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Dr. Fly

18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.

MAJOR MOVE TO THE UPSIDE LOOMS *

I do believe the next big move is up. But even though I feel this way, I am not bold enough to commit much to the long side — because of the possibility of a legitimate crashing of the markets, as Pax Americana comes to an end.

Markets are beginning to price in a western LOSS in Ukraine, make no mistake about it. If not a loss, then a kinetic escalation that will be RUINOUS to EU growth. That being said, I took a 5% position in TQQQ — having gained 41bps for the session I am afforded the luxury.

I trade well during crashes because I am not naive and rarely fooled. These are the best of times for me, but my money will eventually be made on the UPSIDE of this debacle not the downside. I prefer to wade in slowly and then all at once for a great big fucking gain.

Safe havens have been eliminated in the commodity sector, which is now subjugated to the bearish winds. The only respites left are found in stocks like SJM, CLX and MDLZ.

The market is pricing in harsh economic decline. Although I am prone to agree to any and all bad news, I will admit the prognostications are PRE-MATURE and this pin action we saw today felt more forced, if anything else, as rookie son of a bitches got liquidated en masse and sent back to their mansions in the Hampton’s where they can rot out the rest of their meaningless lives high on cocaine and adderall.

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HODLers IN SHOCK: CRYPTOS EVISCERATED

There is nothing left of your imaginary world you intended to live in. You had grande scheme to live in a virtual world, date virtual girls, wear virtual clothes. But you are now rudely awakening to the deafening sound of artillery fire and the notice of it all being over.

BTC is below $31,000 and ETH is under $2,300 and the world is in ruins.

The soft sounds of chubby bodies hitting the pavement is comforting to me, as I am well position to buy the blood and take advantage of these heart attack drops. The crypto miners that we so beloved by all, MARA, HUT, HIVE, RIOT, have gone back to whence they came and the market is telling you cryptos as an asset class is meaningless rabble. You knew it was trash when a segment of the Stocklabs ecosystem branched off like fools to talk amongst themselves about NFTs. How are your collective works of art now, pray tell me?

See, The Fly is many things, but loser isn’t one of them. Actually, I might be a loser in some departments of life, come to think of it. But when it comes to being right or wrong about investments, I reign supreme.

I do not find comfort in your pain. I would advise you to seek the counsel of others who know more, are better prepared for the fires. Men who have wrapped themselves in burlap to withstand the storms and enjoy the smell of black smoke.

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The Moment of Truth Fast Approaches

Listen to me.

The idea was Russia was going to withhold its precious oil and gas and we’d starve because we didn’t have any wheat or fertilizer. That’s what our brains said, but the market is saying something else. The market is saying you’ll eat bugs in the cold dark trench and enjoy it. Perhaps the supply shock is going to MORE THAN OFFSET with mind numbing depression. Perhaps that’s what the market is trying to say with oil down 5% and Natty down 8% and everything else getting hammered.

Or, maybe I’m being overly dramatic.

But one thing is indelibly true, basic material stocks are down 10% the past month and your favorite ag plays like IPI, MOS and CF have been de-balled, down anywhere from 20-42% over a 1 month time period.

It’s over.

The same PIN ACTION can be seen in the oils and today truly is a pivotal day in the history of stocks. Our mean reversion algorithms encroach on historical low readings and it would behoove us not to rally sometime soon, preferably tomorrow.

Plainly, I no long have the stomach for the intra-day racket and have opted for a more austere approach — leaning on swing trades. I have only a handful of old man stocks left, having closed out my UVIX position. I would think the only trade into the close is to be long something, based on these oversold readings. But to do so would mean we dive into the concrete pool hoping enough water will be there in the morning to protect our skulls. My best sense is to get long in the afternoon to a small degree and average down in a potential gap down tomorrow.

On the issue of commodities, they will bounce too. But it seems, and this goes without saying, they no longer act defensively and are just like any other sector now. The sole safe haven is now in consumer staples alone.

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Is it Too Late to Sell?

I get this question all the time during market sell offs: “Is it too late to sell?”

But the question people should be asking is: “do I deserve to hold?”

If you’re investing and still adding to your accounts every month, you can weather through any storm via dollar cost averaging. If, by chance, you made the bulk of your money and no longer contribute to your accounts and simply sit there waiting for a miracle, ask yourself: do you feel in control?

