18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
21,502 Blog Posts

First Week of the New Year Ends With Ruinous Losses

For the week, the NASDAQ closed down 4.5%, a ruinous start to 2022 and we’re just getting started.

The first act of trickery started with yields, the 10yr spiking like a motherfucker to over 1.75%, catching everyone off-guard. As the inflation story gripped and oils sashayed higher, all else crumbled at the feet of short selling demons — SAAS stocks in particular cascaded lower to levels not conceptualized even in the more grim circumstances. Bell-weather names like HUBS off by 23% for the week — taken to the train station with its passengers riding on the long black train to hell.

I have nothing positive to say, other than the fact that we are so dreary now and the losses so severe, very soon mean reversion will kick in and we can have a glorious rally, filled with fucking gay giraffes and blue elephants. But for now, biotech is trading like all humans are infected with a serum that will soon kill them, eliminating their cash-cow for good and relegating the to them graveyard of former well to do industries. We all need medicine, some more than others. Some of us prefer shots over healthy eating and exercise — big fucking fat piece of shits with no muscles injecting themselves with toxins for the purpose of extending their lives. I don’t see the point of wanting to live so god damned long. If you succumb to the germs of this planet and are expelled from it — it was your time to die. Your loved ones will bury you and think about you on your birthdays — and carry on with their lives as if you never existed at all. ‘Tis the drama and cruelty of life, so make it worthwhile and stop being such a fucking pussy.

You want coin — go make something people want and sell it.

I have no instincts in me to be empathetic for people who are unable to take care of themselves. No one is going to save you and no one cares about your family but you.

I closed the week off by 2.5% in spite of the market doing exactly what I said it would. I mismanaged and traded like a fucking moron and closed out with 42% cash, 10% TZA, 5% UVXY, with a long bias for software via WCLD at 15% alongside a few others stocks. As God is my witness, and you could hold me to this, I will figure out this cunt of a tape and the algorithms its running on and crush by the end of January.

data via Stocklabs

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Prepare For Another Leg Lower

I have done the research and I have the documents. The QQQ’s are down 4% for the week. Expect another 2-3% down and then a rally born in hell will rise up and smite short sellers. CRM is off more than 10% for January, an oddity of sorts. MAX DOWNSIDE for CRM, if I was betting, will be -15%. If we get there, which we should if the NASDAQ drops another 2-3%, go in.

I suppose we’re heading into a bear market and I suppose no one understood stagflation was the prime threat. But here we are with stocks telling us growth is slowing and at the same time rates are increasing. The misdirection is largely in oils and banks — oils strong due to inflation and banks up due to widening spreads thanks to higher rates.

Everything else went to shit.

With losses mounting in areas traditional to retail, one has to wonder what future a stock like HOOD has, given their customer base is now bankrupted

I am 100% cash, up 10bps for the session and I, once again, squandered an opportunity, as I entered the session net short. I covered my shorts and my longs because I just didn’t want to partake in the chicanery. However, we fast approach a mean reversion level in Stocklabs which will be a call to action for me. The next big move is NOT on the downside, but on the upside. Having said that, I would not be so confident at 11am and I would not trust being too long into Monday, since all of the finest market crashes have occurred on Mondays. Perhaps buy a little into the bell and nibble some more after the market opens down 25% on Monday.

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About noon I started to buy with vigor. Feeling good about the rally I accumulated the most trodden stocks and it wasn’t long before my heinous losses of 2% were all but erased. During this rise, I could not help to feel as if I escaped a great tragedy. I was recovering from a loss that was mostly self inflicted vis a vie a terrible trade in LABU. But I was recovering and in my mind there was an idea of a rally — a feverish short covering squeeze to punish the short sellers for being so god damned right.

This euphoric sense of being soon crashed up against the rocks of despair, as the lunchtime sojourn quickly became a late day rout — heading into the last day of the week — a Friday during the first week of a new year.

Almost feeling the urge to cry out of anger, I sold my positions, locking in a 1.5% loss — now down 2.45% for the week. I initiated positions for the overnight in UVXY, SQQQ, hedged with a long shot bet on cloud stocks rebounding via WCLD.

It is depressing. This isn’t what we wanted, but it’s what we got.

The odds of this week wrapping up nice is slim. The odds of a nightmarish styled rout is quickly becoming a possibility. My bias is to the downside and if the market rips higher, given my position, I will likely bleed out another 1%. I have been chopped and flipped and churned into butter. The market dips turn up violently and the rips fade and quickly collapse.

On a brighter note, heavily long banks and oils, my Quant closed +2% for the session, really not doing much of anything throughout the session, as the volatility I lament over is focused in both tech and healthcare.

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We have strong mean reversion action in battered parts of the market, focus on SAAS. I have no hedges but 35% cash left for further buys.

My losses crested at -205bps and now sit at around -130bps. I had pulled them under 100bps but we are selling off as I write this which makes me even more anxious.

The principle index inside Stocklabs is basically unchanged due to strength in oils, which I opened the day short. This really is a market filled with whip saws. Next thing you know you’re out the windshield onto the pavement. The enemy is of course hope and greed, a deadly combination.

My losses lessened to 1% again as I close this out.

Wish me luck!

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Trickery Afoot

We opened strong and then quickly collapsed into quick sand and now no one believes anything. I was tricked into covering my shorts, going long biotech, only to quickly lose 6.5% on the trade, fucking myself right back into shorts and down 1.7% for good measure.

How did I manage this?


Now I’m tentative because deep down I still have hope, clinging onto a triple sized position in WCLD thinking todays the day we bounce.

