Regarding the Refiners

For the first time in months, I witnessed significant buying interest in the airlines. Why is this significant? Answer: Jet fuel margins.

Think of the airlines as the other side of the crack spread barbell. They do well when refiners suck and suck when the refiners roar higher. It’s a zero sum game and someone is always winning. For all of 2011, the refiners have enjoyed record spreads, which enabled them to repair broken balance sheets and update facilities. This respite ensures they will be in business for years to come, at a minimum. Regarding WNR, as of last quarter, they were 35% hedged on 321 cracks at $27. At the present, cracks are trading about $27.5, down from $38. Also, WTI-BRENT spreads are $22, down from $28. The trend is lower, which has caused some to believe the trend is broken.

I’m not so sure about that. However, it’s important that I be honest with myself and acknowledge that stocks prices have stagnated at best, underperformed compared to tech. With the end of the hurricane season around the corner, I suspect the appetite for refiners, right or wrong, will wane. This is a 180 degree change for me and that’s how I roll. I can’t change who I am.

Now WNR may end up looking like fucking rocket scientists if cracks continue lower. Think about it. They locked in $27 cracks, historically, a fantastic profit margin.

But, for my money, I need juice. I need to maximize my upside during respites because I am not actively shorting. Meaning: I must make rallies count.

At the present, WNR constitutes just 5% of my holdings, down from 30% last week. I am done selling and will redouble my efforts in the tech sector, then revisit the refiners later on.

Bucket shoppe operators over at Jeffries are calling the crisis in Europe as “the next Lehman event”, this time without TARP. Naturally, the trials and tribulations of Europe affect us greatly. Because of this, you must be careful where you place money. Under no circumstances will I buy bank stocks. However, I happen to agree with Cramer: now is a good time to buy tech.

Due to fortress balance sheets, tech will enjoy premiums in the coming months, as consolidation rips through the industry. If the world banking system stays afloat, there will be deals made in the tech sector. Bank on it.

My favorites are SWKS, MU, AMD,  VMW, CIEN and today’s new buy FFIV. They are all takeover candidates and all down big from the highs. If I am right here, I will be beating you to death with your gold bars by X-mas.

Regarding FFIV, the seasonality data for October, discussed inside of The PPT weeks ago, is insane. I am a buyer into October seasonality. At the present, I am half in, loaded with tech. In my personal, I have a bullish bias, with a TZA hedge.

NOTE: I trimmed more WNR today;

Small children like Ticonderoga #2 pencils. The graphite free #2 is used in elementary schools throughout America. It is a softer lead, painted yellow in order to hoodwink kids with lunch pails to buy them, originally purported by 19th century two bit pencil pushers from Austria-Hungary.

Should you ever attempt to stab an enemy with a pathetically soft Ticonderoga #2 pencil, your enemy will laugh at you, then proceed to light you on fire with his portable blowtorch. However, should you attack with a BLACKWING 602, HEAVY GRAPHITE, pencil, he will explode like a fucking vampire.

The Blackwing 602 is a pencil for men, people interested in crafting important documents or blueprints that shape the way society lives. However, if you are a 40 year old man and feel the need to retake your SAT exam, please make sure to bring that #2, as the machines operated by communist government officials would explode should it dare attempt to read the lead from the GRAPHITE HEAVY, BLACKWING 602.

Bottom line: I prefer my pencils like  I enjoy my websites, coffee and smoke: black.

QEF

I’m sick of blogging about financial matters. The process is repetitive: I blog about wins, you talk shit. Or, you talk shit, I ban you. When I blog about losses, I fucking feel like punching the shit out of my laptop.Actually, it makes me want to take out my Rambo knife and stab it over and over and over again, until I exhaust. This process that I put myself through is woefully unhealthy. I need a distraction, something to unload on, like targeting mentally ill people from the Tea Party.

With stocks, all I have to poke fun at are the garbage pale scrubbers at CNBC. Maybe I will start targeting fellow bloggers with scathing, unsolicited, reviews of their shit journals.

Look at the republican party candidates: all pleasantly retarded (no offense to 12 yr old retarded girls due to Gardisil), sans Mitt, yet I find myself fascinated with their debates. You have the chicken man, Cocaine, talking 999, while Bachman gets crazy as shit on the teevee over OBAMACARE. Perry is executing people daily and Santorum exemplifies moronism on an industrial scale. Ron Paul, clearly, is a KGP operative, most acutely interested in destroying America with populist plans that make no sense, whatsoever. And, that Huntsman guy is just interested in fucking up the prospects of other candidates, obviously for sport. GOP politics is worth watching!

As an aside, I find it interesting that some of you still bother offering “The Fly” financial advice. I mean, how many ways must I tell you to fuck yourselves spinning sideways on a telephone pole, before you get the message?!? This blog lacks discipline.

