MAJOR SHORT SQUEEZE UNDERWAY

Markets were hammered lower at the close and I was confused as to which direction to run. I had entered the session net long, and then with the market hammering lower I quickly switched to short, then back to long — twisting myself in the wind — sinking to a low of -1.3%. I then managed to convince myself to bulk up on GUSH whilst selling out of my long equities in order to remain focused on ETFs.

As markets refused to go lower and my TZA position, which had been up nearly 2% from my basis sunk lower into loss, I had a choice of whether to add to it in 2.5% increments or say fuck it and sell it out. Judging the news and the refusal of the market to drop — I sold it.

I then managed my way into various ETF, adding to them as the market turned up and crested and sold it all +175bps for the session, in a chaotic morning whir where my PNL was jumping 20bps every 10 seconds.

I’m still bearish as fuck and may revisit the short side before the close.

Stay tuned.

Jim Biden and his crackhead son are both pieces of shit. But I only say that to make myself feeeeel better, placing blame on the senile old man and his crackhead son for America’s problems. Truth is, this shit has nothing to do with any of them. Jim is as much in charge as I am and his son is most likely living out his life to the very best of his abilities — cheers to him for that achievement.

The inflation data came in HOT AS FUCK and markets COLLAPSED on open. I was leaning a bit long so I took a few stiff jabs to the jaw. I closed out my shorts and got a little ahead of myself chasing this morning rally — OFF THE LOWS — and now find myself with losses of 70bps.

The morning rallies are an annoyance, because they place into question everything seemingly real about the tape — forcing shorts to cover, longs to chase, only to later succumb to horrendous sell offs and crashings of the close.

Stocklabs is not oversold and this bear market isn’t ending today in the face of abysmal CPI data and rapidly deteriorating war status and all of the other things we hate about an economy on edge.

You’re not safe out there and no one is coming to save you.

We will soon be entreated to a most egregious series of earnings reports from our most esteemed banking institutions. While I do think horrible things are in store for the banks, I lack the courage to short into such events, as I would prefer to short into the hole upon learning about confirmation of their demise.

We have horrible horribles in front and behind us and Biden eating an iced cream cone on one side and Kamala fumbling through the English language on the other. I have said it once and I will say it now: Pax Americana has ended. The era of American dominance around the world is ending, but it won’t end with a whimper — but instead a gigantic war.

Most of you reading this, including myself, are likely to perish from the heat of the coming fires. Sadly, change cannot come from peace or elections, especially when rigged. Change comes via violence and to the victor goes the history books and the new truth and it will be absolute.

Perhaps we have it in us to send a battalion of transvestite marines to help the Ukrainian grifters extend their impoverished society into parts of Russia proper. But I doubt it.

Meanwhile, winter looms and all of Europe is slated to be fucked amidst the tomfoolery of ESG initiatives and lack of natural resources. I am sure it’ll be all right, for us, to some degree. Who knows — really?

YTD, I am still not fooled. I have traded sideways since June, but still not fooled.

The mean reversion algorithms inside Stocklabs are NOT oversold yet. The last set of OS signals eventually led to a fierce rally in stocks, one that I missed by a single day.

We hit OS yesterday on an intra-day basis and then bounced hard off it. But that doesn’t count in our stats.

What we have here is a lethargic, fat, and also slow tape — which in a way is a respite away from the chaotic mashing of heads up and down in the never-ending fuckery that is trading in a bear market.

I am positioned with a slight bullish bias, small positions favoring commodities and a volatility hedge — which I might increase depending on the tone and tenor of the tape. I have eschewed, mostly, individual stocks in favor of ETFs recently, because of the style of this tape, unless of course want to be long something specific like coal or eggs.

I’m +31bps and 72% cash, with a DMV appointment looming at 2:30pm. I will likely be out for the balance of the day, but will have access via mobile phone.

I sold out of all except my 2.5% weighted short against the euro. Given my recent lack of volatility, I’m having a terrific morning +27bps. I checked into the morning heavily short banks with FAZ weighted at 22%. Futures had been up more than 100 but soon collapsed after the hot PPI numbers.

Markets always try to bottom in mornings so I have no interest in remaining in this tape and rather do anything else but scalp the moves. I have a few things to do today, so I’ll be busy.

The problem with chasing morning bounces is the market is sick and needs to capitulate. It can happen at any time and I don’t want to be caught long when it happens.

In an unbelievable move, the Bank of England, at around 2:30pm just after David Einhorn got finished saying “the government doesn’t know what a recession is no more than they do what a woman is” — said to pension funds they’ve got, all of you’ve got, just three days to sell. After 3 days, the BOE intervention ends and so goes your fucking window of opportune, as it stands, right out the fucking door.

At the time I was betwixt between long and short, slowly adding to a TQQQ position. Then the bottom dropped out in true rapish fashion.

Seeing CS down 6% and the specter of a sovereign credit crisis, I took an enormous FAZ position, and with well times average downs — I got out of TQQQ with a 1% loss.