Let me show you two things.

Above are hourly returns of QQQ from April 1st to now. As you can see the bulk of the losses occurs in the morning. This is because markets tend to gap down, attempt to bottom and recover after 11am, and then tank again into the close. What would stop you, for example, from buying an SQQQ hedge into the final hour of trade heading into the next day and closing that hedge each and every morning until markets improved? If you’re frozen from selling, out of stubbornness or fear, why not do something that can reduce the losses?

Secondly I wanted to show you an alternative market happening during this bear run. Those returns you see above all happened during the very worst of times — this terrible market. Some call them consumer staples. I call them “old man stocks.” Whatever they are called, they’re making people money — because their businesses sustain bad times and managers flock to them during times of duress. If you sold 30-40% of your tech shit and bought some defensive stocks — would it be the end of the world for you?

The money you once had in the market isn’t yours anymore. Accept the fact the market took it and it’s never coming back. You invest for the now and for tomorrow, not for yesterday. Your present account value is all that matters and your investment approach must be refreshed all the time to conform with the tape.

Here is my portfolio heading into today. I do not post this to boast of my +26% YTD gains, but instead show you how defensive I am now into a tape I was afraid of touching on Friday.

I am not likely to keep many of those stocks after today — because I prefer to reset all the time. If you do not have time to constantly manage your account, consider cash as an option until things get better. Or, structure your portfolios in a way that is defensive and can withstand recession. You need to start thinking ahead and understand that although markets bounce during periods of oversold, if we are heading into recession — none of those bounces will stick.

I really hate to see people suffer in the market and the reason why I started this blog many years ago was to offer some insight into how to navigate markets. I suck at many things, but have always been proficient at this.

It is never too late to sell and you can and will make your money back. You just need a plan.

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The Pain Has Only Just Begun

A very common coping mechanism for the permanent bull class these days is to show long term charts of the SPY and mocking the recent pullback as something so inconsequential it would behoove them to even acknowledge it’s existence.

Perhaps if you’re comparing account values from 2016 until now, the setbacks aren’t that damaging, but who said we’re done going lower? Isn’t it important to recognize danger when you see it?

That being said, the vast majority of new traders who entered this tape during the COVID lockdown and subsequent meme stock era where retards took to Reddit and Twitter to make fun of others who actively traded because their “Diamond hands” of buy it and forget it stratagems were so much better —- those people are all now destroyed.

I was perusing the carnage from 52 week highs in Stocklabs today and felt like sharing some of the results. As for the direction of the market, expect lower prices for the balance of 2022.

MMAT -94%
TAL -94%
BKKT -93%
NEGG -93%
SKLZ -92%
ARVL -91%
FUBO -91%
CLOV -91%
BLI -90%
PRPL -90%
BBIO -89%
WISH -89%
GRWG -89%
API -89%
VLDR -89%
TSP -88%
ROOT -88%
OTLY -88%
HOOD -88%
SPCE -88%
CVAC -88%
PTON -88%
RIDE -88%
CVNA -88%
TIGR -88%
NVTA -87%
TMC -86%
MTTR -86%
INMD -86%
PLBY -86%
SFIX -86%
PRCH -86%
AFRM -85%
APPH -85%
YALA -85%
BAND -85%
SDC -85%
WKHS -85%
HNST -84%
AMWL -84%
RIVN -84%
BILI -83%
BIRD -83%
FUTU -83%
DNA -83%
ASAN -82%
TDOC -82%
VMEO -82%
FTCH -82%
FVRR -82%
MARA -81%
FSLY -81%
LMND -81%
EDIT -81%
RCKT -81%
PATH -80%
JMIA -80%
CHGG -80%
AMC -80%
BFLY -80%
DIBS -80%
W -80%
BZUN -80%
RBLX -80%
AMPL -80%
ROKU -80%
TDUP -80%
REAL -79%
DKNG -79%
SE -79%
ANET -79%
TLRY -79%
NVAX -79%
UPST -79%
RIOT -79%
DAVE -78%
MQ -78%
POSH -78%
OLO -78%
TWOU -78%
SHOP -78%
ABCL -78%
BEKE -78%
TWST -78%
TOST -78%
BYND -77%
RNG -77%
BLZE -77%
NTLA -77%
ZM -76%
NRDS -76%
TXG -76%
NFLX -75%

This is exactly like the dot com implosion.

