The January Effect LOOMS

So this is the real last trading day of the year, no? Come Monday, everyone will be eating shrimp cocked tails and getting drunk, gratuitously, off champagne. Then we barrel into 2019, very fat, and greasy, begging for an extreme beatdown.

It is my belief, frankly, this rally will not hold. It is my belief, come next week, markets are going to scream lower.

Naturally, I’ll remain open minded to the possibility that stocks can trade up, especially since we’re down so much. After all, a mean reversion spike doesn’t mean we’re in a new bull market. But I do believe the first week of January is a ritualistic time for stocks and it bodes poorly for portly bulls.

What to do?

Cash up. Position in bonds, gold — hedge yourselves.

Watch WTI and HYG and do not hold a lot of long exposure if HYG goes red.

ATTENTION BULLS:

You’re fucked for at least 4 years, as per Carter Braxton Worth, fresh from the Nantucket shores.

Stocks made an epic comeback today, but Chart Master Carter Worth says the worst could be ahead. pic.twitter.com/XBkKt3v95v

— CNBC's Fast Money (@CNBCFastMoney) December 27, 2018

What are we to surmise from all of this? Well, rooted deep in logic and data, the median downturn of markets that declined 20% is 28%. This means, in no way shape of form is this sell off over. Moreover, it means DRIP shall rise again and drop you to your knees, crushing your hopes and dreams — shattering them against the cold, hard, rocks of evil vengeance.

All that aside, I hope you do well tomorrow, LOSING MONEY TO ME.

So I was away during the market tumult. Before I went away, held a meeting with a partner of mine, I bought some TVIX — because that’s what men do during markets that whip-saw 1,000 points per day. It was intended to be a day trade and it indeed ended up being just that — as I sold it for a 7% loss.

Markets dropped in true heart attack fashion, and then regained its composure and is now surging into the bell. I cannot think of a more bullish scenario than this. Sadly, I am betwixt and dumbly long DRIP and DRV into this ebullience. Only by the good grace and hard toil of Jesus Christ himself will I be able to extricate myself from this ordeal. I should’ve held my longs and been a man about the 600 point decline. Alas, we only get one chance at these decisions and they’re often wrong, foolhardy, and stupid.

My original thesis of heading back to the FAGBOX, because it’s fun and easy to do applies again. But this time around, I am, unfortunately, not keenly positioned to profit from such a move. Truth be told, and this goes without saying, I can only wish and hope for the worst. It does not appear my dreams of danger and hazard will come true. It also appears, mind you, I will be forced out of both DRIP and DRV, perhaps even at horrendous prices.

Now I know I’m not the only one to fall victim to such rapery, as these intra-day moves encompass what one could expect during an entire week, if not more. It’s okay, as long as you correct the mistake and resist the temptation to revenge trade.

Heading into tomorrow, I am long DRIP, NUGT, TLT, DRV and AG, hoping and praying to the Gods for a semblance of mercy.

The bull market is over. It’s important that you both acknowledge and accept this new and evil reality. You might believe otherwise, but you’d be wrong.

GOT A CHART BREAKDOWN. Analyst love it, I don’t. I think the break up value is, inexorably, lower.

We might sashay around these levels, making lateral moves for the balance of the week. But if today taught us anything at all, it is not to trust markets on the upside.

I stepped in here and bought some DRV, hoping and praying to the Gods for a complete shattering of the commercial RE markets. It’s like nothing happened at all and yesterday was merely a suggestive whisper in the winds. And now it’s gone. In replace of it is really loud and annoying music, with fuckheads from CNBC chattering around. I just want to break their jaws and be done with it.

Let the markets fall to equilibrium, wherever that may be.

I sold everything I bought yesterday — the whole kit and kaboodle.

Here were the results. HUBS was a +4%.

Replacing it, I bought DRIP, NUGT, TLT and cash of 60%.

What if the market reverses higher?

I have 60% cash to respond.

What if we continue lower?

I will add to DRIP and NUGT, maybe TLT.

Horrible tape. Get defensive.

I did not expect to be entreated to -300 on the Dow. But here we are, speeding in a car made of dynamite sticks heading for the sun.

I think the market should be strapped up to the gibbet and whipped with merciless vigor. I don’t like anything about this sort of action, even though the decline is merely a third of yesterday’s returns. Down 100 Nasdaqs is still a big deal and could lead to even greater losses.

Plus, Germany is down 2.5%, the 10yr bond is down 4bps to 2.75%, and gold is heading higher again. All of the ingredients for a grim open and session are there. I’d like to remain bullish and tell you nice things, pretty things, about FAGboxes and how fun and easy they are; but I cannot — because the night is dark and filled with terrors.

You have two choices now:

Buy and hope to God something god happens.

Sell and go to cash.

You can sell and go short, but then you risk getting chopped up into pieces should the market reverse higher again.

My early tells will be WTI, HYG, SRLN, and GS.

Listen to me now. We’re going back to the FAGBOX.

Feel free to get long with impunity. Nothing can stop you. Once back inside the box, or just below it, you’ll come into heavy selling and likely get your face blow off clean. If I were you, and thank God I am not, I’d play the market for this eventuality.

Bet against the man in the time capsule, lose everything — wife, cars, house, kids etc.

I know futures are lower; but that means literally nothing. Futures will be jimmying higher by the opening tick-tock. Men with stupid hats and ugly ties will position billions into stocks, barreling into the New Year. Those same people will be executed come 2019. Meanwhile, times are good and the goose is fat. Do not lament Le Fly because he’s swifter, more odious than you. Play the box, but do not dare enter the box. The box is for chopping only.

As you were.

I doubled up on HUBS, NEWR, and MDB. And I bought FAS — because I’m a banker now. I’m also up massively on all of my longs initiated today, such as LABU ($26.4). This is how I roll, and you’re nothing.

Ladies and gents, the year has been saved. I knew the great big beautifully breasted bull market would emerge, rise from the dead, and devour its enemies whole.

People need to STFU about downside action. This is yesterday’s news. Tomorrow’s news reads:

THE FLY WINS AGAIN.

Fuckers.

Top picks: HUBS, NEWR, MDB, FAS, FANG, LABU

UPDATE: Record point move in Dow. Bear market rallies are the best, believe me.

If this is your workflow:

WTI
Oil stocks
High yield
Leverage loans

And all of that shit is higher, then you have to go long now.

Let me repeat and rephrase.

If your core thesis is bearish because oil was tanking, which was pressuring high yields, you cannot hold shorts now with price momentum sharply to the upside. This is why I sold DRIP and DRV this morning for 19% gains. Had I held them until now, I’d be flat.

I have opinions and feel strongly about the risks, but ultimately price action guides my decisions.

Having said that, I sold SJB and FXY, which were both bear market positions. WE ARE NOT IN A BEAR MARKET NOW. Ergo, I will be adding to positions into the bell, based off the large white candle being posted today. Odds are, we shoot higher tomorrow as well.

Bet against me, lose your fucking house.

Not the one with Netflix in it, but the actual oil company FANG. Hands down, best producer in the space, vulgarly oversold.

Long here through $100.

45% cash.