The S&P Parade Continues

German markets plunged 5%, alongside all other exchanges. We’re knifing lower so fast, so egregiously, people cannot fathom the losses just yet. Long volatility has been the trade of the year thus far (hmm, I wonder where I heard that before?). And, I’ve managed to dig myself a murderhole, filled with WNR, DECK, GSVC and EMN, then swim in it.

As S&P downgrades anything related to the U.S., I ponder to myself: how do we get rid of these people?

You don’t need me to tell you how oversold we are. It would be easy for me to step in here today and go long a bunch of shit, but that would be reactionary. You know how I’ve been spending my day? I haven’t looked at CNBC or stocks for more than 10 minutes. I am watching the old teevee, laughing it up, waiting it out. I am not leveraged, so I am able to ride it out. Typically, riding out stocks is reserved for idiots. However, I refuse to sell into capitulation. Blame it on a character trait defect.

This is a crash through panic. We’ve seen this before and the end result always is the same: we come back.

I want to go on the record to express my heartfelt wishes and prayers to magical, mystical beings to sap all of the coin from the the purses of my fellow bearshitters wrapped in burlap (DEVILDOG). They’ve certainly earned a place in my dark heart over the years, seeing them make one massively bad call after the next. All of the stuff that you read online, regarding doom and bloody gloom, is not original content. It’s simply the same story, regurgitated, topped with a new headline, and published anew. If my dog had a SEP IRA plan, I wouldn’t let the clam shuckers from Zeroedge, or any other perma bear sites, manage it for him.

NOTE: I do not have a dog.

Israeli and Saudi markets are down sharply. I don’t care about that. There are rumors floating that the ECB will begin massive buying of Spanish and Italian bonds. Should that come to fruition, this market is going to explode to the upside, skull-fucking every single short within a 50 mile radius of me, as well as worldwide,  then lighting their craniums on fire. On the contrary, if nothing is done, so are we.

I am not being melodramatic by stating the obvious, am I? Naturally, the S&P downgrade is irrelevant, as it will not affect our borrowing costs. The main issue is Europe. Having said that, we all know how cheap stocks are and how oversold the markets are at this point in time. But we’re not trading on the fundies here. Let’s wait and see what comes out of Europe. And, don’t forget, THE BEARDED CLAM wishes to have a word or two this Tuesday, at the infamous JACKSON HOLE. All sorts of fabulously gay shit might happen this week.

Making money is “awesome and amazing”, as Mrs. Fly likes to say. But it’s not the game plan now. Right now we stay alive, tuck a few guns in our side pockets, and prepare to shoot people in the face.

So let me get this straight, they made a FUCKINGTWOTRILLIONDOLLAR error in their calculations, yet said “fuck it, we’re going in anyway” with a credit downgrade of the United States? Their main reasoning is political instability? Well, fuck you very much S&P. Would you prefer we have a dictatorship or authoritarian regime like China or Venezuela?

While it’s true our Congressmen acted like fucking morons, they still got the job done by the deadline. This is the same company who rubber stamped all of the CDO’s AAA, leading up to and causing the credit crisis. An argument can be made that the ratings agencies were key actors in bringing down the U.S. economy. Don’t tell me they didn’t know what they were doing. Now, after they helped cause joblessness, fuckery and pain, they downgrade US.

Excuse me for sounding cynical, but they should be held accountable for their errors and for stripping us of our AAA rating.

While you might say “well, Fly, we’re spending too much and we borrow too much. We don’t deserve AAA.” We do, AND MORE.

Look you, we print our own money and owe nothing in other currencies. Theoretically, we could print a few trilly tomorrow, buy China’s treasury holdings from them, then tell them to fuck off. As long as we are the reserve currency of the world and have the ability to create more dollars, our credit rating cannot be negotiated. It is AAA, or whatever the fuck you want to label it. How about A1, like the steak sauce?

The ripple effects might spook people a little, as the cock-gobblers from S&P start downgrading U.S. munis and agencies who rely on the government.

All in all, in my opinion, it is a NON-EVENT.

The real story is still in Europe. Don’t let this downgrade shit distract you. The ECB needs to start monetizing their debt now, else world markets will continue to slide. Providing a deal is announced by Sunday, I expect a patriotic “fuck you S&P” rally on Monday.

It’s the American way.

The rally has been stymied and the volume is bone shattering. I am glad the week is over, as it marked nothing but brutality and carnage for me. If the ECB is going to start monetizing their debt, well, that’s bullish for gold. Silver is too fucking retarded.

The market crash we were all hoping to avoid may be off the table, if a deal is done. If not, we’re fucked.

The action in the Nasdaq is flat out dreadful, with horrifying declines in anything tech. At the moment, fundamentals do not matter. Best case scenario, ECB does a deal and QE3 is announced, leading to a “skull-fucking rally”, erasing the faces of the bears who pressed their luck. Worst case scenario, S&P downgrades America, ECB does nothing and Bernanke gives a speech about beards. Under that scenario, we drop 1,000 points next week.

I could not be more disappointed with my performance this week. I had the answers to the exam and forget to bring them when the test was given. I failed and feel terrible for those of you who bought stocks due to my commentary. My apologies.

Over the weekend, I am going for dinner and drinks and will be keeping a close eye on the news.

Top picks: EMN, WNR and DECK

I have no idea if this is “the” bottom, but it has all the hallmarks. Big volume, whoosh lower, even I got scared out of the market. Luckily, right after the Obama meeting, the market rallied for a good 10 minutes. I used that spike to sell. My losses were still horrendous, so I have nothing to brag about just yet. Shortly after, the ECB deal was announced. Now, I could be wrong, but this sounds like QE1 for Europe. In other words, there is a better than average chance we DO NOT collapse on Monday. That’s what we are all scared about, right?