I closed +13bps, with the FAZ position intact, in addition to UVIX, short bonds, short euros, long wheat, long GUSH as my long directional bet.

It seems like it might be over. But we’ll need confirmation of this suspicion in about 3 days from now.

Once again markets bounce after looking into the abyss. It’s common to expect a sharp uptick following an opening collapse. It would BEHOOVE you to maintain net short after a morning drop. In my experience, markets bottom in mornings and top out in afternoons.

What happens next?

I am 95% cash, 5% TQQQ for a trade, up just 18bps for the session. I have an aversion to markets and have been hesitant to risk much, because during the few times I have — I was entreated with knives to the face.

I do not think the selling is over, far from it. We are flat for October, even though it feels like we are down 10%. Until we see rates collapse and the Euro recapture $1.00, I’d be wary about tilting too far long.

For November, however, I am extremely bullish and think we can see a 5% rally, at which point you’d be wise to escape stocks into what I consider to be the worst tape since 2008 and is sure to bring both pain and suffering into the winter and beyond. We will likely bottom in 2023, although news on the ground can change that opinion.

In short, policy dictates price and right now the Fed is restrictive, so there isn’t much magic left in the tape. If the Fed pauses, we will see a magnificent rally for a day, maybe two. But the after that, all eyes will be fixed to CPI and GDP data and if they don’t align to the new reality of up stocks, disappoint will once again settle in.

Stagflation is a pain in the ass and this isn’t gonna be as easy as prior crises, where we’d just print money and reflate out.

We are at the point of the sell off where I get nervous, as we overextend into deeply oversold territory. Historically, miracles occur when we are oversold, whether it be a policy statement, a well timed news article, or even a CNBC rumor.

THEY do not want to destroy the real estate and tech markets. They are not happy with the recent series of events and will try to make things right.

The reason why the Fed is hiking so fast is because they’re in a rush and want to get back to hedonistic ballroom dances amidst clouds of cocaine and excess.

But we have a real problem and Russia is forever a thorn in their side. The only way to really stop Russia is to beat them militarily. Whilst I’m sure we can hold our own against them, at what cost? Two aircraft carriers, 500 jets, 30,000 dead soldiers? I’d venture the people wouldn’t tolerate it, as we are sick of their wars.

Ergo, here we are in a proxy war, waiting for something awesome and amazing to happen. But we have currency issues, and inflation doesn’t seem to want to go away.

Our best hope is for a Fed pause. But they need inflation to go away. A Fed pause would only make things worse and they know it.

So we wait and we suffer through an interminable market.

I’m 100% cash, up 8bps for the session.

Since the beginning the Russian-Ukrainian conflict, pro west sources were befuddled by the restraint exhibited by Russia. It wasn’t long before that restraint was then viewed as a lack of capability. People assumed since Russia had not decapitated Ukrainian leadership and infrastructure — they were unable to do it. Seven months into the conflict and for about 6 months pro western sources have claimed Russia was running out of ammo.

During the recent Ukrainian offensive, there wasn’t a single decisive battle, meaning Russia left land in exchange for time. Was it all a ruse to extend Ukrainian lines in order to attack from the north and sack Kiev? I don’t know. But what I do know is we are closer than ever to a global war.

Now some of you old fat pieces of shit might be elated by that because the scum in Hollywood has glorified war for decades and brainwashed you into believing war was something all true men must do. We had it all. We had peace and wealth and it has all gone to shit since 9/11 and no one is asking why this has happened to a once great country. We are now the #1 exporters of degeneracy, and war, and destabilization.

Stock are in trouble as long as the world is in trouble.

I was down 2bps for the session and ended the day with this.

We are seeing a profound escalation in the war today, with Russian assets targeting Ukrainian infrastructure, something, if you recall, is part and parcel of the first days of any U.S. prosecuted war. When we do it, it was shock and awe. When Russia does it, it’s war crimes. Everyone sees through the double standard and only the truly idiotic people believe the bullshit.

Here is the unvarnished truth.

The people don’t deserve this shit. The people of Iraq, Libya, Afghanistan and now Ukraine did not deserve this shit. In the case of US wars against “enemies”, there wasn’t much those nations could’ve done to stop our bombing, save become a vassal of America. In the case of Zelensky, all he had to do was expel NATO (an absurd idea in the first place) and strike a conciliatory tone with Russia — but he chose to antagonize and make Russia his enemy and here we are — with the people suffering the consequences of his actions.

As for markets — we are running higher now and I have a blend of long and shorts, down 20bps for the session. I am bearish but understand markets get stretched and bounce hard after the sellers exhaust themselves. Even during the very worst of markets, rallies happen so bear that in mind. I will likely maintain a long/short hedge in an effort to prevent drawdowns of any significant degree.

Speculation is Russia is massing forces in Belarus and might invade again from the north, so be prepared for further escalation.