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What if We’re Repeating 2002?

Happy Saturday fucked for faces.

Let’s really try to scare people now.

We just printed -1.4% GDP and we are coming out from a bubble that popped in Feb 2021. The last time we had a genuine economic storm brewing in the US was 2008 and we papered over it. The time before that, really non bank related crisis, was post dot com, post 9/11 economic malaise leading up to the Iraq war. I recall hating my life most in 2002, so let’s examine — shall we?

GDP data:

Market fucking returns in 2002, courtesy of Stocklabs seasonality engine.

Market returns YTD.

Let me accentuate the 2002 returns.

You stepped into the New Year feeling fresh and bought stocks, only to be horrified by the sheer violence of the collapsing of markets OFF by 12.3%. You thought markets would bounce in March, because fuck that, and it did. Half your losses were erased, as the NASDAQ spiked 6.7%. Feeling good about yourself you doubled your bets — but stocks crashed again by more than 12%. Feeling like you did in January, you doubled your bets thinking May would bounce — but it didn’t. Stocks shed another 5.7% and now you’re miserable. June has to bounce, because “how low can it go?” It can go much lower and the NASDAQ did — dropping another 13% in June. Almost washed out and 100% demoralized, you now resign yourself to “fate” and have concluded you’ll “never sell” because “stocks are so cheap.” Stocks then proceed to drop another 8.6% in July, and again 1.5% in August and finally a bowser of a month, adding insult to injury, -11.8% in September.

Thinking all is lost and somehow it’s all over this time, you sell out in ruins. Stocks then proceed to rally 30% into Thanksgiving, so then you jumped back in and caught a little upside — only to be decapitated by December — off by 12%

Not meaning to shill, but I did write my memoirs on trading this horrible market about 5 years ago. You can buy both books cheaply on Amazon.

Do not be fooled. This isn’t over.

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As We Drift Lower into the Oblivion, Try to Remember the Important Stuff

Stocks have been crashing for as long as I can remember. I first took an interest in stocks as a 11yr old reading about the 1987 market crash and when I passed my series 7 in 1997, I was ENTREATED to one debacle after the next. In between those periods of dislocation, stocks went up wonderfully and although haters will hate, the appreciation in the stock market over the past 30 years has been nothing short of remarkable — a true boon for our country and anyone who bet long America.

Being an avid consumer of information and having lived through various periods in American market history as a trader, I can tell you the mood of the country has never been this bad. It was bad in 2008 — after people came to grips with the fact that the system was rigged. We had already suspected it, but the overt actions in broad daylight confirmed them and we haven’t recovered since, psychologically speaking.

The same could be said about he 2020 COVID lows, when again Federal Govt acted in ways contrary to the benefit of the people they governed.

Two years removed from the COVID chicanery, we are now ENTREATED to runaway inflation and a war on the horizon, perhaps of the global nature with both Russia and China. All of this is being done, once again, against the interests of the people living inside this area of loose containment.

The previous market crashes all led to magnificent upturns. But all previous upturns were also coupled with FEDERAL RESERVE RIGGING, either through interest rate cuts or asset purchase programs. The difference now from all of the other times markets bottomed and ran higher is the Fed is now working AGAINST the market. They are trying to REDUCE economic output in order to control inflation — because the inflation they’re worried about greatly affects the poors. Traditionally speaking, government leaders were hanged by the poors and not some upper middle class FUCKED FACE complaining about country club initiation fees.

Back to my point.

The market will always be here and always offer new avenues of exploration. While the title of this post might make many of you think I’m gonna say some stupid shit like “forget about stocks, go spend time with your families,” I am not — not even close. As a point in fact, spending time with your spendthrift wives and spoiled kids is only possible if you’re successful enough to afford leisure time. In order to deserve leisure time, you must first create wealth and then protect said wealth, no matter what. DO NOT IGNORE YOUR LOSSES. DO NOT AVOID OPENING UP YOUR ACCOUNTS BECAUSE YOU’RE SCARED OF WHAT YOU MIGHT FIND. It’s important that you do one thing and one thing only during tapes such as this: PROTECT THE MONEY. It does not matter if you made 10% this month or 1%. What matters is you are not chopped up into pieces, spit out by the market, and unable to partake in the best of times to come, whenever they do come, that will help you produce generational wealth.

