APRIL 2023 RECAP: -6.3%

It wasn’t my month or my tape. If you’re an avid reader of me you’ll know that I go through periods of drought — not really knowing how to trade — as if I forgot how to do it altogether. Eventually I bust loose and break necks to the upside. This much is all but guaranteed. If you like to buy stocks on a dip and view me as a stock, now is a good time to buy me.

I am fixed on improving my quantitative method — but that wasn’t the reason for my underperformance.

First some stats.

Month to date losses for some of the hottest themes were rancid.

Week to date, red across the board.

Month to date, tech led lower by more than 6%, in line with my losses.

The SPY ended UP 1.37% for April — fulfilling the prophecy of a strong market for the month.

May is supposed to be almost as good.

My monthly quant shed 0.26%, which isn’t bad at all. If that is the baseline from which I am to work with, I should’ve made money via trading. But I traded poorly and took large losses in many of my hedges — as markets whipsawed from green to red back to green for most of the month.

YTD: My trading is +31%, Quant +3%

What will I change?

I upped the minimum market cap threshold for the quant to $1b and I’m also, for the first time, going to deploy a hybrid model of growth and low beta. For the month of April risk averse stocks traded up 3.6% — with 10% gains in stocks like CHD, KMB and MDLZ. I missed out on all of those because the quant only looks for growth. But starting May, I am going to choose from my growth pool down to a 3.00 tech score (1-5 range with 5 being tops), and then select from a low beta, good fundy dividend payer aka olde man stock screen of stocks near 52 week highs, and if needed the same screen but without the 52 week high filter. Ideally, the net result would permit the quant to rotate out of growth to secular and back to growth, based on technicals. This has been my dilemma with this system for quite some time and I am not certain this is the answer — but I will try it.

On May 10th, I depart for Europe for two weeks, so trading and blogging will be sparse. I intend to trade from my phone and really annoy Mrs. Fly nevertheless — because I’m addicted.

My trading sucked because markets fooled me for April. The underperformance of growth coupled with outperformance of the SPY and big divvy grandpa fuckers really caught me off guard and the lack of collapse kept me hedging and waiting for resolution. If I could do it over again, I’d likely cut my losses quicker and avoid getting sucked into very large hedges in a market that resisted going down for more than a few days.

Lastly, the Stocklabs mean reversion algorithm nailed another oversold. It should be noted, so I have done so.

I’m pretty sure we’re all organic AI BOTs, here on this flattened planet to create for whatever reason. If AI was sentient, it wouldn’t matter if it had a cool backstory like us, or simply created by programmers. If you think about it, the human body is by far the most advanced form of robotics, able to multiply and make all sorts of interesting stuff. We went from horse and buggy yo to space rockets in a hundred years and now we recreated the AI to make us even better.

Think about it.

I’m not participating in today’s tape, basically flat for the session. I’ve had a look around and can’t find anything that I liked, so I added to my SOXS hedge.

On the whole, breadth is good, rally is broad — but I can’t get over the fact that Chinese stocks like TOP and MEGL are up 800%.

Maybe later I’ll find something I like, maybe not.

On the issue of the quant hybrid model, I’m stuck on whether the low beta stocks should be near 52 week highs or not. If I only choose from the 52 week high list, I severely limit the pool of stocks available to me and if markets ever got really bad — I’d have nothing to buy.

I was spared the gallows today and netted +0.86% in what I can only describe as a reprieve — since my market hand is cold and my timing off by a few minutes. After the close AMZN posted better than expected results — but NET, SNAP, AYX, PINS, COF, ZS have collapsed.

Let me be on the record to clearly state that the numbers after the market close today are extraordinarily BEARISH. If you take out the anti-trust offender Amazon, the picture is very clear: the economy sucks.

Is it wise to infer the economic forecast by the earnings of our beloved faggot monopolies? I think not, and also beg to differ.

I kept a 15% SOXS position and loaded up on olde man stocks. If you are a long term investor and seek guidance — look towards big cap stocks with a beta less than 1, paying more than 3% dividends.

Tomorrow is Friday and I am sure you think all is gay and merry. But I warn you here and now — a great collapse is coming and it looms. Be ready for it.

I’d like very much to make some money today. If I am being honest with you, I really feel like I deserve it. I’ve been though so much and have worked so hard. It would BEHOOVE the Lord to ignore my plight and punish me with yet another bad tape.

I’d like for the market to just continue up for the balance of the session without any scary jolts — just a relaxing time and place for me to gently trade, very softly, and finish the day with joy.

I am +65bps as I write this and still have a 10% SOXS hedge, even thought it’s down 3%. Why am I still holding it? FEAR.

I am 105% long and reticent to touch anything. I do not want to be bold or conservative or anything at all. I just want to coast for a day, and then maybe coast again tomorrow. I feel I deserve a break.

Here is the ultimate dilemma with my quant. Last year it made me money only because of the war and the early gains in oil and gas stocks. Had it been an ordinary recession, I’d be totally at the mercy of markets. My dilemma is: how do I automate a trigger to either hedge or establish risk averse positions?

I think I stumbled upon an easy solution. I have another screen that fishes out low beta, fundamentally strong stocks. This screen produces stocks like CHD, PEP and SBUX — more or less risk averse names with betas under 1. Since the final arbiter of my quant picks is our technical algo, I’ve decided to edit my quant strategy to include this low beta pool of stocks too. I will first choose the strongest stocks from the growth quant and then when I run out of stocks ranked above 3 tech score, move over to the low beta. This way, in an environment where all stocks tethered to the health of the economy are getting REKT, I will automate into the comforts and safety of low beta Grandpa stocks.

