Look for a Bounce (UPDATED)

Stocks looks pretty good today, even though my longs look wrong. DQ posted some fucked up results, which is hitting shares of WFR—for some oddball reason.  Most sectors are green and the market looks like it wants to make a small run. I am running some screens and will be adding to some longs shortly.

I sold out of my SCO position, not because I think oil is awesome, but because I believe it will be supported at these levels. It never hurts to book a profit.

Tech stocks is where it’s at, along with the metals (LDSH). If you are interested in a bounce, those are two sectors worth a look. As you know, “The Fly” is very busy these days, leaving little time to blog like the wind. However, do not fear, for his schedule has been “corrected” and his blog will not be abandoned again.

UPDATED: I changed my mind and will not be adding to longs.

Updated to reflect today’s disaster.

What makes this sell off unique compared to others, over the past 3 months?

Well, for one, this decline is coinciding with higher rates. Previous to this decline, all small dips were being ignored in the bond markets, as rates pressed lower. Today is especially unique, considering munis are getting hit, yet Treasuries are doing well. This is a classic flight to safety trade. California munis may be rebounding today. However, overall, the municipal bond market is lower to the tune of 1%. There is a pecking order here. First, weak countries, like PiiGS, get smashed. Then, the infection permeates the US, but on a local level first. The big warning sign of U.S. instability will be found first at the state level, then government. So, do not be surprised to see Treasuries trade up, as munis die.

What if this is simply a pit stop to higher prices?

Entirely possible.

I am not convinced, after one short trading week that the market is “on the other side of the mountain.” Nevertheless, I think you would be an ignorant jackass to ignore the quiet under currents of this tape, which may be speaking in volumes.

Over the past week, I’ve taken a lot of losses, in a number of stocks. The big picture is my main concern, not the cost basis of ABC vs. XYZ. I have no problem selling everything, in order to protect gains. That’s exactly what I am doing here. Ultimately, FTK trades higher, so I’m sticking with it. My biggest hedge is SCO, mainly because oil is fantastically overvalued.

NOTE: According to The PPT‘s real time breadth analyzer for industries, Movie Production and Home Improvement stores were the only sectors with 50% or more green.

As we approach 11,000, bulls are positioning to buy. The trade has been very easy: buy all dips, ’cause Ben and the Fed have your back. Well, that sort of thinking is dangerous and idiotic. Think about how complacent you’ve become, expecting free lunches and easy short cuts. You are America, land of the criminally insane, home of the Big Mac.

You can’t expect the market to go up all the time, simply because you believe the Fed wants prices to go up. I hear you jackasses on the radio and the teevee and you make me sick. Like that guy David Tepper, manager of $13 billion, yet so stupid he exclaimed on CNBC that “everything would go up” under QE2. Seriously, have you people forgotten free markets? Have you people lost your fucking minds, with all of this HFT/QE2/POMO bullshit?

This is the stock market, where opportunities are shattered and pikers are sent home with last night’s dinner  in a lunch box. We go down every so often, you know. The stock market is designed to crush people like you, novices who naively navigate without a clue.

What am I doing, you ask?

Well, for one, I am 55% cash. I sold out of BORN this morning too. In addition to that, I bought more SCO and that’s it.  I’m content losing less than others, instead of making a killing on the downside.

Look, my Risk Appetite Index is down another 1.6% today. This thing warned you the market was about to take a dump; but you chose to ignore the signs. The OVERALL PPT score of 3.32 two weeks warned you of an extreme OB condition, yet you ignored it. Now I am telling you, the Risk Appetite Index is wiping out months of bond market gains. Currently at 100, if it hits 97, that would represent the dissolution of 6 months of gains inside of one short week.

Yeah, but I guess NFLX is a neat buy down here, right?

You really need to pay attention to what the bond market is telling us right now. I am going to share with you a chart of my Risk Appetite Index, which is exclusive to The PPT. Essentially, it measures risk through price action of munis, sovereign and corporate debt. Basically, the fucking price action just wiped out 3 months of gains in one week. If you do not think that is cause for alarm, you have your head tightly stuck in your ass. Hence the term “asshat” applies to you.

I am not bullish on stocks here, with this type of “FUCK YOU BEN BERNANKE” pin action. The bubble in bonds is popping across the board, effectively pushing up borrowing costs for asshole municipalities. Also, let’s not forget, Treasuries are the preferred investment for life insurance companies, investment arms, pensions and pretty every fortune 500 company. Where do you think CSCO or MSFT puts their cash reserves? They don’t throw it in the fucking checking account or a lock box.

Look at PCK, down 4.6% today. This is following an 8% drop last week. Something stinks and it’s not the fish. Other muni funds getting lit up include: BBF, EIM and MLN. Keep your eyes on corporate debt, via LQD and JNK. Should yields start to rise there, then look out stock market. Remember, this whole run up is due to the concept of free money, hookers and drugs. Should that shit disappear, well then, there isn’t much to get excited about up at these lofty levels, is there?

Top picks: FTK, SCO

Did I leave anything out?

It appears the market wants to go higher. There is no point in fighting it. However, I am not in the mood to buy stocks right now, so I won’t. If you must be nosy, I am deciding whether to vacation in Portugal, Spain, Italy or Australia. These are very important topics that much be broached at THE HOUSE OF FLY. All things to do with opulence and grotesque decadence are of interest to me. Feel free to offer advice, although it is not readily needed or required.

At the present, I am still in the same old shit, so there is nothing else to chat about.

I just wanted to post that headline, in order to infuriate my ad vendor. He gets very upset when the site is littered with “foul language.” The good folks over at Coca Cola do not like to see “SHUT THE FUCK UP” on sites they advertise their “death beverage” on.

Having said that, I want to echo some of the things I penned in PPT today. Although I added to my FTK/WFR positions, I am very tentative about allocating my cash here. The way I see it, I’ve been blessed here, with recent gains that have wiped out losses from my worst trade in years (VXX). Now, if I was half way retarded, I’d take that for granted and press my luck with idiot Chinese stocks. But, I am smart enough to know when to fold my hand. At the present, the only lotto tickets on the books are BORN and CGA.

I will keep a very tight leash on my STI short, especially since financials looks strong today. Should it break $26, I am out.

Essentially, I am making truckloads of coin here, solely based on FTK. The position is a little overweight here, but I am comfortable with it.

Have you ever known something would happen, not based on inside info, but intuitively, and acted upon those instincts? Well, I do that all the time and I am good at it. FTK wants to trade above $3.03 for 20 days, in order to allow the company to force conversion on millions of warrants @ $1.21. When this happens, the company will receive millions of dollars, buttressing the balance sheet. Ultimately, this is a foregone conclusion. It doesn’t have to happen right away; but it will happen. Mark my words.

NOTE: Munis, especially Cali, are getting killed today. See PCK, MLN for details.

FTK bumping up on $3, bitches.

In this video, “The Fly” lights on competition on fire.

I added to my SCO position now.

As you were, small dick-burglars.

UPDATE: Based upon the laws of reverse gravity, I added to my WFR/FTK positions.