Having said that, our economy is still rocky. Maybe we get a little QE3 next week?

Who knows?

I went from 20% cash to 70%, back down to 30%. I will stay at these levels for at least another day. How absurd!

My core positions are EMN, WNR and DECK. I still own CLF and GSVC, but feel strongly about the other three.

How am I holding up, you ponder?

BAD. I fucking gave back 16% over the past two weeks, most lost over the past two days. Luckily, I was at all-time highs right before this shit storm hit. Nevertheless, the carrousel must continue to turn and the game needs to be played.

Upside to relief rally is +500 points.

Downside to collapse is -5,000 points.

Trade accordingly.

I sold a plethora of stocks and will not look back. I’ve decided it’s too risky to wait and see if the Europeans can get their shit together over the weekend. Therefore, I went to a 70% cash position. The losses are in the millions, wiping out all of my gains year to date. But that’s okay.

With a clean slate and safe bank account, I intend to rally around three names: WNR, DECK and EMN. The story for WNR is alive and well and it makes no sense seeing the stock trade at such low valuations. I loved it at $19, I am fucking possessed with it at $14.

I am buying more and in size.

UPDATE: I bought size in EMN and WNR. Cash down to 40%.

UPDATE: I bought a shitload of DECK. Cash down to 30%.

I don’t like the tone, at all. I took the opportunity, post Obama speech to sell some stocks. I sold out of TEX, CVI, TDC, SWK and lightened up on a little CLF and FLS. I took my cash position from 20% to 55% with these sales. Actually, truth be told, by cash was higher than 20%, only because of the losses over the past two days.

I ate some peas

UPDATE: I sold out of FLS.

UPDATE: I am now 70% cash.

The market is moving so fast, I know you’re on edge. I know I am, having slept a whole hour last night. This market has everyone very nervous. But I am trying to avoid getting swept up in the emotion. The problem with that, will my complacency get me swept away?

Understand, the sentiment is so bearish right now, on a global scale, an notion of QE3 will send this market ripping higher. Again, the issues lie with the Europeans now and they seem unable or unwilling to deal with this crisis. My tell for today is EMN. Truth be told, most stocks are trading in tandem now, straight up or down. I don’t need to explain to you what is already known: uncertainty reigns supreme.

If you are short this market, I think you’re crazy. Going to cash is understandable, but being short here, with the rubberbands pulled back this far, is absolute madness and borderline irresponsible. You can argue with me, until you are blue in the face, about how the house of cards is going to fall and the current path is unsustainable, but it’s still a low probability trade. Taking into account the amount of full fledged market routs, compared to false panics, the edge lies with the bulls here.

On the other hand, buying ahead of the weekend is also dangerous. No one knows what the Europeans will do. Those fuckers are on vacation and seem to have no reservations about letting their countries fall into sinkholes.

Pardon the cliche, but cash is king. If I wasn’t so stubborn, I probably would have raised more this morning. At the present, my 20% reserves will collect dust.

With the 20% cash I have left, it is reserved for “buying the blood” only. Although I believe there are absurd values out there right now, like WLT, WNR, FLS, I need reserves for the “holy shit, dude, did you see that”? moment. Having 80% long is enough to participate in today’s reflex, better than expected, jobs report rally.

I am sure the numbers were fudged; but who gives a fuck? We need a little respite, in order to give the incompetents in Europe time to fix their mess over the weekend.

I do not believe we will sell off into strength today. However, I’ve seen crazier shit happen.

One thing is for certain: I am addicted to bailouts. Some of you fuckers were correct in chastising me yesterday for asking for government help. But I hope you understand I am not looking for private sector bailouts. I want those idiots to fix their own sovereign issues. In other words, I want government to bail out government, plus throw in a little QE3 on the side for us for the novelty.

Why do I want QE3?

Because it makes the market go up.

Are you surprised? Don’t be.

I’m not gonna judge this tape until 11am.

Hell, now that I had time to think about it, all sorts of horrific scenarios came to mind. I just haven’t had any blow ups like this in a long, long time. Check my archives. I covered my shorts when the market bottomed in 2009 and went long.

I had some real old fashioned blow ups in 1997, 1998, and 2000, the type of shit that makes you seek God for protection. I recall seeing accounts heavily margined going “negative equity” and oversized positions down 50% in a day. My CEO was running back and forth to the trading desk, clearing out margin calls at 10am. Did I ever tell you about the time I got RAMP’d?

Back in 2000, one of my biggest clients came to my office to visit. When I walked into my office, much to my surprise he was there, looking at stocks—all 6’7 of him. Unfortunately, his largest position with me, as well as many other clients, was RAMP, down 50% for the day— from $20 to $10— on an earnings miss. We discussed the catastrophe in great detail and agreed to cut our losses. RAMP came back, eventually, just prior to going bankrupt. But I needed to clear my books of it, mainly to regain a psychological edge.

The one thing that comforts me on days like today is knowing I will make it all back. I’ve done it so many times, it’s ridiculous. There’s a reason why they call me SAM (Space Alien Magician). Whatever the market has to offer tomorrow and Monday, fucking bring it. Do your worst and make it stick.

I live for days like this, back up against the wall, fighting for survival. Thank God, Santa Claus and the Tooth Fairy I was near all time highs, going into today’s trade. I had this trade nailed, then Congress distracted me with their idiotic debt ceiling manufactured crisis. And I got lured back into equities, YESTERDAY, by allocating 30% of my cash to my current positions. There is no sense wallowing in my own feces over this shit. It happens and you fuckers need to man up.

I don’t want to read any pussy shit on this here blog. Keep that shit for other blogs.

With the 20% cash I have on the sidelines, I will perform great feats of magic.

At the end of the day, it’s only paper with hideous faces on it.