Charts Lie, But Numbers Don’t

Let’s settle this bear v bull market debate once and for all, shall we?

Year to date, 1,492 stocks are up more than 10%, while 1,567 are down more than 10%.

Going to the extremes, 391 stocks are up more than 40% this year, while an astounding 557 are down more than 40%.

Bear in mind, there are 4,271 equities in The PPT database. As such, that means that more than 13% of all stocks are down 40% or more.

Bull market? Really?

The PPT algos came close to an OVERSOLD signal yesterday–but no dice. One thing I’ve witnessed with the algos, since they adjust on their own with time (I designed them that way) is a widening of the ranges. Meaning: the oversold signal used to get triggered at 2.45ish, almost like clockwork. For those of you who are unfamiliar, The PPT grades stocks on a 1-5 scale, with 5 being strongest. In the past, when the overall score hit 2.45, it would trigger a systemwide OVERSOLD signal with amazing accuracy. Over the past three months, that range has been lowered to 2.38, and over the past twelve 2.43.

I think it’s pretty obvious that the market’s worse days are more extreme than its best, and I’m not talking about the Dow Jones.

Oil stocks like WRES, EOX and SN embody the entrepreneurial spirit of the industry, whose share prices, up until recently, have done very well. One hundred dollar crude spelled success and growth, $65 crude not-so-much.

SN has gone from $38 to $10, WRES $6.5 to $1.90 and EOX $8.5 to $1.50.

Now here is the interesting question, one that I answered back in 2010 when I bought a few million shares of FTK at $1, sold around $4ish, only to see it go to $30: will oil stabilize around these levels and will those three companies that I mentioned above get their financing in line long enough to weather this storm? Moreover, will the price of crude trade back to $100 next year, resulting in 300-500% one year returns for those stocks?

These questions will keep me up at night, God damn it.

The indices are up and mega cap stocks have glided throughout 2014, unscathed, basking at new highs. But back in April over 100 tech/biotech names crashed to the tune of 50-70%, as the ‘bubble basket’ capitulated. After that, the market drifted higher and many of those tech stocks recovered some of their losses. During the summer, oil started to weaken and it never looked back, as well as all commodities, soft and hard.

Looking at the net result, from then to now, is nothing short of catastrophe. Oil, gas, gold, silver, even ag, have all been summarily tossed into the great incinerator and smoked out for the rest of the world to choke on.

Let’s not kid each other any longer, friendo: this is a severe bear market, wrapped inside of a bull. The headlines speak of new highs and elaborate pornography. The internals are just fucked.

I’d like to wish you well, tell you that everything will be fine; but I’d be lying. What happened to tech during April is now happening to oil. The difference between the two is one is meaningless horseshit and the other is saddled with hundreds of billions in debt and is an integral part of global growth.

Over the past six months, the following prominent oil stocks are down more than FIFTY FUCKING PERCENT.

NADL -81%

CRR -73%

SN -69%

SGY -65%

OAS -65%

HK -65%

LPI -65%

PWE -62%

SDRL -61%

CVEO -60%

SD -60%

TLM -55%

PDCE -54%

CWEI -54%

CJES -52%

CIE -52%

DNR -52%

BCEI -51%

RIG -51%

TTI -51%

WTI 50%

Pray tell me, who needs a bear market with a bull market like this?

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Yet here I am gawking at oil related stocks trade down. Truth be told, only one of my 5 oil stocks is lower, which SLCA. However, BALT should not have a 2 handle. It deserves better than this.  Aside from my own positions, there is a slew of names down over 30% over the past week. Here are some names.

EXXI -52%

GDP -51%

MILL -47%

NADL -45%

FST -43%

SSE -41%

SFY -41%

EOX -41%

SN -39%

OAS -37%

I can go on. This is as bad as you will ever see it. The pin action in the oils, over the past week, rivals the worst days of 2000 and 2008. Naturally, the world was ending back then and other stocks fell too. But to endure 30% drawdowns in dozens of quality energy names is, frankly, unbelievable.

Leverage is a powerful drug. Some people smoke too much.

Something has to give. I cannot keep on living this way, meandering through dark alleyways, hoping to reach my destination intact. I’ve made a decision. Effective immediately, I am ceasing my bulking diet and will cut, mind you, to the tune of 5 pounds. Originally, I intended to gain 15 lbs of pure mass, in the hopes of being able to one day rip someone’s head clean off his shoulders. But I now see the error in my ways.

This new Fly that you see in front of you will be kinder, gentler, and will not rip your heads clean off from your shoulders.

For the love of tall ladders and hard to install Xmas lights, someone must make sacrifices, in order to get this market going. I’ve decided that it will be me.

This new diet that I will embark on will consist of light fare, salads, fruits and bird seeds. I will resume my activities in the gym, sans the creatine, and model my life after a Mongolian Monk.

These words have been written and read, therefore, it shall be so.

I tried to ignore the tape. I took up some conversation with the gents who are installing my lights (I’m not going up there), chin-wagging about this or that. And then I was panic stricken, as I peaked at my smartphone to bear witness to the biggest and greatest fuckery of 2014. There isn’t logic behind the move lower in SLCA or BALT. However, it is happening whether I like it or not.

The commodity space has been dispatched, sent sea-worthy, into an ocean filled with amphibious dinosaurs. I am in a small boat, in the middle of said ocean, trying to paddle my way back to shore.

I thought Santa Claus loved me and would bring me presents. There is nothing but coal under my tree (extra BTU).

I am a bastard fool, a jackass of the first order. What are these stocks in my portfolio?

How much am I down today?

