Fly Sell: VXX

I sold out of my VXX position, north of $32. At the present, my only hedge is MET. I now have more than 50% cash.

The market is not fancy on seeing the Euro choke, while the Yen flourishes. There are all sorts of ominous cross currents that puts me in a box. On one hand, I have never seen The PPT spit out an OVERSOLD reading without a decent bounce transpiring shortly thereafter. On the other, this time is different.

I know it’s very cliche of me to say so. As Mrs. Fly would say “suchness is sooo overrated.”

While I do not know what the fuck that means, nor do I bother asking, it’s worth noting that there is a certain amount of genius built into statements that mean absolutely nothing. It takes a lot of skill to say nothing.

Back to the market.

I am getting RINO’d in this fucking RINO, deservedly so. What in the world am I doing buying low end chicoms, in the midst of a fucking meltdown. I deserve the losses, AND MORE. Furthermore, I am enjoying pivot kicks to the scrotum in GS, ATPG and GLDD as well. With VXX and FAZ barely up, my losses are outstripping my gains, making Le Fly a very unhappy space alien.

With credit default swaps widening across the board and the Euro diving, be very careful about taking on aggressive long only strategies. Trust me, I am much smarter than you, certified by IQ tests and have been banking coin in this market, ever since puberty.

Top picks: Short MET, long TNA

UPDATE: I sold out of my FAZ position @ $16.80. Respecting the Hybrid.

You might think the world is ending, due to recent events. However, things are no more dire now than previous periods of sheer fuckery. However, that does not mean stocks have to go up. The very notion that stocks must go up because the world isn’t ending is fucking ludicrous. Nevertheless, there will be peaks and valleys. Following Friday’s drubbing, I would not be surprised to see some sort of bounce here, especially since The PPT is registering an OVERSOLD reading of 2.19.

As an aside,  “The Fly” just received his 3g ready iPad. I must admit, it is a very cool device. It’s like a giant iPhone and I love the iPhone.

So, in short, my bias is bearish and my expectations are to endure incredible and mind numbing daily ranges, due to the “coolness” of the western economies dealing with the eventuality of a “double dip.” Ultimately, I am in this game to buy stocks, at absurd valuations. I am not one of those burlap wearing bearshitters who pray to dead goats for the apocalypse. At some point, stocks will reach a level where the “worst case scenario” is priced in. In my estimation, we simply aren’t there yet.

Hence, I will continue to hold full positions in VXX, FAZ and will look to add to my MET short, when the opportunity presents itself.

Forget about the bull market. Just forget about it. We are officially on the “other side of the mountain”, with steep losses in all of the global growth names. Before we can say “the uptrend is intact,” there is a lot of work to be done.

So, for the sakes of keeping things simple, I am assuming the primary trend is lower, with an emphasis on deflation. Regardless of where you stand on the ever cumbersome inflation versus deflation debate, one thing is abundantly clear: the market fears “the Big D” way more than a little i. This is why treasuries are rallying and commodity stocks are being poleaxed. The worst case scenario, for the market architects, is to see their fraud unveiled, vis a vis sovereign debt defaults.

It’s very easy to paper over some bullshit mortgages. But, it’s not so easy to ignore the entire EU collapsing before our eyes. Who do you think loaned out all of the money to the PiiGS?

Answer: French and German banks, who are all intertwined with U.S. banks. The whole thing is connected.

For the foreseeable future, I suggest that you monitor the bond marker very closely. On The PPT, I update fellow gentlemen on the CDS market. And, I put together a Risk Appetite Index (RAI), which was designed for a market just like this. I want to know, before retail, where there is stress and I want to know right away. Here is a screen shot of the RAI:

(NOTE: The RAI is comprised by using a multitude of publicly traded bond funds, both domestic and foreign. I’ve compared this to the Markit CDX index and it definitely compares quite well.)

I will play this market accordingly:

Assume the primary trend is lower.

Do not press shorts, when extreme OVERSOLD conditions persist. Central Banks tend to do outlandish shit when markets crap out.

Play the upside, in a measured and fast way, even if that means going long 2-3x ETF’s for the sake of expediency.

Stay hedged, at all times, even if that means eating monstrous losses. Nothing is guaranteed, including the apocalypse.

Utilize The PPT‘s algorithms to help identify specific overbought/sold ranges.

Top picks: Short MET, AFL

A Flashback to the bear market days of 2008. Note the orange tone to the site.