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BIOTECHS FAST APPROACHING 2020 LOWS: WHAT THE FUCK IS GOING ON HERE?

I will tell you exactly what’s going on because it’s exactly what happened after the dot coms BLEW THE FUCK UP in 2000.

In Stocklabs we have over 650 biotech stocks listed, most came public over the past 5 years. The overwhelming majority of these stocks are complete shit and should not be public. They are public because they require funding and have enjoyed unprecedented valuations. In a bull market, anyone can tap markets for cash, either through debt or equity offerings. After the dot com bubble BLEW THE FUCK UP, all of the dot coms who relied on markets for cash went to zero. They lost funding, burned out, closed down.

Period.

The market is pricing in the CLOSURE OF CAPITAL markets for unprofitable shit stocks. When you have stocks like AMZN off by 30% YTD, believe me no one gives a fuck about your cure of herpes.

This logic applies to all stocks. If you own a stock who is free cash flow negative, prepare for lower prices. Many of them will successfully do dilutive equity offerings. Very few will tap bond markets; and a number of them will pursue alternative sources of funds with fucked covenants with warrants attached — aka death spirals.

Out of all the sectors of the market — nothing has been hit harder than both biotech and tech and it’s for these exact reasons why CPB and KHC are doing so well in comparison.

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TOO EARLY TO BELIEVE: THE WEEKEND WILL BE FRAUGHT WITH PANIC

We tanked at the open and I went to 100% cash, higher by 14bps for the session. I see the market is presently oversold and there is an urge to splurge in areas of the NASDAQ — hardest hit. Let me remind you, May 9th looms and you might be buying into a declaration of war.

Or perhaps not and the market rallies 4% from here.

Either way, to be honest, I am not interested. What I am interested in is consistency and preservation of capital to withstand the pangs to come. We are in a recession and it’s only going to get worse. Valuations are now at 2019 levels and in order to be considered value — well, we’d need to get another 30% haircut in your favorite stocks.

I am trying to not live in the moment and attempt to offer a bigger picture point of view for you.

On an intra-day basis, anything is possible. Like I said, we are oversold and we can rally fiercely off the lows. This doesn’t mean the rally can stick and it also doesn’t mean we won’t become subjected to margin call liquidations late in the afternoon — nosediving heavily into a concrete pool.

If you bought the bottom, congrats. If you are buying into this rip — keep your stops at 3%.

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MAY 9TH LOOMS: US BOASTS OF HELPING TO SINK RUSSIA’S FLAGSHIP WAR VESSEL

On May 9th, 1945, Russia defeated the Nazi regime. It’s called “Victory Day” in Russia and considered a very important, sacred even, holiday.

This coincides with tensions ratcheting up between NATO and Russia, as the Ukrainian war draws in regional and global forces to fend off the Russian invasion. It’s rumored that Russia will order a full mobilization of its armed forces and officially declare war against Ukraine. It’s hard to imagine Russia NOT mobilizing, since all of NATO is actively targeting Russian leadership and servicemen.

While no one really knows what Russia will do, we do know the United States is goading Russia with comments designed to cause Putin to choose violence, giving NATO the pretext to launch attacks against Russia. Tonight they boasted about helping to sink the Moskva.

BREAKING: U.S. intelligence helped Ukraine sink the Russian cruiser Moskva – NBC News

Last week Pelosi, Schiff and other US politicians were in Kiev talking about defeating Russia and said nothing about de escalation. And lastly Belarusian forces are teeming on the border with Lithuania, as well as nuclear readiness exercises underway by the Russians in Kaliningrad.

In total, the mood of the west is one of invincibility — as people view Russia’s struggles in the Ukraine and deduce they’re weak. The fact is, Ukraine is strong, assisted by western intelligence, logistics, and weapons. If the war expanded into other areas of Europe, forget about GDP growth and start to worry about submarines in the Atlantic targeting LNG tankers to a gas starved Europe.

One can make a strong argument that the Ukrainian army is the strongest and most battle ready forces in all of Europe. How other European forces will stack up against a fully mobilized Russia is anyone’s guess.

All being said, none of this is bullish for stocks.

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