HAPPY FIREWORKS AND HOT DOGS DAY

With all that is happening, it would be easy for me to shit on the 4th of July today — seeing just about all decisions made on behalf of the American people run counter to the best interests of the American people. But I’m not going to do that — especially since there’s so many of the Hot Dogs and hamburgers for you to eat today.

Why don’t you wash them down with a nice frosted beer, as you preside over the oversized stainless steel grill, preparing sausages for junior and grilled chicken breast for the wife and daughter?

Perhaps after you’ve eaten enough to feed 10 people — you can sit down and relax. After all, you’ve earned it. Might I suggest a brandy and cigar? It’s always the patriotic thing to do on the 4th of July.

When the day grows longer and the kids become restless, might I suggest you take out some fired crackers and light them up in front of the house? You can hand junior a lighter and your daughter a sparkler and have them partake in the festivities — watching the colors and smelling the gunned powder —- so much smoke but not enough to choke on — just the right amount.

After the show is over, might I suggest some iced cream or Italian ices and an episode or two of the Honeymooners before bed?

Happy 4th to the last generation of Americans who gives a shit.

My wife likes to collect everything and also preserve everything — especially from the kids. We have stored away in an endless array of clear plastic bins clothing from when they were young to their homework assignments to the previous “vision” she had for the house — boxes upon boxes of pillows and curtains and more pillows and more curtains. To me, it’s maddening. I am tempted to call the junk man to just dive into my garage, which is now stacked floor to ceiling with a lifetime’s worth of junk, and just throw it away. If I did so, I don’t think she’d even notice, which is the irony.

I also have an entire store’s worth of art supplies, sowing materials, beads, blank canvases, paint and brushes. The list is endless and there’s barely anything of mine mixed in with the boxes, aside from 1 or two boxes of baseball cards and some tools.

I’ve spoken to colleagues and friends about this and it seems, if I might be so bold, the foraging of nonsense and storing of memories is primarily a female trait —- which of course is a FLAW since when we die our children will simply TOSS all of this shit away — post haste — sans the valuables.

This is why women can’t trade well —- too emotional, fixed on sentimentality —- always trying to get back former glory and unable to move forward with the new reality.

Utilities were up 4.8% last week whilst semis, EV, department stores and online retailers were shattered for 10%+. It capped off an otherwise brutish month of June, one that presided over scores of corpses STACKED HIGH and prepped to be tossed in the fires of summer. The bigger story for June, however, was the absolute disintegration of the commodity sector: oils, copper, metals all down 20%+. In a sense, there’s no place to hide and you ought to be mindful where you place your money. It’s important to note the biotech sector BOUNCED by 2.6% for June and more specifically Gene Editing stocks rose by 11%. I once did some research on biotech during the financial collapse and much to my surprise biotech did BETTER than tech.

In regards to utes and other dividend paying stocks outperforming: this is a result of the treasury yields coming in. As yields come in investors will bounce around asset classes attempting to find yields for income. The safest bet would be TLT or a leveraged approach with TMF.

I will not sugar coat it: the market is doomed to cascade lower into the flames and all those long heavily into the summer climes are to be roasted belly first. But before that happens, I am looking for a rally. It’s hard to keep up, and frankly I do not expect you to understand how I think. I’ve given up on the notion that I could teach anything to anyone when I barely know what I will think tomorrow — since I am so prone to changeability.

We have traded higher for 14 consecutive Julys and although you might want to believe that streak will continue, in order to provide yourselves with a small respite whereby you could extricate yourselves from the market and sigh in relief — there will be no relief and no one is coming to save you.

The NASDAQ lifted by 100, following what appeared to be a ruinous open. I took it upon myself to resolutely BELIEVE in the fiction woven for me by my overlords. I am, in fact, BOOLISH now — but not without hedges. Only complete morons invest without hedges.

Here is my prediction:

We rally for the first week, maybe 2, of July and COLLAPSE sloppily and fatly into an open fireplace and fall into the fires for August. The blubber and the fat will burn bright and hot for all of August, as the Russian wars spills over into neighboring Poland and afflicts itself unto NATO. One negative headline can send this market down 10% in a single session.

HAVING SAID THAT, we are at the PRE COVID highs for the IWM. This is as good a place to defend the market as any. As such, I am bullish.

Even so, I’ll be blowing out first thing Monday morning and repeating my process until it stops working.

I finished the session +89bps.