Well, my top three holdings are GPRO, YELP and COH. You do the math, fucker. I am dying over here, getting my balls boxed in– sad, angry, and vengeful all at once.

I’d like to tell you “The Fly will have his revenge soon. He will kill many people and send them away in ‘fag-boxes.’ But the truth of the matter is, I’ve been doomed all along. My arrogance and hideous display of decadence, both on and off the site, have brought me chickens and they are here to roost.

The downfall of “The Fly” is at hand. Bear witness as this gigantic icon falls and crumbles into 1 million pieces, never to be made whole again.

I bring you many greetings from the land of milk and honey.  I am enjoying today’s market of misdirection, despite it coming at a tall order for yours truly. We all thought today was going to be a rout of sorts for the commodity sector when in fact it was the tech sector that was being prepped for the gallows.

Market breadth is an abysmal 28% and technicals have soured to the point of apathy. But let me remind you that this is a common occurrence. I am sure you can pull up several articles of mine over the years titled “CHRISTMAS IS CANCELED.” It’s always canceled, until it isn’t. Retail sales are never enough and the people who trade this tape are always dicks. These are all ingredients for a recipe that results in a very annoying soufflé.

I invite you to eat a baguette, drink a few glasses of your favorite Bordeaux, and play some scratch off lottery tickets.

As for me, I am busy putting up Xmas lights.

Oil is careening lower, down almost $2 to $64ish. Gold is down 2.3% and silver is off by an ass-raping 5%. Prepare to be debacled tomorrow, amidst a fantastic commodity driven liquidation. The vision of the great JP Morgan has come to fruition and silver is going to lead the way to hades.

S&P futures are off by 6.5, a very modest, almost laughable exhibition in trickery, one that you will wish you had starting with tomorrow’s opening tick.

Everything is going to be pillaged, men will be ruined, and Goldman Sachs will make several billion off their shorts.

Friday’s ridiculous liquidation in the commodity sector was merely an appetizer, an Hors d’oeuvres, compared to what’s coming tomorrow.

If, by chance, you own an oil stock, or god forbid a silver stock, pre-empt your wives now and file for divorce. If you file ahead of her, with cause, the judge might offer leniency in his alimony appropriations.

Some of you younger types, “the punks” as I like to call you, think this is some sort of joke. You believe yourselves to be invincible and will simply walk into tomorrow’s blood bath, fully protected by your egos and your cheap suits. Listen to me: fear the tape. Run from it now, while you have the chance. You can do anything with your lives: become a garbage man, a lawyer or even a pharmacist. Leave this wretched business of speculation to hardened, jaded types, persons such as myself.

The Bakken is finished and Russia is next.

The big hatted Texans and oil sheiks in the middle east are defecating all over themselves this weekend, as the bottom drops out of their stupid commodity. If we didn’t own any oil stocks, we’d all hate oil, no?

Personally,  and I can say this without reservation, I’d sacrifice 5% of my portfolio, in order to completely bankrupt those scoundrels,  bedeviled self-imposed gate keepers of capitalism. I understand that the drop in commodities goes against everything you hold dear. You felt rather emphatic about inflation and the subsequent destruction of the dollar. I told you from the get go, this was wrong and inflation is nonexistent. Just because the Fed is creating a trillion dollars inside of a walled fortress, that doesn’t mean the plebs on the outside get to benefit.

Dig it?

The more I think about the oil storm to come, the more I fear it. These companies are fucking levered to the hilt and represent a large contingent of our market, similar to the banks in ’08. I doubt there will be much systemic contagion, since bond holders will most likely be made whole and equity holders caught fondling themselves. Nonetheless, as the price of crude falls, there will be repercussions, bank on that.

The good news is oil and gas stocks have 100’s of billions in cash reserves. The bad news is they have 100’s of billions in debt, based upon metrics that depend on expensive crude. Expect credit downgrades and frenzied capital raises, if the price falls into the $50’s.

Once you dig through the rubble, you will find companies who saw this coming and prepared for it. For example, FANG went from 4% to 56% hedged through 2015, executing this last month. On the other hand, CLR removed all hedges and now are completely exposed to fuckery on a grande scale.

In other news, retail sales will do just fine; ignore the early headlines. People are shopping online, skirting the lines at the mall. Last I read, online sales were up 8% year over year.

Here’s a tune for all of you oil players out there.

Full disclosure: I went back to sleep after bearing witness to the raping of my oil stocks.

Talk about throwing the baby out with the bath water. Down a hard 10 in SLCA, fucking 20%, due to the collapse in oil? You know what, words cannot express the sheer fuckness of what just transpired, so I’ll just post a screen shot of what happened.

So this is the end of oil production in the United States, yes? All of you fuckheads should sell the remainder of your oil stocks and barrel into WFM, with reckless abandon.

I was also amused that my BALT got its brains shot out, which is odd since THEY DON’T HAVE ANYTHING TO DO WITH THE FUCKING OIL TRADE. Those lads deliver steel, grains and slaves, totally insulated from the soon-to-be bankrupt folks in the Bakken.

You shmucks thought you were energy independent, drilling away like fucking imbeciles, in the shale rocks, at a cost of $70 per barrel. Now you have those rocks in your head and the House of Saud pisses on your shaley graves.

In other news, GPRO was down a smidge. Overall, I lost 1.7% today and I don’t even have a lot of money in fucking oil stocks, mainly thanks to the pin action in SLCA, DVN, CHK, COP and BALT.

I am grateful to the Gods of capitalism (United States and Great Britain) for destroying OPEC during National Feast. May you and yours receive many King Dollars and Precious Pounds this holiday season.

Santa Claus, through Amazon, is now upon you.