find a stock that embodied this sell off. It had to have a track record of at least 5 years, relatively large capped, high growth, cloud based business model, and generally a great company. We look at FEYE and SPLK and get confused because there isn’t a reference point. They’re too new.

BEHOLD: I’ve found the holy grail, the one stock that is the skeleton key to this market, one singular ticker symbol that for reasons unbeknownst to me refuses to be analyzed by The PPT engines (it is the only stock out of 5,000 stocks that refuses to be analyzed). It has been a terrific outperformer and now resides in the woodshed, with the rats and the cheese.

Here it is:

I am going out on a limb here and suggesting this is NOT 2008. There isn’t a dire financial bubble about to burst and if there is one, paint me green. I’ve analyzed all instances of monthly underperformance from the letter N, since 2009, and this is what I found.

Jan 2009: -17%
Feb 2009: +31.4%

Feb 2010: -21.7%
March 2010: +17.6%

March 2014: -20.4%
April 2014: ?

April 2012: -11.75%
May 2012: +5.75%

May 2009: -17.3%
June 2009: +2.1%

June 2010: -10.2%
July 2010: +17.4%

August 2011: -18%
Sept 2011: -16%
Oct 2011: +40.1%

Oct 2010: -13.11%
Sept 2010: +21.1%

Nov 2012: -6.1%
Dec 2012: +12.8%

Do you notice a fucking trend? There was only 1 time when N went down for the month and stood down the next month and that was during the Euro crisis of 2011, which ended up in a gargantuan +40% return the very next month. History may not repeat itself, but it certainly does rhyme. I use precedent and price patterns all the time in my investment decisions. Right now it looks scary, especially since the overall market has held up fairly well. Plus, we haven’t even gone through earnings yet.

I am willing to bet we are at the bottom, or at least very close to it with exceptional confidence behind this call. I realize I’ve been caught holding the bag in a number of names; but that was a different market and I was sucker punched at a time when market’s aren’t even supposed to be throwing punches (March).

I like to analyze price action like a rubber band. That’s how I designed the algorithms of The PPT. When price action gets overheated, prices always correct or at least consolidate. During ordinary market’s, one’s without a fundamental crisis, extraordinary market declines in the heart of the market, which is always growth, will be met with recovery, 9 out of 10 times.

You can short here, or go to cash. The first mistake was buying too high. The worst mistake will be locking in losses and not catching the snap-back rally by selling too low.

Now that we’ve established the margin clerks are in charge, people are confused. I see the talking heads on my television recalling 2011, 2008 and even 2000. They cite PE similarities between now, and of course 1929. All of this theatre, this song and pony show, is a prerequisite to find a market bottom.

The next phase of this market will be to establish, as fact, that we cannot go higher, as it is physically impossible, before getting a “final flush.” Cramer is sure to come on the television and request one for his buddies who are short WDAY.

“We need a final flush. We need a final flush. We need a final flush.”

We need it, so that we can buy cheaper stocks, only to run them back up to all-time highs again. In a sane world, people would dismiss such frantic cat calls as “foolish” or even “manipulative.” I won’t drive this point into the ground anymore, as the market has always been this way and will continue to be this way for as long as it trades.

Just make sure you have enough staying power, which means NO MARGIN and a lot of patience, in order to wade through the mud.

It’s all coming to a head soon. I’ve seen this pattern a thousand times and it always ends the same: relentless selling. I know it’s not what you were hoping to read and your 4 figure accounts might suffer as a result. But there  is an active campaign taking place to break investor confidence and it won’t take much to flush out the weak hands.

We’re already seeing it in WDAY, SPLK, TWTR, YELP, DATA and FEYE, just to name a few. The very best stocks are now the very worst. How did that happen?

Very easily.

All of the marketing lured retail and independent traders into those names. For the most part, they have weak hands and can’t afford to hold during periods of decline. They’re unable to see it through, suffer the pangs of misery, enduring the blade of agony twisting inside of their stomach, all the while stocks like XOM and X hit new highs. The divergence between the haves and have nots is always unappetizing and sickening, frankly. It is human nature to believe in hope and creativity, to believe that we are, in some way, unique and that our ideas mean something.

Sadly, more often than not, we are nothing more than cogs in a grotesquely large wheel, subjected to whims and the caprices of others.

For example: you might like XYZ here, due to its chart or valuation. But what if XYZ’s largest shareholder is having a bad go at it and decided to liquidate? You will fall victim to horrendous losses, all unexplained, lost in the story book of Wall Street, a book that is often recalled by memory and rarely  documented for future generations.

According to the people on my television, the entire market is ruled by Candy Crush, ticker symbol KING. Because of all of the “froth” in the IPO market, all momentum names, who’ve been knocking the cover off the earnings ball, should be sold.

Sold to whom is the question you might want to ask yourself.

I bought back YELP, taking advantage of the recent debacle in shareholder value.

NOTE: I also added to WDAY.

UPDATE: I added to IFON.

Every single morning, Jim Cramer goes on the television to besmirch the IPO market. He toils and laments, then toils again, about valuation and how he wished none of these companies even existed. Since when did this man of circumstance care about the IPO market and their subsequent valuations? I smell fish. This man has been talking down stocks, and the market, for more than 3 weeks now, always brooding about one thing or another. He also likes to reflect on the unfortunate circumstances of “real companies”, like FEYE and WDAY, falling victim to sell offs due to these bastard IPOs. Really?

WDAY was overvalued the day it came public. The only reason why people buy it is for growth, the same reason why these IPOs are coming public today. They aren’t anymore overvalued than WDAY or YELP was when they IPOd.

Cramer has an agenda.

