I’m upset with the market again. I can see it now: we are setting up for a huge August run, only to be let down by an equally huge September fuck you.
Look, I will tell you plainly. The crisis has ended. Despite how bad the [[MER]] and [[COF]] numbers were, people don’t care again. The egregious runs on banks has been temporarily delayed, thanks to government support.
The fact that [[C]], [[WFC]] and [[JPM]] posted better than expected numbers should give anyone reason to slow down his erroneous short selling actions against the banks. I’m not interested if they’re being 100% forthright. All I care about is market reaction.
However, the banks are way overbought, at these levels.
Unless something changes, I will cover my bank shorts into this swoon, then begin betting against other sectors of the economy that are weak, like internet advertising, ‘global growth plays’ and retail.
Stocks like [[TEX]], [[VMC]] and [[GVA]] are well deserving of multiple homo-hammers to the head. Also, retail stocks like [[NKE]], [[RL]] and [[ANF]] are incredibly weak and are not manipulated by the fucking government.
For hedging reasons, I am holding my [[RKH]] position. I will probably sell it into the next leg up, over $100.
Finally, the MER numbers were horrendous. I believe the stock should be trading less than $21 per share. However, thanks to the popularity of selling short banks stocks, I’m afraid MER and their cohorts may have found some sort of artificial floor. Selling the banks has become too emotional. Nonetheless, I’m still not 100% on this thesis; but at the present, I want to unwind my bank shorts and look for weakness elsewhere. And, of course, I want to buy more [[RIG]] here.
UPDATE: A true hero.
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Fly, I don’t think you need to wait until september for the huge fuck you. Once the opex hangover settles the banks will reverse course and resume their ride to zero.
fly let me give you another very shitty sector … gaming
churchill downs has everything going against ..
CHDN- top short pick
Thanks for your insight.
The Calvino got flat. Fuck you very much douchebags, I know you got more juice today.
.. No offense meant, Minute Maid.
excpet for a little canadian refining.
i suggest watching csiq stellar rise today, for a fall.
none taken Calvarino
not sure either about those bank shorts … all this killer bank rally did was scare people out of banks that will go to zero … nothing has changed except that we’re now set to head to new lows since everyone thinks another tradable bottom has been made & the banks have bottomed
I wouldn’t be surprised to see this entire rally wiped out in one or two days
but its tough to have conviction on that
All the cash to be made and lost for the pikers in Oil and Banks has been cooked. Those two sectors will suck up (Caesars’ Palace Style) every pc. of coin you have over the next few months long or short. Big Boys only. Trying to trade this market on your own is the equivalent of Fly trying to do roofing or plumbing. GLT
The Govt. is that kind of like those two little green slots in the Roulette Wheel.
Disclosure Long Ass-Hatteries in all emerging markets.
Off to the Ozarks
Fly,
I don’t think bank stocks will rip very high, because the combination of the loss of trust, and the enevitable warnings, near misses, or failures of various banks (or the anticipation of such events) will cause people to shy away from the sector. People feel lied to (WFC extending the window, writedown lies, the banks created this whole mes, etc), so I don’t see a monster rally happpening next week. This week is special, as greedy people wanted to cash in their chips & stupid people bought hope from them.
SKF is off today because of C, and “speculators” (those assholes), which is retarded. SKF does not reflect what I am seeing on my screen with the banks.
fm MV
The following is offered by someone I have tremendous respect for, someone who has run major trading operations on both sides of the Street. If there’s a smarter fellow in finance, I have yet to meet him. You may not agree with his view but as I’ve learned over the last twenty years, it should definitely be respected.
Two Plus Two Equals Four
Financial companies are desperate for capital but their stock prices are so low that any issuance would be dilution death for the companies. The government is desperately trying to keep the financial system together. Add that up and you get the possibility of a great manipulation.
How would the government engineer a rally in financial stocks so that these companies can sell stock to raise capital at a reasonable or at least palatable dilution level?
