I Got Your Bounce Right Here

Consider the idiocy of technical analysis (no offense to Brian from Alpha):

Had you been playing Gordon Gekko in your basement office a few weeks ago, fiddling through Fannie Mae [[FNM]] , Freddie Mac [[FRE]] and Lehman Brothers Holdings Inc. [[LEH]] charts, you might have bought them—due to a “pending breakout from the base,” or something stupid like that. Then, all of a sudden, one day you walk down to your moldy office to check a few morning quotes, then BAM: FNM and FRE are at zero, punching a hole through your “morning mug,” courtesy of Premier Paulson.

Seeing how positively the other banks were reacting, with most up more than 6% that day, you bought more LEH— with the courage and fury of a mountain lion trapped inside a gay club, located near the outskirts of San Fransisco.

The following morning, you step into your “work arena” and BAM: your face gets ripped off by another 45%.

The moral of the story is: if you do not have it, you cannot manufacture ways to get it. Only a select few can manage money, with God-like precision, like men who walk in the shadows and punch people in the kidney’s with empty monster energy soda cans, just for a few good trades.

As it pertains to this tape:

Use your charts for the indices, not individual stocks.

Finally, this was your bounce, gentleman. Now get ready for the real fun.

NOTE: For the day, “The Fly” was up more than 4.9%, led by gains in commodity related names and betting against Bill Miller.

NOTE II: The preferred market is officially closed for many banks, thanks to Comrade Paulson. It will be interesting to see how they raise capital, within the next week.

I sold short 2,000 Legg Mason, Inc. [[LM]] @ $43.80.

Disclaimer: If you short LM because of this post, your only daughter will marry Keith Olberman. And, you may lose money.

The [[RKH]] is way too high, considering Lehman Brothers Holdings Inc. [[LEH]] is half dead. The very notion that the banks have bottomed is laughable at a minimum, violently vomiting with craze at a maximum.

Remember, many of the regionals got “rear ended” by Paulson. Many of them were long Fannie and Freddie preferred, even common stock.

The easy short cut is to sell short RKH.

To execute like a highly trained ninja, who has sharp swords and ample supply of smoke bombs, sell the following too:

Sovereign Bancorp, Inc. [[SOV]]

[[FED]]

PacWest Bancorp [[PACW]]

Marshall & Ilsley Corporation [[Mi]]

CapitalSource, Inc. [[CSE]]

Pzena Investment Management, Inc. [[PZN]]

Legg Mason, Inc. [[LM]]

KeyCorp [[KEY]]

East West Bancorp, Inc. [[EWBC]]

Synovus Financial Corp. [[SNV]]

That’s my list and I’m sticking to it.

As an aside, it’s rather amusing to see the home wreckers aka casino stocks getting the knife to gut treatment. Unfortunately, I am no longer short Las Vegas Sands Corp. [[LVS]] . However, I wish I were.

In that space, Wynn Resorts, Limited [[WYNN]] , Boyd Gaming Corporation [[BYD]] , MGM MIRAGE [[MGM]] and LVS are my favorite ways to bet against legalized crime.

On the long side, the commodity related stocks have bottomed, ahead of the actual commodities. This is an early tell, God willing.

Again, the quick short cut is to own [[DIG]] , [[IEO]] and [[UNG]] . However, if you’re into individual equities, take a closer look at National-Oilwell Varco, Inc. [[NOV]] , EOG Resources, Inc. [[EOG]] , United States Steel Corporation [[X]] , Potash Corp./Saskatchewan (USA) [[POT]] , Arena Resources, Inc. [[ARD]] and Freeport-McMoRan Copper & Gold Inc. [[FCX]]

Do American capitalists still exist?

All of this jargon, discussing the “greatness” the government bailout of Fannie Mae [[FNM]] /Freddie Mac [[FRE]], is making me sick and ashamed to work on Wall Street. As a matter of fact, I would like Hurricane Ike to make a quick turn and come up here (NYC), in order to wipe out the exchange. Wall Street needs a good category 5 hurricane to “clean up” the garbagio.

How is it a “good thing,” when the U.S. government is now the proud owner of your house? Directly, they now own more than 75% of the mortgages, implying they own the land too. So, has anyone thought through the long term ramifications of this? Anyone?

Abuse of powers, land grab, you name it—it stinks to high heaven.

On top of that, no one is going to want to work at Fannie anymore. From here on, Fannie and Freddie will be operated by the same bureaucrats who run welfare, medicaid and social security: fargin’ losers.

On top of that, President Paulson has subordinated the tax payers money to the GSE bond holders, such as Russia, China and oh yeah Bill Gross and the Pimco pimps. This all sounds like a grand idea, if you are a sovereign wealth fund or have a net worth north of 2 billion.

