Sold SKUL

I closed out the SKUL trade down a fraction of a percent – a wash.

The squeeze I was looking for sort of happened, but I thought I could get more out of it than 10%. Now, I have nothing.

This morning’s rampant victory has been flagging in a way that almost disheartens me – but not quite. You see, we are not done going higher.

The jobs numbers were complete garbage. For those of you who were in The Fly’s comments the other day, it is exactly as I said it would be; they are heavily over applying seasonality adjustments that do not make sense in this environment. Thereby, we have a “miraculously” low number that’s mere extreme nature should mark it as inaccurate.

As Tyler over at the Zerohedge was more or less instantaneous at pointing out (the guy is fast), if you take out the statistical “horseplay”, jobless claims increased. And oh yeah, apparently one “large” state may have sort of forgotten to even respond to the BLS – which makes the entire sample useless. A “large” state like Texas or California can carry a quarter of the results by itself.

I’m sure this negligence in the face of routine tasks was purely random error not at all swayed by a presidential election being <1 month out…

But I don’t care that the number was garbage. Or that I’m ignoring a ton of negative news.

I’m ultra-long going into the end of 2012 based upon two hypotheses:

1) Turkey legs
2) Ham

And now the IMF is pushing for an end to austerity. Let the money printing fest commence, and bring with it all the blessings of higher stock prices – until demand collapses.

Go ahead and argue with it. I’m not getting bearish again until mid-2013. Things may be destined to fall apart but they can hold together for long enough.

In respite of my preoccupied condition, I took a moment from my day to watch as the market skipped off the lows with such violent force as to crush short seller’s dreams. It appears that I had a bad feed. It was showing the market at half its losses and I thought it was happening right now. Oops

In many ways, my current affairs are a blessing – they keep me from obsessing over the gyrations of a market digesting huge gains, and force me to take stock of the world only at night, when I cannot act exuberantly and must carefully plan out the next day’s actions in advance.

It gives me time to look over the data and keep things in perspective.

I do not much like the way this market has been behaving, but there are three things that hold me steady:
1) We aren’t really down much at all
2) Free money
3) Christmas

I’m regretful if you were hoping for the bearish Cain Hammond Thaler of last year. But I’m not getting suckered into that hole again.

Last week was a storm on my desk; a flurry of papers demanding my attention, with no lapses in between.

This week is off to a similar start. But, I cannot leave my post unmanned for so long. Ergo, I have stolen a few minutes today to communicate with each of you.

The market is “correcting”, if that’s what you can call this. Weakness after the QE3-leak ramp is hardly something to fear. The Fed is sending another $600 billion directly into the market’s arm – they have simply gotten clever about how they phrase it. Chill.

BAS has had a rough few weeks. After two failed breakouts, it collapsed below my initiation. Yet, the company is still a buy, I feel. The cause of weakness is well known and anything less than the worst outcome will result in extreme “cheapness” being apparent; leading to gains.

This winter will be rough on natural gas – thus BAS may continue to falter. But BAS is a servicer, not a well owner. They have great cash and are best positioned to benefit from a continued natural gas expansion. This is a long term trend and it will continue to reveal itself, in time.

Multifamily and nuclear energy are getting hit by smear pieces, from all angles.

Multifamily is being accused of “weakness” as renting demand “diminishes.” Mind you, that this rental weakness seems to have left occupancies totally unharmed, at 95%+. But we shall see at the next string of earnings reports.

A stream of slanderous articles proclaiming nuclear “too hyped” have come out in the usual venues, and just before one of the major supplies of second source uranium is being set to be taken off the market, no less. Hmmm…

I can appreciate the point of the articles, which is to say “hey, reactor recovery from the ‘Fukushima jitters’ will not be V-shaped”. Fine; but it’s not like nuclear stocks have been just gallivanting higher. The equities themselves have been abhorrent – and now is the time to buy. You cannot look at the price of uranium by itself; the market is too thinly traded. You have to look at Cameco, cornering the fucking market, expanding their production by leaps and bounds, to see the whole picture.

Alright, I am needed. Have a good day.

I will continue to hold long SKUL going into their November 1 earnings announcement, but not through.

I have conducted only narrow due diligence on the name, which amounts to going “yep, they have enough cash to not go bankrupt anytime this year.”

I have no interest in owning a headphones maker.

This stock is purely for the squeeze. And that squeeze is going to intensify going into earnings, as nervous shorts realize that at current trading volumes, it could take the better part of one month to unwind the stocks entire short position.

The shorts are the ones who must respect earnings. Not I.

As for the earnings themselves; I’m not interested in them.

And BAS is down another 5% today, perhaps as a product of follow through weakness in the sector, an announcement that they intend to raise $250 million, or it’s just leading the charge after Ben Bernanke’s…um…what the hell was the point of that speech anyway?

I don’t know; you pick the reason. None of them really makes sense.

After Key Energy’s disappointing guidance, the investing world is scared – scared, mind you – of any (already highly likely and anticipated) forward guidance that is anything less than what was expected at the beginning of 2012.

Of course, the entire energy sector sold off hard between then and now, rendering all the fracking companies dirt cheap. And secretly, we all know that natural gas / oil extraction in this country is going to continue to expand voraciously. And especially so just as soon as we get some more base demand online and some natural gas price stability. Which looking at coal miners crumpling, will be coming shortly.

Hell, we don’t even need demand for natural gas – just somewhere to put the God damned stuff would suffice…

But that’s all unimportant now. If BAS should print numbers that show a lower growth rate, even though we all know it’s probably just a lull, the market is preparing to give the stock a PE ratio that reflects the disappointment in its entirety.

This is a grave mispricing, in my mind. But hey, I’m happy to embrace and buy the plunge. Both Obama and Romney appear to be very accommodating to the drilling taking place in this country. And to me, energy services companies are still the best way to try and play a bottom in natural gas prices without actually getting beneath that falling piano.

Meanwhile, BAS persists in being one of the only energy services companies that actually has any cash on hand. They’re about to have $250 million more. If we get the slowdown everyone is bracing for, I can tell you without hesitation it will kill dozens of the weaker players. They have no cash on hand; no buffer to absorb shock.

With BAS, I’m looking ahead, to a time when natural gas production is expanding again, even slower than it was this past year; to when natural gas demand has grown on the backs of cheap volumes; and to where BAS is one of the only remaining players.