It might go something like this. Since financial stocks are in such trouble they have heavy short interest; this is natural and well known and can be used to their advantage. A clever “berry” might think to introduce confusing rules that raise the cost of borrowing short stock and temporarily confuse shorts into covering and not shorting more. And this is precisely what the SEC did.
It seems innocuous to most folks, but it put stock loan desks and dealers in complete disarray. New short sellers could find no stock to borrow and many existing short sellers were forced to cover as the technical rules forced allocation of loans at much higher costs.
For example, the rebate rate on Fannie Mae (FNM) the day before the SEC announcement was 1%; the day after it was -5%. Many who were short the stock were forced to cover, thus driving the stock price up.
But this alone would only drive stock prices up so much. The clever berry needs a catalyst, one that would force panic buying into now truncated supply.
It just so happened that the new SEC rules came conveniently the day before many of these financial companies were to report earnings. If just some how these earnings were really good the match would be lit on the kindling.
So far banks have miraculously come through on their end of things. Wells Fargo (WFC) and JPMorgan (JPM) reported better than expected beaten down earnings. Things must be getting better just as the companies need capital.
What a coincidence.
But if you look at how the banks “beat” their earnings the coincidence becomes clear. WFC took the unprecedented step of extending charge-off acknowledgment from 120 days to 160 days. This allowed the bank to move less capital to loan loss reserves and report better than expected horrible earnings. And JPM was even more aggressive. It actually lowered its loan loss reserves quarter to quarter.
The list of financial companies where shorting regulations are being enforced/enhanced is precisely the banks and dealers (and FNM/Freddie Mac (FRE)) that have access to the Fed’s balance sheet (dealers through the PDCF and FNM/FRE through the recently-allowed access to the discount window). So we can speculate on the nature of the ”coincidence”: Perhaps the Fed is getting worried about the value of all that collateral these dealers have posted to the Fed balance sheet and must boost the capital of these companies to protect that value.
And now on cue FRE, a $5 billion market capitalization company wants/needs to issue $10 billion in new stock? Doesn’t that sound a little crazy? Well get ready for others to do the same because the banking system needs capital desperately and the government is there to help.
But help at the expense of who?
i maintain that the rally is horse shit, but the fact that it’s clearly 90% traders means they’re probably going to run the XLF right up to the 50 or 65-day. there’s clearly no resistance from the market. XKF daily volume is equivalent to the entire float. SKF is about double the float daily.
bottom line..
these banks way over shot on the downside which they always do..
wether or not they have a viable business going forward is not relevant in the short term
MVIS taking a “homo boat-ride”
thanks for the post, juice. as i’ve always said, there are no coincidences on wall st.
I’m thinking there’s maybe one squeeze left in manipulated banks on that list of 19. They all need to raise capital. They hold up or go up into the weekend. I think we get some equity offerings Monday. The market won’t be able to absorb them & we wipe out this weeks gains.
Tough to put money behind that. But I will at the end of the day if they squeeze them some more.
Juice,
Does he/she have a blog ? I think he/she makes lot of sense
allcash .. don’t know . I pulled that off Minyanville
http://www.minyanville.com/news_views/
OP ex. = volatility. Markets down early, so bought QLD @ 71.66 for a daytrade.
Edit: Bought FTO @ 18.80.
No position today. will come back Monday for more
RCII- check it out, for the long side…Definitely a way to milk the poor consumer.
Nice call Woody.
The PPT has gone so far to declare peace with Iran to get oil down to save equities. Got to give them credit.
USO goes to 99
I got something else I would like to give them than credit. Sell lvs mgm and wynn
On CNBC just now that Addison Armstrong guy was chatting with some blonde chick and a loud bell trigger went off when USO broke 105.
LOL
The Big Snacker’s nose is in the right place w. regard to CHDN, just be careful on the whole “casino issue.”