I’ll keep you apprised how this plays out.

Early going BIG ZUCK over at META is saving the day. However important you might think that is, have a look at the fucking semis steered lower by LSCC. We have a pastiche of cross currents, earnings pops and drops, that is making this tape EXCEEDINGLY arduous.

Even though I am slumping, I remain steadfast in my methods and will continue to use them without deviation until the Gods favour me again. As you know, it’s only a matter of time when I appear here in my odious visage to declare “LOOK WHO’S BACK AT RECOURD HIGHS.”

Earnings season can be a wonder or an absolute train-wreck. My trading account is 100% directed quantitatively — mixed with leveraged positions and hedges. For the week I have been de-balled in ENPH and CALM — with only a small favor done in DDOG. In all, I am being fleeced in a very automated way and I am not sure that I like it.

It wasn’t supposed to be like this. EVEN WITH ENPH IN HELL, I had been up 50bps today, more or less enjoying life. And then the last few hours rained down fury upon me — with the utter and sheer calamity unfolding in BTC, with the coin dropping THOUSANDS — and then worse, much much worse, was my sole hedge SOXS dropping with the market.

I shed another 1.36% today, now down 6.47% for April — still +31.25% for the year. To say that I am over is an understatement. The way I’ve let these losses creep up on me and control my thinking is disgusting. I was supposed to make money during April, and every other month of the year — but instead I get this.

I didn’t trade to lose and I certainly do not like losing via the quant. Part of me wants to punch the quant into its robot face and self direct. The issue I have with that — I am very bearish. But maybe that’s a good thing. Perhaps it’s time to take the fucking training wheels off and ride again.

As May approaches I will make a determination.

Oil and gas shattered. The Microsoft induced rally has turned to ash, with the NASDAQ at session lows — but still +80. The IWM is off by 0.7% and a wide doomed net has been cast over the markets. I will say this to you: I hope it happens and it ends and the collapse cleanses away all of the excesses we see in front of us.

I am trading reactionary, presently hedged via TZA. My gains have been canceled out and I am now -0.10% for the session. However difficult the market is now, I’d like to point out many larger dividend yielding stocks like SBUX, MCD and KMB are pinned to 52 week highs. I think it’s important to be on guard, but also do not fall for obvious tricks and maintain an allocation into what is working, as opposed to what isn’t.

This sounds simple enough — but most of you fucking retards load up on CVNA instead of CHD and then wonder where your money went.

Into the close, I am leveraging up into risk averse names — maintaining a hedge — but I’m open to taking profits to see if stocks can redeem themselves.

We flagged oversold for our 3 month algo yesterday and I had a massive TZA position into what I viewed were risk earnings out of MSFT. That risk appeared to be overstated and the stock is off to the races. I closed out TZA and now remain unhedged and that might be a mistake. However, given the success of the 3 mo oversold this year, I am willing to give the market a little time to continue higher — maybe an hour or two.

Each OS has led to a rally in 2023 and today should be no different, give we have solid results out of BIG TECH.

Keep your eyes on breadth, currently at 68%. Should that number sink into the 50s, we might get a downside reversal. However, if we remain above 65% and edge higher — I am thinking we get a ripper into the rest of the week.

I’d hate to stand before you and change my mind again. I was going to declare the market to be bearish — but refrained in the last minute before I started to blog because MSFT is up in the after-hours and that might shift things a bit.

You must admit, seeing the NASDAQ -200 feels good in spite of personal injury. Sure, in a perfect world I’d be up today and not in the quant generated picks — but instead perfectly wagoned to hitch the ride lower. But I haven’t and for those of you bitching and moaning about the quant picking BOWSERS — you need to shut the fuck up at once and stick to ze plan.

The muscle in the Russell had dissipated and the summer swoons fast approaches. We better pray to the Gods for profound earnings to extract us from this slump — for it is foreboding and evil. I do not like the measure of this tape and would prefer another one.

I closed -179bps for the session, all but powerful under the weight of a long only book of tech and oil — a recipe for catastrophe on this day.

Just yesterday I was fooled into believing Pax Americana was back, if only for 1 more day. I had plummed visions of fat people dancing in their trans-gendered costumes celebrating their stocked market gains via popping rainbow colored corks right into each others cocks. There would be fun an excess for all — drugs and free items from Target and CVS — and we’d all generally ENJOY ourselves at the expense of others.

But today’s tape has reminded me of the evils that lurk not too far under the surface. It is a sober reminder to never relax and never succumb to the alluring nature of free items from CVS.

I have been trading well today, but still find myself down 1.75% in a long only book. My hedges have been intermittent and I wished I had done them yesterday — but I didn’t.

Today we have KNIFE TO FACE action in FRC, PACW, TENB, CVNA, UPS, ZS, NTES, CRWD, ADM — the whole fucking kit and caboodle has gone wayward and overboard. We are in the midst of a rout and the Stocklabs mean reversion algorithms are not oversold.

Let me clarify, we are OS on the 3mos, but not on the 6 or 12 — and with breadth at 25% and 11% of large capped stocks rated strongly inside the platform — it would BEHOOVE me to not tell you we probably have lower prices to achieve.

How can I get away with saying that — when just yesterday I declared on this very blog I was bullish? Well, I just did. Who will stop me?

I just closed out my TZA hedge and will try to give the market a chance to rally from now until 3pm — but I am likely to heavily hedge into the close — given this catastrophe unfolding.