Moving on, I hereby declare that I am going to make all of the money that I lost back, and more. For the year, it appears I am down about 5%, a hard 15% sell off from the top.

Early on, futures are higher and the market look promising. Let’s see how long the gains will stick, before the margin clerks bleed out my stocks for another 4-5%.

Did you know steel and iron stocks have been doing well, during this 30 point “dip” in FEYE? As I am tormented, daily, in SPLK and FEYE, seemingly fantastic companies, the very worst companies in the world, STLD, MTL,  AKS and MT are hitting new highs. My pick for 2014, CRS, is at a new high.

Telecom stocks, T, USM, VIV are doing great.

Oil and gas stocks, PFFFFF, fughetiboutit.

CWEI, WTI, HK, NBR, PBR, SGY, just to name a few, are much higher.

It’s ridiculous, frankly, seeing these stocks rip to the upside.

FOR CHRIST’S SAKE X is UP 13% OVER THE PAST WEEK.

Banks too.

Here is the lesson, sadly enough, once again.

I wasn’t paying attention to the signals, the rotation in front of my face. It was right there, right here, yet I allowed my emotions to take the place of reality. I embraced a false reality, based upon sentiments, instead of coldly  moving into sectors that were enjoying the upswing of rotation. This is an ongoing event, a swift move away from high multiple growth stocks into stodgy industrials–boring companies with earnings.

In the end, high growth wins every single time. But there will be losers (ZNGA) along the way.

Since most of us are traders, it’s important to remind ourselves during periods of duress to trade.

I averaged down in FEYE, SPLK, WDAY, FLXN and EGRX today, while adding to my position in IFON. I did it late in the day and nothing too big. I just wanted to make sure I got some prints in at these levels, preparing myself to buy even more lower.

I can envision myself (extra Mrs. Fly) buying FEYE in the low $20’s, a poor man, very haphazard and entirely corrupted by insanity. I’d cash my paycheck at the grocery store, after a hard week’s work of stocking shelves, and I’d buy 1 or 2 shares of FEYE. After FEYE drops another $10, I’d buy more, with the same pleasantness and ambitious attitude that I am displaying here today. Why, I might even up my share purchase programme to 3, maybe even 4, shares, with the mindset of duty, honour and the American way.

Closing out the day, I lost some money today, maybe around 1% or so. Following yesterday’s 7.5% debacle, I consider myself to be lucky, almost fortunate.

I’ll get into what’s working now later on tonight. But I will tell you what’s not working and that’s FEYE and SPLK. These are the poster child’s for the worst publicly traded stocks in the world and I own them. Both of them continue to careen lower. Any ape worth his salt would sell them, as it is obvious that they’ve topped and have begun the hard sledding of multiple compression.

Where will they stop?

No one knows.

This is a suckers rally. We’re not really rallying, actually. Just 55% of stocks are higher today, masked by the pleasant aesthetics of a Dow +100. It’s all nonsense and the margin clerks are just getting started.

I don’t want to invest my cash reserves; therefore, it might be a good time to do it.

DEVELOPING…

Let’s profile the typical degenerate, small money, piker.

He bought FEYE and SPLK 20% higher, fully concentrated, leveraged at 50%. With yesterday’s drop, he is now below maintenance and will be forced to either come up with funds or liquidate. In the off chance the market really soars today, he might be able to stave off liquidation by pleading with his margin clerks, citing “market appreciation.” In most cases, Fed calls need to be met by 2:30-3:00 max.

This recent correction has been focused exclusively in the momo names. Old economy stocks have done well, or at least weathered the storm. The last time momo names took a beating like this was after the FB ipo. The centerpiece of that debacle was FB dropping by 50%, GRPN and ZNGA by 70% and YELP pressuring me by dropping from $30 to as low as $12, intra-day. The bottom line: just when you thought the correction was over, BAM, another limb got ripped off.

If we are to follow that same “pin-action”, there could be another 30% lower for many of these cloud/biotech names. I suspect the overall market will continue to do okay, simply moving away from those sectors as if they never existed.

Or, I could be wrong and we go straight up from here.

Either way, the margin clerks are coming today. You margin call players out there are gonna need a miracle to avoid liquidation.

How about we don’t lose any money tomorrow? I bet you expected to come here, after seeing the drubbing I received today, and bear witness to a humble Fly, someone without penis, scared of the shadows and the rain. I will have you know, I was born in the rain, molded by it. You merely adopted the rain. I’ve gained over 17 pounds of pure muscle in recent months and intend to use this new found strength to punch holes into the faces of anyone who dares to get in my way.

What art thou speaketh of, you asketh?

My God given right to money, a ridiculously extravagant lifestyle, and above all: WINSHIP.

There isn’t anything here that I haven’t seen before. A few years back, when I was on vacation in Turks and Caicos, the market defecated all over itself, taking a wrecking ball of 30% to my head, face, and then back to my head again. What did I do? I simply made it all back.

NOW IS NOT THE TIME FOR TEPID COWARDICE, mice of men without Johnsons, unable to dodge bullets and return them with the speed of that guy with the sunglasses from Matrix.

This is what I am going to do.

With the money raised today, I am going to delve into debauchery, of the purest form. I will not dilute it with half measured acts. I intend to go all in, AND MORE.

These are the stocks that I am looking to buy, aside from the obvious FEYE, SPLK, IFON,  EGRX, WDAY and ANGI:

It doesn’t get crazier than that.

The second I see an oversold signal inside of the lauded and much appreciate PPT, I am committing myself to a “do or die” approach to the market. I won’t be doing it because I need to, per se. I will do it because it’s the right thing to do, for justice, for capitalism, for the American way.

God bless the United Steaks of America and her 11 aircraft carriers, readying to reduce Putin’s house into a garbage can.