Stocklabs Mean Reversion Victory

It was one of the best oversold signals to date.

I was awoken to cataclysmic losses today, after a spate of good fortune. I had been long oils, ag, and pot stocks — all fucked at the open. The entire day was spent trying to stick my fingers into the holes of my ship, in an attempt to stay afloat. I ended the session DOWN 390bps and that’s after two dozen small trading gains.

It’s worth noting, I was also heavily hedged with positions in TZA, UVXY and FAZ.

It could’ve been disastrous and indeed it sort of was. But towards the end of the session, the gods placed me in DNA and she beat estimates after the bell and I just made 13% for my troubles — propelling the portfolio higher by 64bps in the AHs.

I am roughly 13% cash, 25% short, the balance long a blend of tech and commodity stocks. Although tempted to truly buy the oil dip, off by 9.5% for the session, my best guess is for oil to continue lower tomorrow and perhaps sting longs who bought today’s sale.

The news is rigged. The markets are rigged. Your entire life is rigged. I trust nothing other than the last quote and try my best to position at the moment for what is likely to be a trend in the immediate term.

Month to date, I am +14.5%.

NOTE: We begin the 1st Annual Stocklabs trading contest on 4/1, lasting the entire month. First place is $1,000. Read here for details and join before the month ends to get accustomed with our tools.

This is reminiscent of 2008 bank bailouts whereby each afternoon CNBC entreated us to market moving rumors that almost always turned up false. Today markets were running ahead of this leaked news, a set of headlines I find every hard to believe.

-Ukraine has to give up on Nato but will be free to join the EU

– Russia is no longer demanding “denazification”

– “demilitarization” and Russian language are not part of the possible deal either

In short, we are being led to believe Putin will stop hostilities and permit those dastardly Nazis to continue to run free across the Ukrainian countryside, as long as Ukraine backs down from the idea of joining NATO.

Color me skeptical. Nevertheless, markets wants to believe. The NASDAQ is +138 and WTI is clobbered down 8.7%.

Commodities are being taken to the woodshed today — losses are abundant in mostly the entire space save select natural gas and LNG plays — like NEXT and SWN. WTI is hammered lower by 6.6% and the only explanation for this is “crowded trade” and/or the market is beginning to price in “demand destruction” based off the notion that the global economy is about to tailspin lower.

But if that were the case — we would not see the NASDAQ +31, mostly buoyed by the 8% move in TSLA.

Chinese stocks are doing well too, as evidenced by CWEB. Stocks like QS and FSLR are leading in the green plays and there is widespread strength in the shippers. There names like CMRE, SB and DLNG are leading.

What the market is trying to do is rotate out of commodities and back into retail/tech/industrials — but the headwinds are too strong with inflation, dastardly high mortgage rates, and headlines that make one wince.

My best guess is for this trend to continue through tomorrow — perhaps even Wednesday and then right back into the oils. There is no logical reason for tech to rally, oils to fade, and yet yields race towards inversion. We are simply unsure what the fuck is going on now — which offers opportunity as assets are being mispriced.

I had a black swan event in mind for the dollar before this conflict started. It went something like this.

Post Afghan defeat, the US suffered a major blow vs Russia — a military defeat in the Ukraine. The subsequent result was removal of the dollar currency reserve after China sided with Russia.

Back then this was a far fetched idea. But let’s game theory this for a moment.

Although the Ukrainians are fighting with spirit, they cannot win vs Russia, unless Russia themselves decides to stop. The west is throwing the kitchen sink at this conflict, to preserve the hegemony.

China has clearly sided with Russia, and perhaps India and Brazil — BRIC IS BACK.

OPEC said they will not remove Russia from OPEC +

The sanctions are an inconvenience for Russia — but they won’t destroy the country since Russia has its own natural resources.

Don’t look now — but the Ruble is soaring against the dollar.

If by summer Russia succeeds in Ukraine, humiliating the west’s efforts to defeat them and then imposing itself on the borders of Poland and the Baltics — we might be looking at an entirely different world order by then — one that almost demands US military actions vs Russia. It might seem far fetched now — but the dollar and our capital markets must be protected at all costs. The fact the Ruble is now up 7.1% vs the dollar on a day when oil is down 6.4% is a pie in the face for Biden and believe me our leaders are far too spiteful to let this go unchecked.

The line in the sand will be if the Ruble can advance into the $70s vs the dollar, effectively wiping out all losses in the Russian currency since sanctions were imposed.

In other news:

SCHOLZ: CUT OF FROM RUSSIAN COAL, OIL MAY HAPPEN THIS YEAR

Russian Oligarch Roman Abramovich, Ukrainian Peace Negotiators Suffer Symptoms of Suspected Poisoning — WSJ

Our best predictor of recession is on the fucking move today. The spreads between the US 10yr and 2yr has tightened considerably to 12bps. Markets don’t give a shit — because stocks — the NASDAQ is +75 but small caps are still marginally lower for the session. We are seeing a fucking rout in commodities, as if the market was pricing in some demand destruction and already pricing us into a recession and out of one (which makes no sense).

Oil is -7.1%
Gas -1.4%
Palladium -8%
Wheat -4.1%

Over in Stock-land airlines, shippers, and software stocks are higher, while everything in the commodity trade gets up-ended.

What’s the news? Peace in Ukraine? Some major break-through? No, quite the opposite actually.