[youtube:http://www.youtube.com/watch?v=RSzFIGZLNuo 616 500]

My previous works of  “chart-art” have all sold at Sotheby’s for high 7 figure bids. I expect this one to do nothing less than 8.

“Doin’ the Hugh”

The Fly, June, 2010

[youtube:http://www.youtube.com/watch?v=5GESoS-Pp98 616 500]

Portual
Italy
Greece
Spain
Hungary
Ireland
Turkey

Pigshit!

That market is under pressure for a multitude of reasons. Instead of offering you a pointless post about “how fucking awesome” I am, as opposed to you, I will scribble down some of my random thoughts for your perusal.

Hungary is warning of default, sending CDS spreads through the roof.

U.S. employment numbers were very weak, further emboldening the “double dip” camp to sell short.

The wolf pack is circling the Euro and all European countries, mentioned in my crude version of acrostic poetry.

China is slowing down and can no longer support the world on its own. They need help.

China is in a bubble of all bubbles, waiting to pop.

Mutual funds do not have a lot of cash on hand, leaving the market susceptible to further downside.

The fact that rates continue to go down means deflation is the play, not inflation.

The Yen carry trade continues to unravel. This is particularly bad for Australia.

European banks will take massive write downs and need to raise more capital.

Okay, that just about summarizes my fears. Basically, the market is diving here and appears to be OVERSOLD. However, as a manager of other peoples money, I am obligated to stay hedged over the weekend—just in case fuckery on a grande scale ensues. So, I am keeping my FAZ/VXX/short MET trades intact. Also, in the event the market bounces on Monday, I will keep all of my longs, including GS, GLDD, PKX, ATPG, FTK, TEVA, SD and RINO—just to name a few.

Overall, I am 45% cash, 17% VXX and 8% FAZ/MET short—leaving me long to the tune of 30%. In my estimation, my bias is bearish, to a slight degree, especially since FAZ is x3. My purpose, as always, is to preserve what I have and eek out another 5-10% on this decline. When the time is right, I will deploy my 45% cash horde to the long side, then pare down my shorts. Essentially, this is an art, something that I am very good at doing. The market is my canvas and my money is the paint.

Off to celebrate, yet again (I’ve been celebrating a lot these days)

NOTE: Do yourselves a favor, check me out on The PPT.

I just wanted to take a moment, out of my busy day, to say “indeud.”

Proceed.

I sold short 10,000 MET @ $39.85

The jobs numbers were horrific, even more so than reported. Slap in the birth/death model and you have a loss of more than 200k for the month. The only jobs available, oddly enough, are from Government. So, it’s settled, we are heading towards a double dip recession. Trade accordingly.

Expect a sharp drop at the open and a sharp drop at the close. Please do not make a jackass out of yourself, intra-day, with inane moves. So you know, while you lose money at the open, “The Fly” will be playing tennis and laughing at many of you, on the inside. I try to reserve my emotions in public, so you know.

I will make some coin in my 50,000 share FAZ position and boatloads in VXX. Let’s not forget, I am short MET too. I do have a fair amount of longs. But, the damage should be limited, thanks to my hedges.

See folks, my positioning has never been about making money on the downside. “The Fly” is all about preserving his 30% YTD gains, while putting himself in an uncanny position to purchase your margin liquidations. It appears, I will be afforded such an opportunity in short order.

The euro is cracking and Hungary is warning of default. Prepare to dive, motherfucker. Prepare to dive.

I sold out of my GMXR at the lows because of my over weight exposure to natural gas. It happens. I will not lament over it. Right now, I own FTK, SD and ATPG, making up more than 15% of assets. However, if Obama is really serious about turning the corner on oil, using the BP spill as a motivating catalyst, we will see much, much higher natural gas prices and equity valuations.

The following names attribute more than 75% of their production to natural gas. (hat tip to Po Pimp from The PPT, for this research)

CRK, MMR, PVA, ROSE, DPTR, PQ, GDP, CRZO, KWK, FST, COG, XCO, HK, NFX, UPL, RRC, STR.

Additionally, here are some other names to keep on the radar:

CLNE (natty gas stations), WPRT, NGS, BEXP, TLM, XTEC, NBL, SWN, KWK, PETD, PSE, KOG, REXX, HP, VNR, HERO, BRNC and of course FTK.

Over the next several days, I will weed out this list and select my favorites for purchase, providing the market keeps the uptrend intact.