The ineffably corrupt Gubner of KY will sell his grandchildren to get casino gamblin’ going in KY, as he sees how much dough is floating over the river to Indiana’s Harraboats, etc. And whilst the SoBaps have been barring the door on that prospect for many years now, the drive for cash may force it open yet again.
And that would cause a temporary, at least, upswing in CHDN.
Caveat on the caveat… some of that casino spec is already “baked in” to CHDN’s current price.
_
Juice says:
…. nothing has changed except that we’re now set to head to new lows since everyone thinks another tradable bottom has been made & the banks have bottomed.
I wouldn’t be surprised to see this entire rally wiped out in one or two days
but its tough to have conviction on that.
Reminds one a bit of the housing “bottom” some eighteen months back, no?
_
Thanks Cajun–
even better, I grabbed my balls this morning and bought the low after that morning freefall in the name.
COF numbers weren’t that bad.
You can’t short MER, GS, FNM or half those names anymore…
Plus hedgies leaving oil for fertile ground.
forget banks — won’t be a good play long or short.
Buy MRK, MR, small cap tech stuff.
OIH will be recovering in a few weeks. RIG is dead money for now. But a good call on the next wave. I think NE will outperform when the time is right though. May as well add NE
I’m petitioning the SEC to suspend short selling on banks. No new shorts!!
Fuck you, bank bears! Eat my inflated dollars!
This shorting shit has gone on way too fuckin’ long, in my esteemed opinion. I don’t understand it, even though I was CEO at Goldman Sachs. WTF?? CEO’s just spend their time wining and dining clients and smoking cigars while wearing expensive velour bathrobes. Hey, somebody has to do it.
Buy the banks!!..or we’ll freeze your fucking bank account and dump a truckload of mortgage applications on your front lawn….and we’ll kill you!!!!
This:
CEO’s just spend their time wining and dining clients and smoking cigars while wearing expensive velour bathrobes.
Is approaching “Fly level” funny.
____________
I’m wondering if “the Fly” has given birth to a nascent comedic writing style, much like when Sam Kinnison (sp?) came out with his “outrageous comic” act and everyone copied him (I recognize there are some who argue that even Kinnison was copying someone else)….
Took gain in QLD and stopped out in FTO, but still for a net gain.
Trading this market feels like walking through a bad neighborhood. I know the risks, and I know how to handle and protect myself, but I am still looking over my shoulder half expecting someone to club me over the head and take my wallet.
lvs sitting on top of a pump right now. sell
Fly,
Do you know why MVIS financing now? What gives? Any info.
Billy,
Maybe they are battoning down the hatches for a poor economy, while they incubate and improve the technology?
Denninger, allow me to correct. You start out with the wrong premise today. Bernanke is NOT a banker. He is a chamberpot boy chosen for his sycophantic subservience to real bankers. Cheney picked well. The chairrat pisses his leg when bankers with a thousand times his earnings power look at him disapprovingly. This is why he was chose.
If you were short you need to realize that you were betting against the casino. Wall Street, the SEC and the FED run the fucking casino.
Shorts were like gamblers at a BJ table at Wynn LV on a long winning streak. Hand after hand they kept winning. The bets got bigger as their confidence grew. Mr. Wynn didn’t like what he saw. So he changed the dealer and the deck of cards. The players noticed but didn’t care. They were drunk with an aura of invincibility. Then just like that the winning streak was over. They continued to bet big and continued to lose. And before long they had lost it all.
The SEC changed the rules of the game via the short sales edict. Throw in some behind the scene Wall Street and FED shenanigans and shorts have been blown out of the game.
Haven’t you seen the papers? They’re all saying things like “Dont Panic! It’s not as bad as a decade ago” This is all staged to create emotional pre emptive fear and worry sparked by the imagination of another great depression. The market will set up and rally for now, and then once people forget about it, and it’s in the back of their minds, the real rumors come out, the paper announces bank runs, and everyone is in full out panic. The market will crash, and great depression part 2!
Buy some fucking gold and shit.
Does JPM still own most of the news?