iBankCoin
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
23,598 Blog Posts

The Mother of all Short Squeezes

We are living in historic times. I’ve been in the market for a long time. I can tell you, without pause, I have never seen a short squeeze like the one taking place in the banks right now.

Banks that were teetering on bankruptcy last week are now ripping higher, to mind numbing levels.

Listen to me, very closely: do not chase the banks here.

I was very tempted to go long [[STI]] and [[UMPQ]] for a trade too; but it’s too risky. Don’t kick yourself for missing an opportunity, others will come.

The first error was missing the rally. The fast track to the poorhouse is when you exacerbate the first error by chasing stocks, near the end of their run, effectively missing the bottom and marking the top.

Be patient and wait for your trade.

In other news, I am happy to be done with [[RIG]] and all of my fucking bank shorts. What a nightmare.

At the present, I have a clean head and will be allocating capital soon.

Despite the new bull market we are in, I still think the next best trade is to sell short. The exuberance is high and the supply of cocaine to money managers is prolific.

They look like shit, but, stepping into [[SRS]], [[FXP]] and [[SKF]] represent fairly low risk/high reward trades now, in my opinion. In addition, with commodity weakness, there is upside to both [[VSE]] and [[CLNE]].

In short, the big money in the banks has been made. Don’t be a fucking jackass and buy here, only to regret it two days from now. Look elsewhere for buying opportunities.

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32 comments

  1. Kiwin

    I think we’ll keep rallying/bouncing/squeezing/etc till oil turns around which I believe to be around $100/barrel.

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  2. p

    i need a new colon after holdin xlf’s short for 2 days

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  3. Juice

    the supply of cocaine to money managers is at an all-time high.

    LOL !

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  4. CubsRock

    “Be patient and wait for your trade.”

    Great post Fly.

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  5. Joe Trader

    You are soooooo right.

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  6. Donny

    Cheap(er) gas is NOT going to save the asshole consumer (nor the equity markets), who has lost his/her ability to spend with reckless abandonment. It’s over for Johnny Fuckface.

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  7. Juice

    Now that shorts have been run outta town with their Pakistani brothers & sisters, there’s gotta be an air pocket beneath egregious fucktarded insolvent financial stocks. I’m thinking short RKH near 110-111 resistance for a trade.

    Nevermind … can’t get a borrow on RKH.

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  8. Tung

    Talk about lucky I shorted 4000 SKF at 115.88 last month, it shot up to $200 and for the last five days went down to $113 I coved at $113 and got out At one point I was down over $250000. I putting my money to MUMINS Bond

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  9. Big Mike

    Question…

    You see all these banks, from large to small saying “we greatly reduced our risky assets/mortgage exposures/leverage loans, etc…”
    I dont know the exact figures but the overall sum of banks reduction of risky assets have to near 100ish billion and above. I think Citi itself sold some 40 bil in exposures.

    The question is…who the hell is buying all these risky assets?

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  10. Gemini

    From CNBC iBankCoin:

    The indexes are down from where I officially called a top, and now I am officially claiming victory and going off the air with the exception of a special tonight at 8 pm in place of Suze Orman: “Your Money, You’re Fucked.”

    Back to your regularly scheduled programming.

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  11. punyandy

    Tung

    No one cares about your paper trading account, you stupid fuck.

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  12. Prospectus

    Saw this picture of DT surfing:

    http://cache.boston.com/universal/site_graphics/blogs/bigpicture/swim_07_23/swim22.jpg

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  13. TraderCaddy

    Fly- You should have seen Tues. 10/20/87 at about 11:30 AM. It was a doozy of a rally. Too bad there was no internet for trading. I sat in the chairs with a bunch of old guys at Fidelity watching the ticker tape go by and it was about 20 minutes behind because of the speed of the rally. Now I am one of the old guys. Where the hell did the time go.

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  14. Juice

    Talk about a pot calling a kettle, black.

    http://www.youtube.com/watch?v=z_FDRjluLJQ

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  15. Gemini

    Bought GG @ 41.36 and hoping its not a headfake.

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  16. TraderCaddy

    NEM is the best acting gold stock of the day (but certainly sucks except for scalping purposes only). SLW doing okay too.

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  17. menoknow

    I jumped into SKF earlier today at $114.50. Bouncing nicely thus far with plenty of room to go.

