The Party is Fun, Until it Ends

In my opinion, we have a maximum of 2% upside left, and 15% down. I’ve been through markets like this before, as many of you. The big difference between you, and a person such as myself: I remember the answers. I can personally guarantee many of you will be caught 100% long, or more, into the top. It happens every time. After all, someone has to hold the bag of bombs filled with shit.

There will be no warnings or mercy, just down. Perhaps the widening CDS spreads in Ireland, Portugal, Greece and Ukraine will have something to do with the decline. Or, it might be caused by fears of taxes rising or monetary tightening in Asia. Dare I say, the markets may just sell off due to profit taking? I mean, let’s be perfectly clear with one another, if the United States economy was a business, would you buy it now? The notion that news is so bad it has to get better applies best when markets are depressed. Last I checked, CRM was trading 1 billion times 2020 earnings.

I’ve dug in my heels and will not budge, so do not try to sway me. I see BAC trickling lower, while abject retards bid up NFLX. This is not the beginning of some financial renaissance. For that to happen, we’d need strong underpinnings. Last I checked, we’re a nation filled of hamburgalars.

Look, don’t do what I do. Stick to what you feel comfortable with doing. Maybe it’s my time to lose. It could be the end of “The Fly’s” dynasty of perpetual market mastery. Or, maybe I ricochet back and blow up your log cabin with my fucking howitzer.

Those consumer sentiment numbers were dreadful, yet here we are unch. There is something to be said about a market that refuses to go down. Now, we can complain all we want about manipulation and how “stupid” the market is. But, in reality, markets are not stupid, people are. I’ve been 100% wrong with my recent sales. I’ve been 100% wrong with my VXX “hedge.” It’s too early to say if I am wrong on TZA, since it is hovering near my cost basis. The big lesson in all of this is: there is no lesson.

Previous market pullbacks were very sharp, which would have allowed my current strategy to pay off very handsomely. Unfortunately, the market has not cooperated with my incessant demands. So the fuck what? I still have big gains and lots of skin in the game. It’s not like the market is ending soon and I will not have a chance to recapture my former glory.

Go with what you know and don’t be stupid about allocations. If there is one thing that has saved me, over and over again, it’s allocations. Leg into positions slowly and never overweight one sector or stock more than 20%.

Breadth is somewhat mixed today, with weakness in commodity names and strength in tech. The market could go either way. If I was to bet against anything, it would be a big move in any direction.

More of the same, ho hum, ho hum.

I shorted another 2,000 AEM this morning @ $68.30.

Disclaimer: Fuck bubbles.

Nice meltdown action in European markets, oil and rotary phone maker RIMM. But “The Fly” has more important bad news to lament over. Late last night, Mrs. Fly approached my person and said “you do know you have to shave that thing? We have company coming Saturday.”

Say goodbye to the beard.

Great men, like Ben Bernanke and Prezident O’bama have beards. Why can’t I? I suppose it wasn’t meant to be?

CPI data came in cool, at 0, when you strip out food and energy. But who gives a fuck? It’s all about ignoring valuation and buying shit ’cause it’s up, as is the case with gold.

Sure, keep ignoring valuation; see where it gets you.

Aside from gold, the only sectors showing relative strength today are tech and chemicals, led by gains in AAPL, CSCO, FFIV, AMZN, RIMM, HUN, EMN, CE etc. Everything else is bland to down, especially CRE and banks. But so what? My cost basis on TZA is in the high $31’s and VXX in the $23’s. Do not view me as a wounded animal, as most of my assets are held in cash.

I initiated a short position in AEM, not to defeat gold bugs. Stocks ebb and flow. Some of you forget that ranges are never preordained. You have to anticipate them. Fuck your charts. I intend to short 2,000 shares, every point, up to $71.

I am left with a few long positions: FTK, TEVA, C, SHLD and EWZ.

In closing, I will not be surprised to see more of the same, run into the bell. After all, the short sellers are without testicles and the perma-bulls brains. We can call this rally “the one in 7 celebratory rally,” commemorating the fact that 1 in 7 American are now considered “impoverished” (highest level since 1965).

Now that is something to celebrate!

I sold short 2,000 AEM @ $67.61.

I intend to sell short this overpriced pig a great deal, up to $71.

Disclaimer: Fuck gold.

I grew up dodging bullets my whole life, at times literally. Unlike some of you silver spooners, who have no idea what it feels like to need, I thrive during periods of duress. Just know and understand, when I come out on the other end of this a winner, there will be penances distributed, without restraint. I am not like you, so don’t try to befriend me. See, you and I, we are two peas in a pod. The only difference, I have a fucking rambo knife and will split your head two for one.

This internet thing is real funny for a lot of you. You come here in your trousers, laughing, waiting to see what “The Fly” is gonna say next. In the meantime, I am monitoring all of you, vis a vis a sophisticated network of identity tracking software, which will be used to punch off your chest hairs in due time.

