ATTENTION: A SPECIAL MESSAGE FROM MERLIN

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Poof! Your never-ending bull market is officially over.

-Merlin

Apologies may be left in the comments section of this post.

TLT has just marched from $114 to $124, without fanfare or untoward publicity. The Yen has rebounded and is starting to gain some upward momentum. At the same time, the SPY continues to hit new highs, all the while the jobs market and earnings come in less than stellar.

I’ve always been a huge advocate, almost to the point of worship, of the Federal Reserve–Benjamin “Blunt Smokin'” Bernanke and his miraculous beard. I was always at the forefront, reminding people what POMO meant for stocks and how a little cocaine never killed anyone, when applied to the markets of course. But even legends such as Ben need a day off, in this case a single month.

Yes, everyone thinks the market will trade down in May; therefore, as all laws of contrarian opinion go, the markets shall rise again. But what about the 6 month winning streak for the SPY? Surely, if the market is up for 6 straight months, there must be some “excess speculative fervor”, no?

According to the laws (don’t shoot the messenger) of seasonality, it doesn’t matter what you think or say. The month of May is siesta time for policy makers. It’s the time of year everyone long stocks finds God, begging for his forgiveness, so that he may grant respite.

I, myself, am a victim today, long both AMBA and RBCN into the sharpest of teeth. My largest position is cash; but I haven’t a solitary hedge. Therefore, it goes without saying, I am losing my shirt today. But there’s a certain feeling of exhilaration in today’s rout, one that demotivates me from acting in favor of watching.

So I shall watch, as the rats scurry about–in search for more cheese. In the meantime, 80% of stocks are lower today. The tape is much worse than the indices suggest.

Losses are mounting on Wall Street, as the diabolical calendar month called “May” makes itself known. As is tradition with the month of “May”, investors “go away” and the stock market does very poorly. Naturally, there will be some trouble makers who refuse to “go away,” loitering about the lobby, attempting to break into the safe. But those people will be punished, ever so harshly.

Evacuate the premised immediately.

“The Devil” is buying CALL today, off the EBIX buyout. Apparently, the penis grabbers over at Copperfield Research, via Seeking Alpha, were short EBIX into a leveraged buyout. They’re so damned stupid. Weren’t they the bozos who were shorting TEA into an already announced ALL CASH buyout from SBUX?

Well, apparently, they are secretly short CALL too, or so goes the rumor. So, as Wall Street would have it, the wolves are at their doorstep, trying to afflict pain and misery onto their already ravaged book.

Other than that, I’m just watching RBCN get its arms and legs blown off on no news.

Very soon, before you know it, while you’re not looking, the market will “surprise sex” you–vaporizing your 4 figure brokerage accounts with reckless abandon.

All of the money you’ve saved, being a good boy, trying to buy a house or a used automobile, will be liquidated by lesbian margin clerks.

At that time, “The Fly” will be in a rocking chair, playing with his globe, blowing smoke into vaulted ceilings. You schmucks think you have all of the answers, bold and brazen in your contempt of my prophecies, impatient to be proven wrong.

All you need to do is wait, very quietly, and you shall be proven wrong–yet again.

I am going to “go away in May” because some cliches are worth believing in. Just like woman are absolutely psychotic during menstrual cycles, so is the stock market during the month of May.

***YOU’VE BEEN WARNED***jackass

Critics argue that I’ve been too cautious for too long, effectively missing out on some good rallies in cocaine and other drug related stocks. The truth is, I am Rocky Balboa, post Clubber Lang knockout, scared while running on the beach with Apollo Creed.

I’ve been taken to the woodshed for two years in a row, after achieving huge gains early on. The collapse occurred the same way it always does: I get all bearish, then lose patience, invest all of my money, then the market collapses.

Rinse and repeat.

It’s the preferred recipe to cook a Fly on Wall Street.

So pardon my apprehensiveness if I opt to wait out the harder months of the year, preserving a high teenage digit return, while living the life of leisure that the Gods intended me to have. There isn’t anything wrong, per se, with having 40% of my assets in cash. It only speak to a profound act of cowardice, one that I admit to be guilty of.

One cannot expect to achieve greatness while watching from the sidelines–all very well and true. But I, my friends, am sitting on the sidelines in an Orbital Space Cannon (OSC)–fully intent on committing aggressive acts of war at a given notice.

Do not worry about Le Fly, for he is partaking in “stock market art,” using his portfolio as a canvas. In time, the gains will come together. Until the market adjusts to what I deem to be “reasonably oversold,” I will continue to flee from risk, running away with a yellow line painted on my back.

