GENTEEL RETURNS — HEDGED THE CLOSE

I am super fucking leveraged now at 152% due to outsized positions across the board. 10% weightings in almost all. But by the end of trade, I felt uneasy due to the fact I will be out tomorrow so I hedged like a motherfucker, taking down a 38% position in FAZ.

While this might seem EGREGIOUS to many of you, that is because it most certainly is. I have no basis for shorting banks in any large size, since the banks have done nothing wrong to me or my loved ones. But at the same time, I truly hate them and want them disappeared.

Truth is, nothing is risk if done in moderation. Whilst this size isn’t moderate at all (as a matter of fact it’s egregious), I am ok with holding it until the morning, whereby I’ll cast my die and accept what the market gives me on he opening tick.

I can’t say my closing position is a good one or bad. But what I do know is, whatever I have been doing is working, since my gains are now extended to +50% for the year and I haven’t had an appreciable drawdown in quite some time.

GOOD DAY.

In the face of all of this optimism, who the fuck am I do be downtrodden and glum. I am following the lead of Gap, resident permanent bull inside Stocklabs and going all in long. I will of course place a hedge down, as it permits me to have a restful night.

Also, I will be out most of the day tomorrow.

Also, I will be out much of this week, as I partake in home renovations a la Mrs Fly.

Presently higher by 82bps and pressing higher into the close.

Naturally we rallied hard off the lows, reversing losses and V shaping on both TGT and the NASDAQ. Whatever trickery is at play here, I chose long ago not to participate. I closed out all of my positions before 9:35, both hedges and longs up and now sit in cash higher by 77bps for the session.

If I had held longs, I might be up more, but there was no way of knowing markets would do this — and of course I am not chasing the rally predicated on idiotic notions.

There is a temptation to short here, but I will not do that either, since the market has V shaped up based on the second earnings warning from TGT inside of a month — the market can do anything at all.

The higher probability play is to wait for the market to settle in and then nibble and conclude the session towards the end of the day, fully hedged and prepared for tomorrow.

It doesn’t get much worse than this, TGT cutting estimates for the second time in a month — promising to take pricing actions to correct inventory situation. Look for some clearance sales soon.

Target Plans ‘Pricing Actions’ To Cut High Transportation Costs
– Actions Include Removing Excess Inventory, Cancelling Orders

Look for broad weakness in consumer related names today. Also, bitcoin and Ethereum dumped out last night, producing a wonderful selling environment for COIN and other crypto related stocks today. There is a chance for a fucking full meltdown today. However, and as always, expect chicanery. Although I’d place the chance at the NASDAQ going green today at zero, crazier things have happened. But we need some good news, something, anything.

Markets closed up but well off the highs. In case you’re wondering my approach to chop like this — don’t trade it. I clear out positions in the morning, nibble throughout the day, and then hedge by the close. My hope is for an arb, where my longs outpace my shorts or vice versa. It would be very rare for me to suffer substantial drawdowns trading like this — because I keep ample cash and mostly long commodities which are trending.

I finished the day DOWN 46bps due to the late day drop in VIX. I can accept small losses en route to largess. I am dealing with some personal issues which might be causing me to feel a certain way — but I cannot shake the sense of impending doom. I feel it all around me, an uneasiness that has accompanied me during some of my worst moments of my adult life.

That being said, I’m not a fucking psychic and I don’t believe my feeeeeelings have anything to do with future outcomes. But what I am aware of is the fact this feeeeeeling might injure my trading, causing me to be perhaps too bearish, if there is even such a thing.

It’s easy to get wrapped up in the moment and it’s infectious to feel you know more than others, will profit where everyone else will fall. The truth is, the bear market IS trending and this is the easiest path towards success.

Within the oil complex, it seems from a novices point of view (my own) — most pressure is being applied to the downstream area of the market aka the refiners. At times in the past when crack spreads blew out and attracted all of the hot money into the space, it crested and took late comers down with it as spreads narrowed. However, given the unique scenario in regards to the war and how the EPA is causing all sorts of havoc here under the banner of ESG — I think it’s worth noting when something like this is happening.

321 cracks are sustaining the $50+ levels, unheard of margins. The sort of margins we are seeing now would suggest $300 crude.

You can see below on the 10yr chart, this level far exceeds the time I was buying WNR and making phallic jokes about it.

The stocks in the space are NOT cheap on a historical basis, with VLO trading at 0.43x sales now. But the ratio has been above 0.4 since 2016 and will be much lower by next year, providing these margins continue and the world doesn’t collapse — seeing that sales are roughly growing at 100% per annum now.

Here are the top rated refiners inside Stocklabs.

I chanced upon this tweet from my good friends at Zerohedge and it immediately resonated with me and I’ll tell you why.

"the nightmare scenario we've all been hypothetically thinking about for years, if not decades, is here. Runaway German inflation at the same time as soaring Italian yields." – DB

— zerohedge (@zerohedge) June 6, 2022

Back in 2012 during the PIGS debt crisis, Germany begrudgingly bailed out Italy, Greece, Spain, Ireland, and Portugal. Basically all of those economies are terrible and the theory was at the time, the ECB would collapse. Luckily for the PIGS, Germany caved thanks to American influence and it never happened.

But if such a terrible thing happened now, and it’d be a damn shame if it did, there would be nothing Germany could do to stop it, since they’re racked with inflation. This could be a worst case scenario playing out for Europe.

So what’s the backdrop? Italy never bothered to extend the maturities on their sovereign debt.

Their debt to GDP, like all nations, is even higher than before.

And the market is beginning to smell danger, with Italian bond yields disconnecting from German Bunds. The spreads have doubled in recent months.

FX markets sense it too.

Stay tuned!

Pure stupidity underway and I’m fighting the sudden urge to short everything based upon what I believe is a fallacious reason for a rally.

First of all, natty is up 8 fucking percent and fast approaching $10. Secondly, gasoline prices have never been higher. Thirdly, solar stocks are up 6% because Jim Biden is gonna defeat Russia by lifting tariffs on solar panels. Fourthly, Chinese stocks are roaring higher because who knows? Do I even need to bother to view the news?

The Nasdaq is higher by 200 and I’m not in the mood to chase the moon based off a pipe dream. But I ought to be careful as to not letting my feeeeelings get in the way of sensible trading. After all, if the market believes we’re gonna beat Russia to death with solar panels, I ought to listen.

For now, I’ll stay in cash.

I’m back home after a quick trip to NJ for a wedding. I have been tracking the war closely the past few days as the tensions between NATO and Russia appear to be at a tipping point — with Putin explicitly stating he would “declare war” on the west should any of our long range missile hit inside Russia.

I’m done trying to convince others that war is bad and death is not a preferable option to life and love. It seems, and this goes without saying, I live in a country that is like a death cult — and not just the govt. Sure, the govt is executing these policies — but at least HALF the country supports everything they say and really really like war and US involvement in the killing of others.

Without US weapons in Ukraine — the war would’ve been over weeks ago.

I closed Friday up more than 2% and with a cash position near 80%. I have new house things to do Tuesday and I am certain Mrs. Fly will have me going to and fro after that — as we fetch items to make the new home “super awesome and amazing.” In short, summer trading is here for House Fly, but without Jr at the turret. Since I am a responsible adult and always help others who are in need, I will make sure to pay attention to everything closely in order to provide the people inside Stocklabs with the very best fish the ocean has to offer.

Futures opened up strong — but do not expect that to be the case by tomorrow morning.

I am quite literally the best trader you’ll ever meet.

HAGW — off to the shithole of NJ.