Bear Market or Correction? Decide Now

Here’s some data for your money cup of oatmeal.

Data provided by Exodus.

All stocks -8.5% over the past month.

Losses by market cap.

$100b+: -5.5%
$50-100b: -6.5%
$10-50b: -7.75%
$5-10b: -8.9%
$1-5b: -10.3%
under $1b: -8.9%

Worst Industries:

Truckers: -21%
Small Tools and Accessories: -21%
Semis, Memory Chips: -19%
Farm and Construction: -19%
Home Improvement -18%

Best Industries:

Gold: +7%
Foreign Utes: +4.2%
Electric Utes: +1.7%
Publishing: +1.6%
Discount Stores: +0.6%

Numbers of stocks down 1 mo:

More than -30%: 197
More than -20%: 667
Between -10% to -20%: 1,520
Between -5% to -10%: 1,197

FAANG -5.3%

I’d love nothing more than to attack Fed’s Powell, since I hate his guts. We haven’t had a man at the Fed since Dr. Bernanke. But this attack on Powell and their INSANE policy on rates is misguided.

Let’s be clear. The fucking Fed, under the direction of Grandma Yellen, start their ‘dot plot’ lunacy back in 2014. Look, I still have their insane chart, one that has, pretty much, come to fruition.

Chairman Powell is a lawyer and literally knows nothing about economics. He’s a technocrat who is at the Fed to take orders, not to give them. The Grande Recursive Order of the Knights of the Lambda Calculus prefer to have idiots at the Fed who can be told what to do. Alas, we haven’t had a man at the Fed since Bernanke, who bravely seized power during the financial crisis and saved the world.

Here’s Trump in a WSJ interview not knowing what’s he’s talking about — making a generally fool out of himself.

“I’m just saying this: I’m very unhappy with the Fed because Obama had zero interest rates,” Trump told the Journal on Tuesday. “Every time we do something great, he raises the interest rates.”

The president said Powell “almost looks like he’s happy raising interest rates,” but declined to elaborate, according to the Journal.

WTF?

And there’s more.

Asked if he regrets nominating Powell to his Fed chairmanship, Trump told the Journal: “Too early to tell, but maybe.”

Here’s Andrew Left, expert in shorting stocks. He runs Citron Research, which is a likely a front for some influential hedge funds who have short positions that need to go lower. They likely influence Mr. Left via great research, bullet points, soft dollars, and drinks at the pub. He then issues said report and stock cascades lower.

In this case, said hedge funds might want stocks to barrel higher. So here’s Left shilling for Tesla now, in spite of having an active lawsuit against Musk for his “funding secured” tweet.

The video is below for you to peruse — and he also casts shade on TLRY, CGC, CRON and other pot stocks.

Here’s the cliff notes.

– Left knows nothing at all about Tesla. Fucking black box, so err, go long.
– He was wrong forever on the short side, but feels confident about being right now.
– Tesla is crushing the competition.
– Give pot stocks a few quarters to see if they’re viable investments.

NOTE: I know what you’re thinking. “What the fuck is wrong with Fly, placing a photo of sloth next to Mr. Left?” Ten thousand apologies, I don’t like sloth.

Ron Wan is a financial expert in China and here is his pleasant bio.

Mr. Wan is an experienced investment banker and financial expert with more than 25 years of international investment banking experience in Asia and Greater China Region. He has rich experience in off-shore listing and reorganisation of various major Mainland Chinese enterprises in capital markets. He was also one of the pioneer investment bankers involved in the restructuring of state-owned enterprises in Mainland China and have deep understanding of the economic development and securities markets in the regional and Greater China markets.

He is also an Examination Committee Member of HKSI, Honorary Chair Professor of Renmin University of China and Founding Committee Member and Vice Chairman of CUAAFA. Mr. Wan was graduated from London School of Economics and Political Science with a Master’s Degree in International Accounting and Finance in early 90s. He has also served as senior management in various major multinational and regional financial institutions previously. During 2004 and 2012, Mr. Wan has achieved various awards in recognition of his achievements in the industry.

