FLASH: Japan is Going ‘Crazy’ to the Upside Again

Both Japanese and Australian markets are off to the races. The Koreans (extra Ashley Schaffer) are tracking a close third.

On the home improvement front, my landscaper is at war with my arborist over a tree planted close to the house. He also states: “the idiots messed up the planting of another tree in the back”, which will result in “surface roots” because “that guy doesn’t know what the hell he is doing.” Moreover, he declares “the god damned wood chips from the stumped tree should’ve been removed from the turf.” Furthermore, he declared: “no grass will grow here, ever again.”

Stay tuned for Battle Landscaping at The House of Fly tomorrow, as the arborist is scheduled to make his case around noon, in the flesh and with convincing rebuttals.

According to Trim Tabs, more than $60 billion outflows in bond funds were reported last week.

The last time consumer confidence numbers were this high was in January of 2008.

Buyer beware.

Still 65% cash.

NOTE: This is why CHINA SUCKS.

The best sector is solar, with gains in SCTY, FSLR, RSOL and DQ. ASYS has been melting up on a daily basis too.

About 75% of stocks are higher today, bucking the trend of rates. As you see, TLT is lower for the day.

Regional banks are outperforming again, as managers allocate into names that stand to benefit from higher rates. Names like HBAN, SBNY, CMA, FITB, ZION and TCBI are accelerating to the upside.

Although tempting, I’ve opted to not chase the market today. I might regret it, since we have lots of upside potential if the current panic turns out to be bogus. But before I can buy, I need to see TLT higher–plain and simple.

It’s worth noting, Dry Bulk rates shot higher again. I know some believe they’re rising due to chinese iron ore demand. But I still believe the core reason to ever own a shipping stock is based upon the premise that ships will be scrapped after bankruptcies are declared. Tighter credit could decimate the shippers. I haven’t bought back the FRO shares that I sold because of higher rates. They need to refinance by 2015. The clock is ticking.

It’s frustrating to watch TXTR melt up. I had an in on the name and never bought a share due to the low volume.

For now, I am still focused on IMMR and will be waiting for the cocaine party to break out, hosted by The Gimp, to get back into risk.

Oh, as for the losers, gold and silver, again. What else is new?

As long as yields are rising, the market cannot be trusted. If the 10 yr bond hits 3% there will an Exodus out of stocks into bonds.

I like TXTR, USG, WNR, APO, HOV and BZH. But, unfortunately, I am nothing more, or less, than a spectator for now.

On paper, this rally should stock. Durable goods came in better than expected. Some Fed official made some dovish comments and LEN posted much better than expected results, which should give a boost to one of the lynchpins of this market: housing.

But TLT is barely up and if we see yields rise again, the rally will dissipate and bulls will be crucified. If you get that 10 yr close to 3%, you will see a bonafide panic, former greedy gluttons liquidating their accounts before they hit zero.

In the event bonds should rally alongside stocks, I am a buyer of USG, HOV or BZH, AMBA, WETF and maybe some WNR.

Let it be noted, however, I am skeptical.

UPDATE: TLT is actually lower on the day. I am avoiding all stocks, leaving IMMR to be managed if it dips. By managed, I mean buy more.

First I want to tell you that when I type in the phrase The PPT it auto-links to the product page. My IT chief fixed that up. I’m not here whoring for new business. Secondly, iBankCoin is not venture capital funded and I couldn’t care less about getting new members for my algorithms, since it represents a minute part of my overall income. Unlike most of my competitors, I have my own money and do not depend on anyone but myself.

Having said that, I cannot trade with The PPT and offer you looks behind the paid wall, not necessarily to lure you into out inner-sanctum, but instead of show you what I am proud of. Think of these posts like a father showing pictures of his son hitting a grand slam in the world series and fondling a famous actress at the same time (no Rick Ross).

Since late 2011, this market has been going straight up. From 2009-2011, The PPT would regularly post Hybrid Oversold signals, which gave me an incredible edge in the markets, considering their extreme accuracy. But something changed in late 2011. Perhaps it was QE, POMO and Ben’s beard. Volatility compressed and stocks took a methodical ride higher, until now.

After the close of trade, the very first Hybrid Oversold signal was registered by my algorithms. The score hasn’t been this low since November of 2011. The result should be sublime. However, the process, as always, is scary and nerve-racking.

Nonetheless, I must adhere to this signal. I may not go on a buying spree tomorrow, but soon.

Here is a brief look at some of the previous OS signals and results.