However, for the average Joey Bag o Mortgages, this is a disaster. In time, Fannie and Freddie will become so corrupt and so gay, credit will seize up—due to unavailability of loans. I wonder if the government will elect to tap the Fannie/Freddie surpluses (providing they will ever have one), just like they “tapped” our social security fund, over the decades?

Heck, if the government is right, and housing bottoms, they can make a fortune owning both agencies. With the profits, they can buy all sorts of stuff and fund exorbitant amounts of “pork barrel” projects.

In other news, the basic resource stocks are bouncing hard here. I am still “deeply out of the money” on my positions; but it’s nice to get a little respite, nonetheless.

I would not add to any basic resource positions yet. If anything, I’d wait until 3:30 to execute new positions.

Finally, the Lehman Brothers Holdings Inc. [[LEH]] news was so non-eventful I feel like shorting the stock again. They have nothing. They are trying to douse the flames; but it’s too late. Once LEH is out of the way, all guns will aim to Merrill Lynch & Co., Inc. [[MER]] . Regardless of what Cramer says (he’s just a Thain jerker), MER blows.

Top pick: [[SKF]]

I don’t know why, but when other people in the financial industry do poorly, I get all happy. Don’t panic. I’m not alone in this shameful display of schadenfreude; everyone in the business wishes doom upon his competition. The only person “The Fly” roots for is Howard. I’d like to see Howard make 200% for the next 10 years, raise 50 billion dollars, then fart on live television, following a Larry Kudlow question.

Anyway, as you know, with the commodity tap out, many funds are rumored to be folding tent, including Cramer’s favorite: Atticus Capital.

With 13 billion under management, an Atticus failure would definitely cause ripples. The question is: are they done?

You decide:

Here is their most recent reported holdings, in order:

Union Pacific Corporation [[UNP]]

Burlington Northern Santa Fe Corporation [[BNI]]

ConocoPhillips [[COP]]

MasterCard Incorporated [[MA]]

NYSE Euronext [[NYX]]

Occidental Petroleum Corporation [[OXY]]

Freeport-McMoRan Copper & Gold Inc. [[FCX]]

Crown Castle International Corp. [[CCI]]

Baidu.com, Inc. (ADR) [[BIDU]]

Norfolk Southern Corp. [[NSC]]

Peabody Energy Corporation [[BTU]]

Canadian Natural Resource Ltd (USA) [[CNQ]]

The Boeing Company [[BA]]

Praxair, Inc. [[PX]]

Focus Media Holding Limited (ADR) [[FMCN]]

Genomic Health, Inc. [[GHDX]]

In other news, U.S. Treasury default swaps hit a record today, thanks to the Fannie/Freddie bailout.

Contracts on U.S. government debt increased 3.5 basis points to a record 18, up from 6 basis points in April, according to CMA Datavision prices for five-year credit-default swaps at 5 p.m. in London. Credit-default swaps on German government bonds cost 8 basis points and Japanese bonds 16.5 basis points.

So, contrary to what all of the dollar circle jerkers are saying, the U.S. is not better off than Europe, when it comes to possible insolvency. In other words, in order to insure yourself against the U.S. Government defaulting on their obligations, you now have to pay through the nose.

[youtube:http://www.youtube.com/watch?v=T5Xl0Qry-hA 450 300]

I just emailed my local congressman, requesting “free bread, cheese and butter,” for the duration of the Paulson administration. As you know, President Paulson is a man for the people, sponsored by a few (formerly) rich investment banks.

With Lehman Brothers Holdings Inc. [[LEH]] on the precipice of death, life seems back to normal. Banks are tumbling. Cramer is riddled and “The Fly” is almost back to full strength.

All day, I cursed myself for being long oils. Do you know how many times I tried my hand, long [[DUG]] and [[SMN]] , only to give up like a retarded ape? This is all very unsettling.

Nonetheless, my gains in my shorts have far outstripped my losses, enabling me to gloat in your stupid face. As for questions that pertain to Apple Inc. [[AAPL]] , and why it is a good short now, and not at $180: all perspective.

Let me clarify. At no point did AAPL belong at $180, but the perception was that it couldn’t be stopped. It was bucking trends and holding up in bad tapes—just like Potash Corp./Saskatchewan (USA) [[POT]] was during the first chapter of the banking collapse. However, now that AAPL is vulnerable to sellers again, it is a prime candidate to short sell—since the loyal longs will have no interest in defending it.

That’s my take and it’s the correct one.

In closing, I continue to nibble at [[DIG]] , [[IEO]] and Freeport-McMoRan Copper & Gold Inc. [[FCX]] , with every 1 point downtick. And, I love the prospects of Bill Miller, from Legg Mason, Inc. [[LM]] , soiling himself over the LEH action today—making LM my number 1 pick of all time.

