Basically Weak

Basic materials are getting hit again. I am leaning towards selling my RS, but want to give it a shot to get back on track. The whole point of keeping RS is to have exposure to basic materials. Although weak, the industry tends to go gangbusters when things in China are going well. However, as of late, the chinese stock market has been getting kicked in the noodles.

I suspect the market is going to trade lower, just a smidge, in order to lure a fresh batch of bears into the snare. Rest assured, similar to past traps, this decline will only result in more pain for the ursine types.

Near the top of my buy list is BID, ahead of the spring auction season. “The Fly” is all about high end luxury items, which is why he made money in TIF while many of you lost money in MCD. The point being, a great many of you eat, rather sloppily, at MCD or WEN, clad in CROX shoes and Lee jeans. Frankly, that’s disgusting, on many levels.

It’s too early to make any well informed predictions. But thus far, the market decline looks benign– perhaps a fine occasion to capitulate on shorts and get long before the tide rises again.

UPDATE: I sold out of RS.

No, I didn’t sell any YELP today; I bought more! The stock will likely trade lower tomorrow, following today’s nirvana. But it accomplished something significant today, aside from all-time high share price: visibility. I gather the lot of you are still using rotary phones and watching black and white televisions with antennas on top; but Yelp is changing the way people pick places to eat. It’s the Zagat killer, social media at its best.

Aside from YELP, BID, RS and JWN, my other positions traded lower, as the market weakened into the bell. That’s all right. We’re overdue a correction and the TVIX needs some love. I am glad to have sold EXK; but chagrined that I bought MAS near the highs of the day. It’s a half position, so I will have no reservations about averaging in lower–should the opportunity present itself.

CPST is such a piece of offal. But I am interested to see how the story plays out, which is why I haven’t sold any shares. If I sold today, my losses would be around 18% and could be easily absorbed and offset with the gains I am enjoying elsewhere. Nevertheless, stubbornly, I still hold.

For the day, I advanced by 1.7%, firmly putting myself at annual and all-time highs, indeud.

I am closing out Q1 up about 20%. I’ve told you, over and over, about my obsession with starting the year with gains. Well, I’ve worked about 2 months this quarter and find myself with more than 4x my 2011 returns.

After revving up the engines in late December, I decided to take profits in early February, chilled in cash; now I’m speeding again inside of my fucking space ship–abducting fuckers from 0hio and tossing them into outerspace.  I have a large amount of YELP ripping chest hairs to the upside. A more humble man than I would be taking profits here, preserving his coin for later use.

“NOW IS NOT THE TIME TO BE A PUSSY.”

I don’t give a shit that the stock is up 20% since my initial position. I bought more today and will sell it all when my favorite urinal shadow tells me to.

I bought some MAS today, due to my desire to have housing exposure. Those fuckers make kitchen cabinets, things of that nature. Since Mrs. Fly has a $100k kitchen renovation in mind, I see it as a good hedge against her superfluities. Also, I added to GLW. There is some shit brewing with GLW. You fuckers just don’t know it yet.

I sold out of EXK because I don’t like precious metals when the market is overheating.

Back in 1999, I was 23 making $250,000 per month, long internet stocks, first to show because my brain works better than others. Fast forward 13 years, I’m doing the same ol’ shit.

http://www.youtube.com/watch?v=9kpqCzTAF70

I added to YELP and GLW and started a new position in MAS. Get the fuck out of my way.

I hate buying stocks that have already made big moves to the upside. More often than not, however, the stocks near new highs continue to make new highs. Momentum begets momentum. Things happen for a reason. People are single at 40 for a reason, just like stocks underperform for a reason. Most of the time, they are shit. However, on occasion, a keen eye can find the proverbial “diamond in the rough” and buy the next one to go early.

I’ve compiled a list of stocks, with market caps above $5 billion, that are up less than 3% year to date.

Let’s review them, shall we?

EA is interesting down here. I know video game sales have been sluggish. But EA was supposed to be killing it on the mobile side too. That is definitely a stock worth monitoring. I don’t have much interest in any of those names, especially chinese burritos, coal, utilities and gold. Although I think gold goes higher, the fucking mining stocks have not correlated well with the market over the past 12 months. Yeah, I see a rail on there too, likely weak due to coal. MCD is at the bottom, busy poisoning kids with their fucking “Happy Meals.” No interest.

Next.

This list is littered with defensive names. None of these stocks are doing terrible, year to date, just lackluster. Most of them pay big dividends, so that makes up for some of the underperformance.  My favorites on that list are DPS, GOOG and SWN. I like beverages in a strong economy. There are strong correlations between beverage consumption and strong national GDP. GOOG is GOOG and SWN will rip tits if natural gas bottoms.

Last but not least.

MCHP, SNDK, TCK and JCP are interesting. SNDK is enjoying a tailwind due to weaker Yen. Plus, flash memory is booming. MCHP is your classic semiconductor company that tends to do well under the radar, when semis are strong. JCP is interesting with the Apple guy leading the company. And TCK will run if basic materials catch a bid. For the most part, basic materials have been laggards, mostly thanks to coal. Should coal bottom, particularly met coal prices, I like JOY and WLT.

Bottom line: In the big cap space, there aren’t a lot of names on sale. In order to get real bargains, I suspect there is a lot more to choose from in the smaller cap space.

UPDATE: I sold out of EXK

One of the edicts set forth by the powers that be at iBankCoin, during the exquisite development of the second iteration of The PPT (BEHOLD the excellency of my prose!) was to establish an evolved version of the Overall Hybrid Score, aka the mean reversion element of the algorithm that flags general market overbought and oversold conditions. Throughout the years, you’ve witnessed these signals with perfect clarity time the market with sublime mathematical precision. Upon the launch of part two of my grande experiment in mathematical precision, three new sets of general algorithms will be added, all to conform to time.