I was just speaking to a local doctor who got burned in the market during the 2008 crisis. After losing 30% of his assets, he put his million dollar portfolio into bonds. But he didn’t just buy any sort of bond: he bought junk. He was telling me that “stocks were too risky” and that he needed to make “7% per year in bonds”, which I told him was “absurd” and that he was taking on more risk with that strategy than buying blue chipped stocks.

There is a great bubble in bonds. This man is “all in” on junk, ignoring principle drawdowns, providing dividends are paid.

There is a lot of panic in the bond markets these days. California munis dropped almost 4% today.

Look, I am a bull and want to own stocks. I am not shorting stocks because I believe the market can jump higher at any moment in time. I am a bull on housing, technology and finance. But timing is everything.

I will wait a little bit longer to make sure this isn’t a real full blown chinese sponsored melt down. If you bought stocks today, you just weren’t thinking about risk and may have to deal with the consequences tomorrow.

This market isn’t worth buying.

Any of you fine gents trade during the “Asian Contagion” markets of 1998? I built my business off of that crash. My CEO was running in the halls at 11 am, forcing brokers to cover margin calls right away, instead of the traditional 3 pm deadline. There was a panic in the boardroom, one that I haven’t seen since post 9/11 and 2008.

Stocks just got cheaper and cheaper.

I had just moved firms and only had 1 client, brand new to the business, young and fearless. I called people up and told them to buy internet stocks into the weakness. I was buying BYND in size. Well, “size” then was a minor  sub 7 figure position. But it meant a lot to me then. The shares got crushed and I was down to 25% equity on the accounts I assembled.

I stopped going to work because I couldn’t afford the expense of traveling on the subway and eating lunch, as well as dry cleaning. I was washing my shirts in the sink and my wife would iron them at night. That’s how poor I was, unable to pay my bills, living off credit cards.

I got lucky. The market turned because the panic ended. It lasted far longer than anyone expected. BYND went from $8ish to $13 almost overnight. I had small accounts go from $3k to $15k. I was the definition of piker, but tried to change that by building on the momentum the market turn had created.

I’ve told this story here several times over the past 5 years. You know how it ends. I built up a new client base and leveraged myself to the hilt on high beta internet stocks that just worked. The market never looked back and before long I was making over $100k per month.

My life changed, but the good times wouldn’t last very long.

Since I’ve been in this business, the market has melted down on a regular basis. In a way, I am an expert on market crashes and calamities. The one thing that I’ve learned, and could hopefully pass on to some of the younger traders out there, is dislocations tend to last longer than anyone could ever imagine, save Zerohedge. There are significant credit disruptions in the muni and corporate debt markets, as well as government.

Just look at my Risk Appetite Index and cringe, then think, then go home.

If you do not want to be chastised, go visit another site right now, one that is hosted by an idiot who will reveal his weaknesses and insecurities. I want you to remember the pain that you are feeling today, for it’s the result of hubris and financial neglect. Many men before you and after will suffer a similar fate, ruined by short term market swings due to the inability to properly gauge sentiment.

The writing was all over the wall, was it not? We knew the situation, bonds going down, the Fed becoming hawkish, Bernanke fired on the Charlie Rose show, global turmoil, unrelenting melt ups in sub-human stocks etc. The list goes on and on.

Margin interest was at its highest point ever, just before the drop. Coincidence?

Dumb money has been collected since the beginning of time, by those who have staying power and a keen eye for identifying trends. When the last idiot sells out of his positions, zeroing out his account, then the market shall rise. This is the sort of tape that vexes people. I’ve seen it before, in ’97, ’98, 2000, 2001, 2002, 2007, 2008, 2009 and 2011. The story always ends the same: dumb money fleeced and the rich get richer, unless of course you worked for Lehman Brothers.

I am solely fixed on IMMR. We are going down in a convoy. Therefore, we shall rise in one too. It’s redundant and wasteful to diversify right now. I will manage the position and exit profitably before the 4th of July.

Bonds are hardly down this morning. Everyone got lit up; therefore, it makes sense for us to bounce today.

Moody’s downgraded the outlook for Hong Kong, likely at the behest of our shadow government. And, the chinese market entered a bear market, all wonderful things to digest in the morning.

As I watch CNBC, all of the talking heads are incredibly bearish. The same folks were doing lines of blow off their teleprompters two weeks ago.

I am still upwards of 65% cash and don’t have a worry in the world. But we’re gonna bounce today, so be on the look out for divergences.