RUSSIA LAWMKAER ABRAMOV SAYS G7’S REFUSAL TO PAY IN RUSSIAN ROUBLES FOR GAS WILL DEFINITELY LEAD TO A HALT IN SUPPLIES – RIA

RUSSIAN FOREIGN MINISTER LAVROV: RUSSIA’S TIES WITH CHINA ARE AT THE STRONGEST LEVEL EVER

Russia’s foreign minister says meeting between Putin and Zelensky could be counter-productive

PUTIN DOES NOT APPEAR READY TO MAKE COMPROMISES TO END UKRAINE WAR FOR NOW, SENIOR U.S. OFFICIAL SAYS

Most interestingly, the Ruble continues to gain — now up 5% vs the dollar to $91.25.

In summary, markets are sanguine about the idea of Russia threatening to cut off gas supplies to Europe, the yield curve racing towards inversion, and no signs for peace in the future.

And Will Smith smacked Chris Rock at the Oscars yesterday.

Clown-World.

Now only is the price of a home +50% since COVID, but so are interest rates.

To put that into perspective. Had you bought a home before 2021, odds are at 20% down you’d pay under $2,000 per month mortgage for a $500,000 home. Now that same fucking house is worth $750,000 and rates are 5%, so you’ll be paying ~$3450 a month in mortgage payments.

MBS bonds get crushed daily

30 yr fixed nearing 5%

Avg home sale ~$500,000

It’s more or less over. I don’t give a fuck what futures are saying. Even worse than affordability is lack of supply. I spoke to my local realtor here in Cary, NC and she said the area usually is running 7,000 listings and now only 1,700 — due to spike in prices and rates. There isn’t anywhere to go so people are staying put.

New homes sales dropped for 4th month in a row.

“Pending transactions diminished in February mainly due to the low number of homes for sale,” said Lawrence Yun, NAR’s chief economist. “Buyer demand is still intense, but it’s as simple as ‘one cannot buy what is not for sale.’ It is still an extremely competitive market, but fast-changing conditions regarding affordability are ahead,” Yun said, referring to prices that are still climbing and today’s rising interest rates. “Consequently, home sellers cannot simply bump up prices in the upcoming months but need to assess the changing market conditions to attract buyers,” he said.

The squeeze on the middled class, as well as the upper middled class, is fucking on. Prices for everything is going up and wages cannot keep up with double digit inflation. This is bound to have a profound effect on home prices, employment, and GDP. This is a ticking time bomb that will make you beg for a nuclear detonation over your city, instead of having to deal with the pangs of debilitating depression.

Here are the fucking rules.

From 4/1 to the last trading day of April — portfolios will be tracked using only the Stocklabs portfolios and stocks domiciled in the system.

Trades cannot be edited. Meaning: you cannot retroactively change basis price for sales and purchases. You must trade at market prices inside Stocklabs.

You must conduct a minimum of 20 trades for the month. This is on par with at least 1 trade per day. We do not condone YOLO buy 1 stock and pray for the best approaches to winship.

A Council of Five has been appointed to oversee the contest and can indiscriminately disqualify anyone at anytime with a majority vote. The Council is Chaired by Diddy, accompanied by C2, ARMBUSTER, MR. WEST and Chief Counsel INDEXJOE.

First prize will be $1,000

Second prize: Set of Steak Knives on a Mug

3rd prize: You’re fired.

We will use the 3rd place “winner” as a blood sacrifice to power our gains thru May.

The contest is open to all Stocklabs members at all levels — even our piker $59 per month level. The purpose of this contest is to demonstrate my market greatness, shattering the confidence of all traders who stand in my way and subjugating them in a subordinate position via sheer brutality.

If you haven’t already, create your contest portfolios and drop a link in the Pelican Room and claim your stake.

God Speed and good luck.

The adults are back in office. The only way an irrational dictator like Vladimir Putin can be stopped is with strength. To apply this strength, we must remove the shackles from our nuclear policies to let him know we mean business, including a General Lemay styled FIRST STRIKE on Moscow, incinerating 5 million evil Russians upon impact.

Biden refuses to rule out first-strike use of nuclear weapons under ‘extreme circumstances’ in dramatic reversal of his campaign vow that they should be ‘solely’ for deterrence

When the bomb hits and you see the fire rising and the nuclear winds breeze past you — bringing with it a warmth you’ve never felt before — find solace in knowing the President Zelensky got to speak at the oscars and was considered on par with great western leaders, such as Churchill and FDR.

You will know at the moment of your demise that it was worth it — because NATO must’ve be able to expand eastward and the Anti-Wokeness out of the racist Nazi haters in Russia was a terrible burden for our cognescenti to bear. If we did not strike Russia first with a doomsday device — than he (evil Putin) might’ve done it to us first and instead of 300 million people dying in America — it might’ve been 350 million.

Good to see American leadership back fulfilling the prophecies Ra’s Al Ghul.

LOOK AT IT.

Many of you know me pretty good by now. My reader base is more or less the same the past 15 years, with marginal growth in readership because of my ornery manners. I will tell you when I suck and I will boast when I am hot. On the whole, I never lose. I go through periods of mediocrity and on occasion miss the mark. But rest assured, on a long enough time frame — I win big and I do this during winning streaks. I can go 30 for 30 in my trading account and move way higher and if you blinked, you missed it.

I am going through such a streak now and entreat you to pay close attention to what I am doing. Yes, I am boasting and of course if you join Stocklabs — House Fly gets to commit more funds to its Orbital Space Cannon (OSC) project. You will also benefit from my market hand, the fucking hottest in the land — closing up 13% for the week, now +30% YTD coming off a -10% start.

My bias leans towards oil but I am also long some cannabis and some metals  — and frankly whatever might look good throughout the trading day. If you are not an active trader — my quant is designed with the thoughts running through my brain, without emotion and it doesn’t require management — only once per month. It is +15% for 2022.

BEHOLD the Grandeur of “The Fly” and iBankCoin — a savant of sorts in the stock exchange — cursed by devils in nearly all other manners of life.