NOTE: My largest position is [[SKF]]

Let’s give the auto-morons 50 billion, the plane-imbeciles 100 billion and the banking-fools another 500 billion. Seriously, following years of being ripped off by contractors overseas (300% markups on hammers, food and supplies), this administration isn’t trying to hide the brazen criminality of it all, sort of like a mid-afternoon bank robbery, no mask.

Don’t misconstrue me. This is not a political statement, since the democrats are gleefully aiding and abetting. This is a matter of losers being elected into office, then fleecing the U.S. Treasury of all of its savings and IOU’s. Why isn’t this a major issue in this years roaming carnivale (elections)?

Either the candidates are too stupid, or they are complicit. Nonetheless, I still believe Bill Miller should resign from Legg Mason, Inc. [[LM]] and run for President. I’d vote for him.

I’d rather have a man, who understands the horror of the banking sector, like Mr. Miller, than some jackass who thinks the economy is on fire. Any reported GDP slowdowns are merely “mental recessions,” no?

I digress.

Steve Jobs still looks sick. Therefore, the “Sick Steve Trade” is still on. Short Apple Inc. [[AAPL]] down to $125.

The global infrastructure boom is toasty, as evidenced by engineering firms Foster Wheeler Ltd. [[FWLT]] , Fluor Corporation (NEW) [[FLR]] , Jacobs Engineering Group Inc. [[JEC]] , URS Corporation [[URS]] and ABB Ltd (ADR) [[ABB]] . In addition, I dislike, with every ounce of adrenaline in my body, shares of Caterpillar Inc. [[CAT]] , Terex Corporation [[TEX]] , Texas Industries, Inc. [[TXI]] , Eagle Materials, Inc. [[EXP]] , Martin Marietta Materials, Inc. [[MLM]] and Vulcan Materials Company [[VMC]] .

I covered my Lehman Brothers Holdings Inc. [[LEH]] short, all of it—sub $10. They may go out of business, or not. Either way, the easy money has been made.

With the proceeds, I doubled my [[SKF]] position, added to [[DIG]] , [[IEO]] and [[FXP]] .

Apparently all of Daddy’s money is tied up in the FDIC and Fannie Mae [[FNM]] /Freddie Mac [[FRE]] . If you are a low end brokerage house, like Lehman Brothers Holdings Inc. [[LEH]] , you’re just gonna have to take one for the team. Oh, that applies to the worms at Washington Mutual, Inc. [[WM]] too.

It’s too bad energy stocks are getting “death clubbed,” otherwise I’d be having a pretty good day. I think my judgment might have been impaired when I bought more [[DIG]] yesterday. It must have been the lingering effects of all the morphine they gave me.

So sorry.

I know many of you circus geeks expected another 400 points up today. However, without having to elaborate, you are morons.

This credit crisis has a brand new feel to it, no? I mean, we have a new VP candidate in Palin, who probably doesn’t know the difference between an mortgage or a moose. On the other side, we have Joe Biden, who is probably making a fortune lending money out to the desperate. As you know, Joe Biden is in the mafia.

What to do?

Well, for the most part, I’ve been sitting on the couch, chuckling at the dodo birds looking for answers as to why Lehman Brothers Holdings Inc. [[LEH]] is so down and so “direly” looking.

Maybe they need to understand the power of fortune cookie?

Anyway, I sold out of all of my Western Refining, Inc. [[WNR]] . Done. And, I have no choice but to buy more [[DIG]] , Freeport-McMoRan Copper & Gold Inc. [[FCX]] and [[IEO]] . It’s one of those situations that you wish you didn’t have to find yourself in; but you’re in it, nonetheless. The damn sector is going cliff diving.

Finally, [[SKF]] still looks very cheap. Which reminds me: who knew about the Treasury bailout and when? If you recall, the banks were rock solid, on big down days, a week prior to the bailout. I remember throwing soup at my trader/servant because of it. Now, all of a sudden, Daddy Warbux splashes them with a couple hundred bill.

Fishy.

With all of the jibber-jabbering and guessing going on here, I am beginning to feel sick, or maybe it’s because my appendix was ripped out by some nazi in tight pants and shiny shoes.

Do me a favor: shut up.

Thanks.

In the meantime, go play with dynamite filled tennis balls, at your local country club.

NOTE: I propose we use this as our new national anthem, comrades.

NOTE: I just want to clarify something, regarding the Treasury bailout. Bill Miller, from Legg Mason, Inc. [[LM]] , and the retards from Pzena Investment Management, Inc. [[PZN]] , come up snake eyes. Always remember that, when playing with those tennis balls.

NOTE II: Fellow tabbed bloggers, your time in the spotlight is over. No longer will “The Fly” share headline status with any of you, since none of you are deserving.