The market is pinned down thanks to quadruple witching. Breadth is horrendous on many levels and we should be down a lot more. Treasuries are selling off and the fervor in gold continues, as fudge fund managers plow into the yellow metal—only because it is up. The yen is down again, as the Japanese go all in against the Chicoms. But, at the end of the day, breadth is bad, so expect nothing.

In most cases, you get what you deserve.

You have no idea how disturbed “The Fly” is right now. He gets like this whenever the market disobeys his wishes. As we speak, he is shadow boxing, with a full beard on his fucking face (where else would it be?). He looks at stocks and their respective stock prices, scrolling on his teevee, and laughs at them profusely, while throwing popcorn at them exclaiming: “stop it, you’re killing me.”

FFIV over $100. NFLX over $140. AKAM over $50. It’s too much.

As it stands now, “The Fly” will never invest again, unless we sell off. You might as well get accustomed to the sage advice offered by the other bloggers on iBC, ’cause Fly has no interest in ever buying stocks again, unless of course we sell off.

It’s not a game anymore. Never has, never will be. I do expect the market to trade 200-500 points higher today, on the back of worse than expected Philly Fed numbers. Whatever the market is supposed to do, the opposite will occur. Should we find out the economy produced 1,000,000 new jobs next month, the market will crash on that news. Anything to fuck with the sane.

Pardon me, kind sir of the internets, I do not mean to castigate you as being crazy. But you must see yourself from my vantage point. See, your perception of yourself is normal, tax paying citizen, God fearing, avid buyer of American stocks. I view you as a dog licking peanut butter off a rusty fire hydrant.

I got my knife on my side and beard on my face. Go ahead, fuck with me. I dare you.

UPDATE: I sold out of long term holding, iBN, for a 40%+ gain. Cash position is now 55%.

[youtube:http://www.youtube.com/watch?v=WTUzw6BF-I0&feature=related 616 500]

Some of you fuckers are hypnotized into believing we are entering a period of rapid inflation. This theory supports your view, wrongly, that equities should trade higher for as long as we shall live. Nothing could be further from the truth. This morning the Swiss National Bank warned of potential deflation risks in 2011. But we already knew that. Why else would yields be so low? With every central bank trying to devalue its currency, it’s not a surprise to see gold trade at new highs. I am not a big believer in “smart money.” As a matter of fact, I believe, in many cases, the bigger your money pool is, the dumber it gets. Having said that, gold is a massive bubble that will continue to inflate until one day people realize they can’t buy sawed off shot guns with yellow coins. The commodity and the underlying stocks are both exhibiting classic signs of a bubble, all the way down the food chain to market participants. Basically, investors of gold, similar to dot com players in 2000, feel we are in a “new economy” and owning gold is the “place to be.”

Been there, done that.

Today’s economic numbers were not eventful and the futures look bad. We should trade lower today. However, ahead of quadruple witching and with investor sentiment catatonically bullish, I would not be surprised to see more of the same.

Month to date, the S&P is up about 4.3%. Listening to the media, one would think we are up 40% in September. Slow your fucking roll, douchebag. The market will vomit up all of its gains, and more, inside two quick trading days—and you know it.

So far, in 2010, the market has been a lot about nothing. If you are up more than 10%, you have managed your money well. Do not try to make 200%, for that entails taking on too much risk.

Here is the monthly performance data of the S&P, in 2010:

Jan: -3.6%
Feb: +3.1%
March: +5.6%
April: +1.5%
May: -7.9%
June: -5.1%
July: +6.8%
August: -0.6%
Sept: 4.3% (open)

Notice any trends? Of course not. Back to the topic of playing this tape: it’s hard. I don’t care what anyone says, this tape, despite my 30% returns, is fucking difficult. Nevertheless, I think my attitude towards the market is jaded due to my disbelief in just about everything. If I was a perma-bull or bear, I would be able to trade with more conviction. But because I think we are simply partaking in building a house of cards, I ebb and flow between bullishness and outright pessimism.

Historically, if the market escapes September with gains, there is a better than average chance of the market continuing the uptrend until December.

There are headwinds. With Japan active in the forex, China gets thrown into the fag box. I have no proof or evidence; but I believe the strong yen action is being caused by insidious forces inside of China. I am not surprised to see Shanghai trade lower, rather aggressively, two days in a row following Japanese intervention. As an aside, the Indian market is the most overvalued in the world, trading more than 20x eps. I will be selling my iBN position tomorrow. There are 10,000 reasons to take profits right now. However, no one wants to be the first one to sell.

One thing is for certain, following simian brained moves to the upside, the funnel is set. Heed these warnings else find yourself inside of a fucking funnel for Halloween, getting mudstomped.

UPDATE: I knew I was onto something with my Japanese/Chinese rift scenario.