Let it be know, the Atlanta Fed is always talking extreme shit. They just revised their estimates for Q2 down from -1% to a little over -2%, which would FIRMLY place us into recession. When we get another 2 quarters DOWN, we will be in a Biden led depression.

On that news, I am directionally BULLISH on this tape, with a 15% TZA hedge.

Why?

Because fuck you.

Markets have cascaded back down to the level which was previously RESISTANCE for markets, pre-covid, dating back to 2018.

In short, this line, or around this area, needs to hold — otherwise we swim rapidly downstream and into the abyss. Given how terrible this tape has been, I’m somewhat sanguine about the specter of bouncing at or around these levels. Nonetheless, I will always keep hedges in place due to geopolitical circumstances.

I had a large position in SOXS heading into the MU earnings, which were terrible. As soon as the market opened, I closed out my positions for a net 101bps gain.

Although tempted to dive back in, as the market is always showing something of interest, I will most likely DO NOTHING until later — when the direction is clear and there is LESS TIME to fuck with my mind and the direction of the market seems clear.

What is noteworthy is collapse in the 10yr, now down to 2.86% and rise in crude, higher by 1.8%. Markets have recovered from earlier losses, as is usually the case with morning drops and now we are in the process of luring people in, so that we can drop the hammer on them later.

This is how I closed out the month.

The S&P dropped the most to start a year since 1970, down 21%.

I, on the other hand, ended the session at RECOURD highs.

This is who I am pal — and you’re nothing.

The news out of Micron is grim. Micron is going to miss by $800m, guiding down from $7.6b to $6.8b.

Look, it’s over. Stop believing in the fraud that is Pax Americana.

Over the past month Biotechs have proven to be most resilient amongst battered asset classes. The one respite previous to June was in commodities. The great commodity super cycle was going to ruin us all, until it collapsed too. And now we have a situation whereby people are TRAPPED due to their beliefs in an asset class best reflecting depression.

Admittedly, I did not think it would happen so fast. Alas, but here we are.

With Natty down more than 12% today and oil -2.6% — this sector is getting lit up again.

Copper, Aluminum and oils are all in a bear market now, off by 20% or more. According to the Stocklabs seasonality engine — this is standard stuff. This sector does poorly after May and doesn’t come back until November.

Barring a miraculous rally in stocks, we might soon find ourselves without any venue to park cash other than cash or short stocks. The reduction of commodity prices is GOOD. Over the past month natty is -34%, wheat -21%, nickel -19%, cotton -18%, uranium -16%, copper -14%, timber -13%, corn -13%, and cocoa -7%.

This bodes well for the plebs. But it doesn’t mean the economy is coming back right away and it doesn’t mean stocks can now head higher — since the Fed is likely to continue to raise rates to ensure inflation is dead for sure.

This is more of a philosophical post on dealing with a bear market, rather than the usual self-aggrandizing OMG LOOK AT HOW AWESOME I AM post.

As you can see by the trading in 2022, both the rallies and slumps are strong. The gyrations are so extreme, it causes people to freeze and become catatonic about their investments, relegating them to long term holdings that needn’t be looked after. This is a disastrous mistake and you’d only be serving someone else’s interests rather than yours.

People ask me all the time what to do with this market. For the most part, I agree that dollar cost averaging once per month is a smart way of dealing with a down tape. However, for those who already amassed wealth and are looking at retirement within a decade, it’s important that you preserve your wealth —- rather than squandering it.

You should most definitely eliminate growth stocks from your holdings and replace them with staples. But the best option, by far, is to trade and hold overnight and sell everything each morning —- rinse and repeat.

If you’re only buying or shorting closes and closing out those trades in the morning —- your risk is low due to holding period. It goes against all of your instincts of buy and hold for the long term —- but it works and it works especially well in this tape.

A typical overnight trade for me would be to long whatever theme trending for the day, in hopes of a continuation. For 2022 I had been buying Ag and Oil. I would hedge those bets with 15%+ positions in inverse ETFs. Often times my oils went up with the inverse ETFs and I’d close them all out before 9:45, in order to avoid morning gyrations which can be confusing.

The key to all this is to invest smaller, most of the time keeping 30%+ in cash and always hedge. No matter how good the market looks, no matter how many times your overnight hedges lost money — ALWAYS BE HEDGING.

The reason why is the geopolitical tensions and of course the fucking economy. News can bust out at any time sending stocks sea-worthy making you rue the day you thought it was wise to just buy and hold.