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  18. Handles

    I think the FLY just capitulated…..I see a bear market and I see a bear mkt rally now…it will end by the middle of Aug and then we see new lows in all stock indexes…..JMO….thank you Fly for all of your hard work….I love this site….

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  19. The Fly

    Handles

    I capitulated yesterday.

    However, I have been buying inverse etf’s today. See most recent post.

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  20. buylo

    Tradercaddy: When i was a teenager working part-time downtown, I used to see you all at the Broker’s offices through the windows. I am wondering if those days were fun in the sense that you might have made some comrade at arms type of friendships, etc. Just wanted to ask you if that scene was swell and you looked forward to going down there, etc. Fidelity still has a downtown office with chairs and ticker, Bloomberg, CNBC, etc., but not many people hanging out watching the tape.

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  21. TraderCaddy

    Buylo- Actually those were good times. I made a bunch of friends with the old timers and it was like a social club. I remember one old guy I made friends with was on the original atomic bomb program near Univ. of Chicago and later was one of the originals at Los Alamos. Many of those oldsters were just bond coupon clippers but were smart and experienced. I learned how to “read the tape” from them. Nothing like the noise and sound of the tape running overhead.
    Now, because of the internet, many traders sit in front of a screen (I do it) and trade like it’s a video game.

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  22. sniper6

    No, no, no. No fucking capitulation. After taking it hard yesterday, and refusing to bail like a pussy, sniper6 has dropped the long range rifle and launched a full frontal assault, kicking the in batwing doors of The Wall Street Saloon, fucking sixguns blazing…face distorted with fury…doubled down HK long @ $32.50 POW!!…doubled down VLY short @ $20, POW!!!…blown out PCX from $110 to $120 in a few short hours POWPOWPOW!!!. Now thumbing fresh ammo into my Navy Colt .45’s, hunkered down in the broken glass behind the upright piano, waiting to pop up and release fresh devastation when the room is once again crowded with targets of opportunity, determined to wrestle victory from the jaws of defeat.

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  23. The Fly

    Pow Wow. Sniper has snapped.

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  24. sniper6

    yes.

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  25. Gemini

    Stopped out of GG. Looks like Bullshit Rally, Phase Two about to start. Yeesh.

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  26. sniper6

    and I hate fuckin ham sandwiches

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  27. Sierra Water

    Denninger is God. Repeat after me, “Denninger is God”.

    http://market-ticker.denninger.net. Pass it on bitches! It is the truth. Stop being a blinded sheep and pass this video on all over the internets. Do it! DOOO IT!!!

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  28. Sierra Water

    Fly post the Denninger video!! Since you castrated my mobile home park in South Texas today, it is the least you could do!!!

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  29. Juice

    fm MV –

    Mr Practical

    12:48:48 PM

    No positions in stocks mentioned.

    End of Free Markets?
    When government makes the judgment for the people to take their money and buy risky assets like stocks, it’s the end of free markets. Why is this important? It isn’t to socialists. Socialists believe that government will make good choices and that it knows better than its people how to allocate capital and resources.

    Capitalists believe this is worse than hubristic. When the government decides to take taxpayer money and allocate that money to a worthless risky asset, production goes down. Those involved in production do not know what comes next from the mind of government so they don’t know how to allocate whatever capital the government leaves them.

    It’s a slippery slope so we must be careful. Bank stocks high to low are moving at a 200 vol. Why are stocks moving like this? Because of artificial manipulation and mis-allocation of capital. The volatility we’re seeing in the all important financial stocks is a function of government intervention. Investors cannot understand or handicap the risks when the government is stepping in and changing the rules to the game but also mis-allocating capital. So there’s no market left per se, no investors buying and selling on the interpretation of value and environment. The government is determining the value for them.

    You can’t say “well it stops here so no harm”. People said that at Bear Stearns. Now we have this. Where does it stop?

    Risk is high.

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  30. Woodshedder

    Ahhhhhh…..sweet relief.

    My balls are just smoldering now. Flames are out.

    The Fly capitulated, and I didn’t. Odd, no?

    What can we learn from this dichotomy?

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  31. Dr T

    Hate to say it, but will do it anyway.

    ‘RIG to 138. Told ya so.’

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  32. The Fly

    Say all you want, fuckface. I sold every single share yesterday.

    Go read my posts.

    Fly wins again, even when he is losing.

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