After all, what better way to celebrate Insurrection Day than to have a nice rally?

Nevertheless, I’m presently net short hating life.

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I gave up trying to believe and shorted into the fucking hole and recovered HALF my losses, closing down just 0.6%. I feel this is ok and I would feeeeel better if I was up. But look at my quant -4%, and the market in ashes, it’s good to know Le Fly is still immune to market pullbacks and no matter how deleterious a tape gets — I am almost always able to navigate it.

My trick is simply never believing what my thoughts are and instead staying disciplined with stops and following trends, rather than obstinate ideologies.

This is the first week of January, which means the tone is being set now. This immediately reminds me of the semis in 2005, down 6.8% for January — but it was much worse in the trenches. I was managing money back then and I recall, very vividly, wanting to cry all over my book. It also reminds me of Q1 2014 when SAAS got fucking wrecked. The common narrative with those corrections is the fact that they bounced for a single month and then was catacombed in a bear tape till summer.

Could we be entering a bear market?

Well, the fact the Fed is interested in hiking and tapering to fend off inflation, coupled with a weaker economic backdrop, one has to muse at the possibility we are entering a worst case scenario period of STAGFLATION, whereby your buying power deprecates while you lose your job.

We have always felt there was some grand plan of malfeasance taking place, ever since the Fed started to monetize everything, now up to a staggering balance sheet of $9 trillion. Aside from all that, which is of course terrible, we now stare down the barrel of a world wide totalitarian lockdown based upon healthcare under the false guise of expertise and noble stewardship. Nothing could be further than the truth and the COVID cases and deaths continue to spiral higher, almost as fast as government officials strip freedoms and force your children to vaccinate against a virus that cannot be vaccinated against. It all paints a very bleak and terrible picture. People on the other side of the spectrum might believe me to be spewing Chicken Little styled doom.

But am I?

I closed 50% cash, long XLP, DRIP, UVXY, TZA and WCLD.

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Aspiration is the enemy of man. It keeps us satiated to feed off of dreams and also from awakening to the harsh cold realities of the truth. When in a dream-like trance, I envision all sorts of trades going right for me — at the mast of a large ship firing grape into a town of devils. In this dream I alone return from the battle victorious, everyone else completely slewed.

In the real world, I keep thinking the market is going to go up and so the way my mind works, simple enough, I hold onto the dream, in this case it was LABU and CWEB and WCLD. See I sold all of my longs at the open bell like a good boy should. But then I also sold my hedge and then I was forced to reapply a hedge via DRIP and then forced to keep forcing myself to adhere to the markets and now I am down 1.05%.

See how that works?

The NASDAQ IS THROUGH THE FUCKING FLOOR BOARDS, led lower by SAAS, as silicon valleys favorites get gassed and exterminated. I want to believe there will be a turn higher — because it fits my world view.

But look at me now, -1.37% for the month, but angry and possibly irrational enough to turn it around.

(there I go again)

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In Order to Make Outsized Gains…You Need Large Balls

Let’s examine the move in energy names the past two days to start 2022, up 18.5% on GUSH. That’s wonderful but if you went in heavily long oil to start the new year — you were in fact a contrarian since it lost 20% the previous two months. On that same train of thought, the market appears to be churning through narratives in attempt to produce alpha.

The hardest hit areas of the market are in tech and healthcare, specifically software and biotech.

Perhaps an enterprising man would go balls deep into this narrative, hoping to see a mean reversion bounce like what just occurred in GUSH. Such a man is me, now long WCLD and LABU, but I do so skeptically. Naturally, it’s also normal to feel like you’re doing something wrong buying the blood. There is a vampirish quality to it and I have never remembered feeling good about it.

For the day, I closed at session highs +78bps, long but also hedged with a 10% weighting in TZA.

Never relax. Never trust the process. Fuck them.

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More of the Same 2022

Software stocks are in fact shot to pieces — off by 7% for the session. CRM is your tell. This is an especially grueling tape because micro capped biotechs are again running alongside oil and chemicals, making it increasingly alluring to those wanting to partake. The simple fact of the matter is, those industries can be rugged at any moment. Look at the divergence between small biotech and large, vis a vie $LABU — hammered to dust.

Along the chain of market cap performance, tera caps are doing best — off by 0.2%, which is great in comparison to the small caps -1.35%. Bear in mind, breadth is decent at 52% because of widespread gains in financials, oils, gold, and other commodities. If you’re buying today, you’re either interested in the tech dips or the aforementioned momentum.

Some of you have managed spectacular gains the past two days, while I sit here down 0.5% MTD. Admittedly, I am behaving like a sort of pussy, cowardly watching from the safety of cash. But am I supposed to chase drillers already up 7% for the session, or a micro capped biotech +25%? It seems to me the easy money has been made and I am more likely to screen myself a deeper hole than escape from the pangs of mediocrity.

I do have a plan and will execute it after 3pm.

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I moved to 100% cash, up 59bps for the session, in spite of what I see as great trading action in regional banks and commodity related stocks. From a trading point of view, biotech is behaving very well too. But what has me troubled is the complete destruction of software stocks for the second day in a row. This is going to be resolved soon and I fear by taking the market down with it.

The market cannot go up without tech, full stop.

I am tempted to trade the strong sectors, but they’re up so much it has a trappish feel to them. Or I’m reading the tea leaves wrong and we go straight up from here. Typically high valuation tech gets hit when growth is a concern. The fact that banks are up is due to widening spreads. Higher rates equals better book value. Biotech up is not to be taken too seriously.

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