You can watch the video below and behold his logic. Or, I can save you the trouble and paraphrase what he said.

– China’s economy is worse than is being reported.
– Many people and companies are facing bankruptcy.
– There is a motherfucking liquidity crisis brewing. No one has cash.
– China needs to do something.

Cynics believe China is rigging its currency in order to offset losses due to Trump’s tariffs. But it’s entirely possible there is, in fact, a massive capital flight underway — which is crushing the yuan, and that would explain the liquidity crisis that is apparently brewing, according to the venerable Mr. Wan.

If the market went down 5,000 points from here, I wouldn’t forgive myself for what I did today. Because of my indecorous behavior, making excuses for myself due to absence and a busy schedule, I somehow ended up in Greek shippers that were literally cracked asunder this morning, producing garish losses in my trading account. This circumstance soured an otherwise gentile demeanor and caused me to increase my cautiousness and lie idle whilst markets caved.

The narrative that I had planned was one of a predator, agile and ferocious, ripping into the flesh of the zebra; but instead it was I who became the hunted, convalescing in the dark as my pride tore through the prairie like a jagged blizzard. I missed the turn and took losses. My SPY sale was 5 points below present values. I permitted an isolated event, getting stung by a few bad stocks, limit me and blind me to the bigger picture.

Even still, I remain stoically recalcitrant in the idea that the market has been bastardized and there’s no V shape recovery in store. I believe we’ll plod around the bottom and eventually W shape higher, using time as the elixir to heal the wounds that have impugned us.

Nevertheless, we have record lows on the Exodus OS and Ragin Cajun was kind enough to plot them against the SPY. Here’s all scores under 2.20, since 2008. Not too many.

Into the waning minutes of trade, I am 100% long in my Quant account, 80% cash in my trading. My confidence, if nothing else mattered, has been bruised; but this too shall pass, just like it has in the past. If you’re like me, suffering from a few bad trades, find solace in knowing the vast majority of experts, people like me who’ve done this forever, lost money too during the great fall of 2018. It’s important to move on and even more important to avoid getting lured into a false bottom.

There will be time to buy breakouts, if they’ll ever come again. But if you’re diving in here, you’re playing for a strong bounce. If you catch said bounce and are fortunate enough to make some money, don’t forget to take profits.

Markets have recovered sharply off the lows. Fuck all of that. I wouldn’t buy this rip with my neighbors lotto money. It’s very nice to see stocks rebound. After all, we’re oversold. But that doesn’t mean shit for tomorrow or the day after. I’m just trying to survive the great market calamity of 2018. Once we bottom, they’ll be plenty of time to get in.

Here’s some data for you.

1,300+ stocks at or near their 52 week lows.

Here are some prominent names starring on the list.

FB, BAC, GS, WFC, CVX, BUD, TM, IBM, MMM, ABEV, TXN, BIDU, MS, ASML, KFC, LFC, BLK, RIO, UBS, SCHW, GD, CL, FDX, JD, ABB, MU, MET, HOG, YY, and on and on it goes.

But I’m sure there’s a bull market somewhere.

I encourage anyone who’s ever wanted to gain access to Exodus to do so now. Click on that link and sign up for a free trial.

Here’s the data. We’re oversold for 12 of the past 14 trading days — a new record. Mind you, these algorithms were measuring fear dating back to 2008. This is worse than those spates of downside pin action.

The lowest score we have on record occurred on 5/6/10 — the date of the flash crash. I remember it well, having been under a general anesthetic for an endoscopy. I had an astounding 25% of my book in VIX and ended up making $5 million on the ordeal. My play was for the lows to be retested and they soon were achieved. As a matter of fact, markets did not recover until October of 2010, a full 5 months after the crash.

After the lowest score was hit, prices dropped again, but quickly recovered. However, the rally was short term and new lows were quickly endured.

On purely a technical basis, this is the 7th lowest score. The first occurred on 9/22/11.

Look below and bear witness to the price action after that OS signal. It was a tepid bounce, followed by more selling. However, in a little less than two weeks from that date, markets had taken off to the upside again.