If you think this blog was written to bait Senator Gint into defending Tea Party principles, while insulting anyone who dares to oppose his ideology, you’re wrong. “The Fly” is only interested in exchanging top hats on the internets with strangers, while sipping on aged cognac. I’d never, ever, ever bait the Senator into insulting your intelligence and making accusations regarding your obvious interest and membership in the Russian-American communist party.

I bought 250,000 shares of MU today, based on semi strength. As you can see, my current thesis is to be long tech, with SWKS, CIEN, AMD, VMW and MU buys today. I’ve been selling WNR throughout the day, in an effort to reduce exposure to commodities. I cut losses on my quick mistake, ZSL. And, I bought a fairly sizable call position in TZA, to partly hedge today’s buys.

My cash position, counting my TLT position, stands at around 50%. I will allocate a final 20% into tech, on news of some sort of solution to the European crisis. I’ve definitely pared some of my gains over the past week. However, it was never mine to begin with. I view the market as a game, not so much different from how you fucking idiots play X-box. When my points go down, I simply get them back. But this is a unique period for me, as I am very hesitant about putting money to work here. I am doing so against my better judgement and would not be surprised if I get torched on today’s buys.

But I must play. I cannot sit idle while fuckers like you make all of the money. My view is fairly static with regards to initiating shorts here: it cannot be done. We are down big and the market is deeply oversold. There is a strong chance that policy makers intervene and cause a tidal wave of short covering, a squeeze for the ages. Knowing that, I’d be nothing more than a big butted baboon if I started shorting ahead of such an event.

Pardon my sloppy trading over the past week, as I am in a state of transition. Once I get my thesis and strategy planned out, the sailing will be fairly smooth.

I bought 10,000 SWKS.

I sold out of ZSL, cutting my losses at 4%.

I trimmed back on my WNR position in order to reduce my exposure to the stock. It was simply too big a weighting and I do not like today’s action in the sector. Full disclosure, I took a floater on HFC this morning and was quickly stopped out. Crack spreads are tightening and WTI-BRENT spreads are narrowing. That’s why people are selling. Nevertheless, I still like the sector long term, just not at a 25% weighting.

I put some money to work, buying VMW, CIEN, AMD with a TZA hedge. At the moment, I am not sure of my cash level. However, it is likely unch.

The market wants to go higher, but is stifled by the overwhelming news flow that seems to get progressively worse. I am going to repeat what I said earlier: keep it light and don’t chase.

Last night, STLD announced a 30% EPS earnings warning. This morning, BBY announced a 30% decline in profits. If you take a look at the majority of bad EPS misses over the past quarter, you are looking at 30% EPS cuts across the board. Analysts are on crack, just like the Tea Party, with $105 EPS forecasts for 2012. If the current trend persists, we are looking at $65 to $75 in earnings for 2012.

The market opened higher this morning, after vacillating wildly between pre-market gains and losses. The rumor mill is in full force and markets are on edge. Having said that, like a bird with my head in the sand, I like refiners here, CVI, HFC and WNR.

Oh well, as I type this the market has begun to trade lower.

I will be keeping it light, on hold until there is clarity on the European debt crisis.

NOTE: I sold out of my TNA

I think it’s time to introduce a little self examination into the blog conversation. My opinions, as well as yours (especially yours) mean absolutely nothing, with regards to money management. While you may believe in a thesis or an idea, at the end of the day, your opinions must form around reality, else your money will run out.

Case in point: I am very much interested in seeing the prospects of gluttonous silver miners routed from public discourse, via outright bankruptcy, of the most horrendous variety. However, these same piggish individuals may endeavor, through steadfast determination, to see my short position dissolved through my own insolvency before that of their own. It is my job, as a member of the investor class, to foresee such an incredulous event and cut losses. Sometimes I cut them slow, others times with great expediency.

Some believe my opinions are too malleable, easily molded to conform with current events. However, it is this flaw that tends to be my greatest attribute, oddly enough. I’ve been a horrible forecaster with regards to investment philosophies, over the span of my illustrious career. At times, my thesis can be exactly the opposite of what needs to be done. However, I’ve managed to make a great deal of money for my clients and even more for myself, thanks to the law of large numbers and multiplication.

Think about the amount of money you’ve made in your finest year and multiply it by 10 to get an idea of my annual take.

Back to my point. You mustn’t pretend to be a great philosopher or fortune teller of the market. Instead, march with bold strides and keep a hard exterior, while remaining a humble student of it, consistently demanding more from your efforts. It is not enough to simply try hard. You must finance your education and dedicate time towards your struggle.

Opinions are fun and serve as points of contention for market participants to filter and gather conclusions. However, they should never be viewed as gospel or de facto blueprints for long term investment plans. The world is dynamic and correlations are in flux, lending to instability.

Often times true knowledge can be ascertained through the study of actions, both by 1st hand experience and through the examination of others who know what the fuck they are doing, unlike your dumbass.

In short, you need to shut the fuck up and watch the pimp hand, in slow motion, as it rains down a handful of stinging pain on your fat faces.

Good night.