The whole google glass idea is ludicrous. People are going to walk around with cameras strapped to their face? How can anyone talk to another wearing that device? I’d punch anyone in the face if they stepped to me with that thing.

The market is trending up again. The resiliency is truly unbelievable. I still think, however, that the month of May will offer some surprises for cocained out bulls. There’s nothing wrong with being long, just be vigilant when the worm turns.

I have a few ideas on deck and might open up a few long trades, purely out of boredom.

The S&P/Case-Shiller home price index rose more-than-expected in February, increasing for the ninth consecutive month, industry data showed on Tuesday.

In a report, Standard & Poor’s with Case-Shiller said its house price index rose at an annualized rate of 9.3% in February from a year earlier, above expectations for a 9% increase.

U.S. home prices in January rose by 8.1%.

Month-on-month, U.S. home prices rose 0.3% in February, compared to expectations for a 0.9% increase, after rising by 1% in the preceding month.

Following the release of the data, the U.S. dollar held on to gains against the euro, with EUR/USD shedding 0.19% to trade at 1.3073.

Meanwhile, U.S. stock index futures were modestly higher. The Dow Jones Industrial Average futures pointed to a gain of 0.1% at the open, S&P 500 futures indicated a rise of 0.1%, while the Nasdaq 100 futures signaled a 0.1% increase.

The house price index just registered an annualized +9.3% number for February. If you’re still doubting the overwhelming data that is pointing to a very robust housing market, you’re an idiot.

Again, I will reiterate my belief that as prices rise, so will new home builds. To build homes, you need lots and lots of wall board.

Needless to say, I am long USG.

Another new residential construction play is TMHC.

Lenders will make a killing. I like NSM.

My favorite housing plays in the tech space are Z, TRLA and ANGI. Since I am constantly hosting construction workers at my house, I have a really good feel for the pulse of the market. Without equivocation, 9 out of 10 contractors are banking extreme amounts of coin via ANGI. Even my cleaning lady uses ANGI to garner new business.

ANGI makes money by charging users a small annual fee, like 10-15 bucks. And they make the bulk of their revenues by charging contractors a monthly advertising fee. My HVAC guy, who was just here fixing my retarded furnace, said he gets 5-10 new customers per week off ANGI, +50% from last year. He used to pay $150 per month to advertise, or get “bumped to top” on ANGI; but they just raised the prices to $250. He expects another rate increase when his contract is up next year and will gladly pay it, since it pays for itself.

He feels the service is “amazing.”

Anyone remember Peoplesoft (PSFT)? If so, you remember when Larry Ellison from Oracle took control of them via ‘hostile takeover.” I have many clients in the consulting space who still talk about that deal and how Larry essentially bought PSFT just to put them out of business.

Well, the founder and many top execs are running a new company now called Workday (WDAY).

I won’t bore you with details that I don’t understand myself. However, what I will share with you is insight from people in the industry who are experts in this sort of crap (the smartest people I know at the top of the consulting world): they love WDAY. From a management perspective, the good folks from PSFT perfecting the art of under promise/over deliver. If history is of any use, WDAY will be trading higher for the next several years, in a very methodical, almost clandestine fashion.

I own it for some long term accounts and will not consider selling it.

Here’s some background on WDAY.

I’m very glad to have averaged in on AAPL down at $400. The stock is down over 40% from its peak– but still up considerably over the past few years. I don’t think there is much downside to this name, especially with some big product announcements this fall.

When they announce The Apple TV, this stock is heading back to $650.

Separately, I like chip stocks, like MU, FCS, AMKR and CDNS. If you are a big Samsung guy, FCS derives 12% of their revenues from them.

During the second half of 2013, look for multiple smartphone makers to manufacture camera lenses out of silicon on sapphire. Your go to plays, once again, are GTAT and RBCN. Speaking of camera plays, take a look at AMBA; you may like what you find there.

Lastly, I am eyeballing OVTI for a bottom.

CLIR is off to the races today, a name that I wasn’t able to partake in–due to the thin trading volume. This is the 7th consecutive win for the old dark one, coming off of wins in CALL, UNXL, PAMT, GDOT, CIMT and BKS. There have been many others, but none of which done with the style and pizzaz of the aforementioned group.

Ragin Cajun may not be evil like El Diablo, but he’s been killing the market too–inside of 12631.

He just had some huge winners in LEDS, YGE and YELP.

Overall, the market looks insane. There is no explanation as to why we trade up every day. We just do.

NOTE: The Devil will be contributing to iBC on a regular basis.