Bottom line: The selling isn’t done yet. When we bounce, based on historical precedence, you should probably look to fade it.

In spite of being largely in cash in my trading account, I’ve managed to make such big blunders, it practically rendered my defensive posture moot.

This all started last week during my triple dipping of the cannabis stocks. I ended up chasing them and stopping out the same day for ~10% losses. Then I bought some Chinese stock, CPHI, because micro crappers were gapping. I missed multiple opportunities to sell for +20% and ended up booking a solid loss of 34% today. The reason why that fell below my 10% stop is because I was out all day yesterday. I don’t like excuses — but that’s the reason.

Then I saw shippers heading up yesterday, so I took 10% of my assets in my trading account, which is 25% of my overall investments, and bought 6 stocks. One of them, ESEA, was up 66% from my basis within an hour of purchasing it.

Did I sell it?

Of course not, otherwise I wouldn’t be writing this post.

Instead of stopping out of them yesterday, I held and then sold during this morning’s blood bath for a collective 16.7% loss.

What have I learned?

Nothing at all.

What can you learn from this?

Quit buying and selling micro cap pieces of shit. You’ll make 100% on 5 of them and then end up blowing up, eventually, in a few errant ones gone sour. I knew the risks and the idiocy of these trades, having made these mistakes before, but I still erred.

The Exodus OS cycle from 10 days ago is over and I closed out the SPY trade I took, for a 6.9% loss on 20% of my Quant account.

Presently, I am ~80% cash in trading account, with 5% long ABX. Gold has been very impressive during this sell off. I have no intentions of buying into this afternoon’s bloodbath, especially after blundering so badly. And that’s the real sin in all this. My mistakes have denied me the ability to act aggressively and might cost me a surreal moment to profit from the panic. But I’ve been reckless enough and that behavior must be moderated, so here I am watching markets reel, lamenting over mistakes that should’ve been avoided.

I did warn you about the retest the lowFAGS. I don’t quite understand what the fuck their problem is — but they’re malicious when it comes to market sell offs and always need the lows to be retested.

Here we are now, retesting like good little monkeys.

According to my handy stock market almanac, when the lows are retested, especially on a morning gap down, apathy and misery circumvent the market, which often leads to bottoms. The issue I have with buying now is the specter of a weak close. There are several ways this can play out.

The best case scenario us morning bottom, followed by a furious face ripping rally.

Worst case is tepid rally, followed by a full face collapse at 3pm.

Either way, you have no business buying in size here. The technicals are weak. If you insist on buying, do so in moderation and try to avoid getting raped in momentum stocks — sort of like me in these fucking shippers this morning.

Futures are lower by more than 400. The session was doomed to begin with, starting with the overnight session. Things went from bad to worse this morning, following some downgrades in the semis and the CAT earnings miss.

While earnings are important, the key to stopping any market squall is psychology. As of this moment, there is a mania about to set hold in the marketplace. If this persists, anything could happen: shattered windows, broken elevators, men without wings flying in the air.

I made two errors yesterday and for that I am deeply regretful this morning.

Because I’ve been managing some personal affairs, I have been busy, and at times, unable to trade. I didn’t stop out of CPHI, which I should not own in the first place. Secondly, I sold my Nasdaq hedge, SQQQ. There was a third mistake, which was going long 6 shippers, but we won’t talk about that now. Overall, I think my measured tone, heading into today 65% cash, has been good. However, after speaking to a few dozen Exodus members during live conferences, I get the feeling that, at times, you ignore my cash position and instead barrel into my picks with full retarded vigor.

You can’t keep behaving the way you do and think you could get away with it.

Best thing you can do before a trading day like this is to prepare. Have yourselves a hearty breakfast. I suggest listening to WQXR- classical NY, two 6 minute soft boiled eggs, a piece of toast, and some earl grey tea with a teaspoon filled with local honey. If you’re unable to be a gymFAG and build muscles, the least you can do it eat well and good.

Here’s the problem with stocks — the fucking SOX.

In order to stocks to bottom, the semis needs to stabilize and recover. But it’s real hard to do that in the middle of a trade war with China.

Welcome to the new paradigm.