Fly Buy: $FRO

Looking for a shipping reversal. I added to my FRO.

I sold short PBR. Starter position.

With CAT breaking down and housing related stocks taking a breather, I am exploring a short sale in TEX.

My other idea is PBR. I don’t like oil here and hate Brasil. The hardest part shorting oil stocks is to find one that cannot be bought out. They are strategically important assets. PBR will not be acquired and they suck wind, just like their host nation.

As of right now, I don’t have a position in either name.

Anyone who’s been reading me for more than two years knows that I was first to be bullish on the refiners, before all of the fancy men with bowed and floral ties rated them to be “buys” on the teevee box. I was long the WNR when it was a limp adolescent, fixed in a price range of $11 to $17.

Now that the WNR has grown, paid off debts, and become a mature investment, plebs recommend it still. However, hidden in plain view is a significant deterioration of profit margins for the refiners.

321 crack spreads are down from mid 30’s to mid 20’s.

And the spread between WTI and Brent crude is down from 25 to 14.

Ignore these trends at your own peril. The primary reason to be long any mid continent refiner is the WTI-Brent crude spread. Without delving into details, it’s their license to steal from you.

There’s also a reason why refiners, like the metals, are traditionally clad with low PE multiples. They are a classic boom to bust back to boom cycle sector. There isn’t any long term profitability worth banking on in the refinery sector. Once margins turn lower, they tend to exaggerate and crush the equities of the underlying businesses.

The primary impediment to shorting these stocks now are their strategic importance. The big oil and gas companies will not buy them. They’ve been selling their refinery businesses for years. But these bozos will most likely merge with one another, just before the industry blows up. So if you’re short the sector, don’t be surprised of a monday morning rape, with your short +35% on a buyout offer.

Nonetheless, I think the sector should be avoided.

Here are the richest valued refiners, ranked by FPEs.

ALJ
CLMT
CVI
DK
PSX
WNR
TSO
HFC
MPC
VLO

Gold and silver are lower again, compressing the shareholders of miners down to little coins. There isn’t any reason to own a silver miner at a time of little to zero inflation. Pray tell me, where is the inflation? Commodity prices are decidedly lower over the past 6 months. All of the people who bought gold and silver also put money on Intrade, betting that Mitt Romney would get elected.

Speaking of which, do you really think Bitcoin is going to be permitted to just float around as an alternative currency? While you nerds out there keep busy solving mathematical equations, “mining for bitcoins”, the government is planning to shut you down. Like Intrade, Bitcoins will be deemed a regulatory risk. There are AML laws in place, my fellow tulip buyers.

Bitcoin is at $107 this morning, up 300% over the past month. Soon enough, they’ll be worth the same as a Chuck-e-Cheese coin.

Top picks: short Bitcoin, short AG

I’d like to welcome Kong to the iBC family, coming aboard from Forex Kong, who intends to share with you his many virtues and forex market hand–much to the chagrin of the dozens of moribund currency hacks littering the blogosphere today.

We’ve come to a mutual understanding and I look forward to learning a thing or two from his new iBC tab.

The market is in the midst of a correction. Q1 is over and everyone is running for the exits. You don’t see it yet in the Dow; but it will surface soon. Look at former hedge fund hotels, like AAPL and all metals–getting their clocks cleaned cold.

High fliers like CREE are decidedly lower and MDB sponsored scam stocks have reversed lower, killing investors along the way (UNXL, PAMT).

Now is not the time for froth mouthed boat stock investing. Now is the time for discretion. While it’s true, I own close to a million shares of FRO, it’s also true that I have 65% of my assets locked in cash. Plus, I have more than 15% of my book short, leaving me with very little equity exposure. Some of the stocks left in the books are of the old man varietal, like KMB, CHD, WM and PEP.

Ignore the casinos like VHC and hunker down, small plebs., for the month of April brings surprises in the form of Jack in the Box styled punches to the face.

At least you are keen to the plot, all thanks to me.

I sold short moar AG because silver is retarded and heading lower.

Before I get into it, KWK executed an asset sale today, sending the stock up by 20%. Expect more of this to occur in the oil and gas space. I’d be shocked if CWEI didn’t raise significant capital through asset sales over the next 3 months.

With the market trading down, I am building a watchlist of stocks worth purchasing on a dip.

I like RAS, BX, WETF, APO, USG and AAPL. There are other stocks that will make the list, undoubtedly. But none of these stocks will be worth anything to me unless they trade lower.

As an investor or trader, who is smartly in cash, North Korea is a friend. Let’s hope they are able to “sabre rattle” the markets lower. Let us pray to the old and the new Gods that Cyprus devolves into anarchy, sending Europe into a stupefied state of collapse.

We want to buy margin liquidations, nothing more or less. When Wall Street is flooded with the tears of the overzealous, it will be time to buy.

Until then, “The Fly” will be biding his time, maneuvering amidst the fog of war, plotting and scheming his way to unrivaled decadence and hedonistic, pornographic, luxury.

The market is overheated, but do not expect anything dramatic. Over the past 7 years, the market has been up in 6.

The trend for the general market is higher. But there are bear markets within it. Case in point: silver miners, coal,  iron etc.

In short, I am expecting a minor pullback. We might drop 5% inside of the next two weeks, but recover it by month’s end. If your time frame is longer term, these moves are immaterial to you. For now, I am 65% cash, long a few boats stocks, and short AG, CCL, and JCP.