Understand something, price is not enough. In order to properly gauge the market, with all of its eccentricities, one must account for time–because things change, correlations dislocate and reattach, scattered over an undetermined period of time. So, we’ve created 3 month, 6 month and 12 month algorithms to go along with the current 36 month (anything longer than 36 months is mostly irrelevant).

During this period of unprecedented appreciation, The PPT has done well. As a matter of fact, our good friend Ragin’ Cajun published a study towards the end of 2011 highlighting the astounding advantages of trading in and out of leveraged ETF’s– using the overbought/oversold signals. The most difficult part of using mean reversion, in an irrational market, is there are few opportunities to profit from the downside. Moreover, over the past three months, there have been an unprecedented amount of overbought signals registered in The PPT, which only further demanded malleability in the way the algorithm was calculated. It is clear to me, a score of 3.10 no longer represents grave danger, as it once did, just 6 months ago. Nevertheless, over the last 36 months, had you adhered to the glory that is The PPT, you did exceptionally well.

HYBRID SCORE CORRELATING WITH THE S&P 500

Using the OS signals made you money 82% of the time, over 33 separate instances. The OB signals, prior to this recent bout of foam mouthed bullishness, presented a much greater level of accuracy. Nonetheless, at 64% accuracy, within 7 days of a signal, in such a trending market as this one, up over 100% in 3 years, I declare it is more than an edge, but an advantage.

I was up another 1.86% today, “Gretzky Housing” within 1% of all-time highs. Volatility is compressing for a reason: we’re heading for new all-time motherufucking highs. You bowling ball shiners can bet against me all you want. I told you before and I’ll tell you again: it’s a losing proposition.

“The Fly” weazens those who stand in his way. Aggressively with savage determination, he kicks people down manholes and runs over skeletons in his 80’s style stretch limo.

Into the bell, I puffed, puffed, puffed, long, steam rolling, egregious amounts of YELP, BID, TDC, EXK, GLW, JWN, and several others.

Trading 8x 2013 earnings, GLW is the proverbial value play that can offer outsized returns, if the stars align for them. The flat screen teevee market is a big driver for Corning Glass (GLW makes the glass for the mobile and television markets). However, the teevee market has been sluggish, due to a long standing oversupply condition in inventories. It’s what bankrupted Circuit City.

But, that shit can change overnight, literally.

Should Apple launch its Apple Teevee in the 4th quarter, I believe this will rejuvenate the teevee market in a number of ways. Not only will people offer to kill each other for a $5,000 Apple teevee, but competitors will copy cat the machine, leading to a boom in the industry—identical to what happened in the phone industry upon the launch of the iPhone. At the time, no one believed Apple would impact RIMM. People bought RIMM, thinking “Apple can’t touch the enterprise side of the business.” Well, Fast forward a few years and not only is Apple eating RIMM’s lunch, but so is Android–reducing the Canadian rotary phone maker to “worthless dicksuckers.”

Now the teevee manufacturing process is a lot different from the phone and it requires a lot more glass to fill a 64 inch screen than a 5 incher. At this stage, I am simply running on logic and gut instinct. But, I’ll get the data together to support my thesis within time. The only problem with buying GLW now is timing. We may be a bit early to the trade and they might miss earnings in the short term. However, in my opinion, any dips should be met with buys, up to $20.

Yes, this a a longer term hold, just like YELP, similar to my previous beliefs in WNR, FTK, GMCR etc.

I sold out of AKS and bought GLW.

I have zero tolerance for underperformers in a trending market. Plus, I still own RS.

It is unbelievable to me that BATS failed on the day of their IPO. That company is cursed. Nevertheless, I think it is a great company and will recover from this horseshit. A lot of people in the media shit on BATS because of their old buttfuck buddies on the NYSE. Well, sorry to say, but the floor guy is a fucking dinosaur. Companies like BATS will, eventually, take over trading volume. If there is one thing that is a guaranteed loser, it is to bet against innovation and technology. The dicksuckers at CNBC seem to excel as “suchness,” which is why people shit on them daily, amongst a wide array of others reasons.

Today’s standouts are tech stocks and speculative short squeezes, like ARNA and SIGA. For the most part, aside from some commodity related stocks, everything is up. But not all stocks and sectors are advancing equally. In order to ensure proper participation in this bull run, you must diversify. That means to scale out of heavily concentrated positions, in exchange for a pastiche.

A typical portfolio of the diversified nature will look like this:

Tech: 20%
Basic Materials: 10%
Financials: 15%
Consumer Discretionary: 10%
Consumer Staples: 10%
Industrials: 10%
Precious Metals: 10%
Healthcare: 10%
Utilities: 5%

The allocation model is entirely discretionary. However, one should not weigh more than 30% into one industry if the goal is to diversify. Unlike past markets where everything moved up in a convoy, I am beginning to notice that we are in a stock pickers market, one that rewards trends then flushes them and hops onto the next trend. I’m not just making observations in the average man, pedestrian, civilian manner. As a point in fact, “The Fly” is being alerted to the whims of the market with his new correlation tool, available only to me. The rest of you fuckers will get to use it once PPT 2.0 is released.

For those of you who are curious, here is a slightest of sneak peeks into the new look of PPT 2.0

Bottom Line: we’re in a fucking bull market. Sack the fuck up and capitulate on your wrong headed shorts. Once you are done being wrong, get right by allocating assets into a broad range of sectors and themes. The stated goal should not be to hit a homerun your first time up. Get your capital base up and then you can take a few wild swings.