This Week in Exodus: Shorting into the Meltup

It was an interesting week, with shorts getting arrested on Friday, flung carelessly into ravines, as markets ripped tits, higher, to new all-time highs. Inside of the hallowed halls of Exodus, there was lively discussion inside The Pelican Room (12631), pertaining to a great many trades and community oriented ideas.

In the beginning of the week, I highlighted SWKS as oversold and designated it as the Exodus pick of the week. While it struggled early in the week, towards the end it proved to be marginally profitable.

Once again, I was dispatched into the poorhouse with another wise idea to short crude, into the hole. This was an idea of mine, nothing to do with the algorithms. I’ll hang on to this bowser until early next week.

Based off impressive overbought data, I sold short FCX. Despite the rally in stocks, FCX closed lower than my entry point. I am confident in this short enough to hold it for another week, maybe longer. Additionally, TLT paid out its monthly divvy, lowering my cost to $118.85.

Towards the end of the week, the German ETF, EWG, was flagging OS. This had me thinking about swapping out the Exodus long pick for EWG. I might do this trade next week.

As of Friday, some overbought stocks, with impressive stats, include BHP, MUR, CEA, ETFC, JBL, MU, ESRX and ORCL.

On the oversold side, NSA, G and SIX look okay.

Overall, it was a solid week for oil, banks and semis, while utilities, gold and REITs suffered.  This is exactly what you want to see as a bull, all of that scared money fleeing for riskier parts of the market.

Looking at the individual industries, banks and semis look very overbought, while utilities and gold are pressing the low end of their recent ranges. These charts aren’t price oriented. They are a composite of all technical and fundamental grades, based off the Exodus algorithms, in an effort to find predictive patterns. You be the judge.

Notice how the current range is much higher than last year, before the melt up in gold? This is a result of shallower pullbacks, indicative of a sector that is prone to be purchased on dips. Exodus is constantly learning to evaluate ranges in real time, using moving averages.

Based off the above charts and several key stocks that are overbought, I’d bet for a pullback of a primordial nature in the week ahead. Also, TLT is oversold on its 3 mo algo, albeit with limited occasions to judge the signal. It’s, nonetheless, impressive.

It comes down to this one question: is the market behavior about to change or will the status quo that is sleepy and methodical in nature, at times tedious and frustrating, preside over the indices?

Classic older Clint Eastwood here. He just wants you to get off his damn lawn and to stop being so damn stupid. Although a bit racist and somewhat XENOPHOBIC, Clint’s character proves himself to be a good man.

America used to be filled with strong men like this. Now it’s been reduced to a bunch of losers venturing off into transgender bathrooms, protesting law enforcement officers with crack pipes in their front pockets.

We are making history today. The jobs market is raging hot. If you were to touch it in an attempt to test its temperature, it’d melt the skin right off your dirty paws.

Everything traded up today, in a continuation of embellished hedonism. Profits are flowing freely. Men with topped hats and canes are walking about the thoroughfare with their wives behind them draped in jewels and the heads of foxes. Everything you thought you knew about economics, taught to you by old guard professors in college, was a lie. Supply and demand only matter when the economy isn’t being managed by professionals.

Bear in mind, there will be a plethora of haters out there, persons of grave disinterest trying to defecate on this grandiose display of American exceptionalism. But, rest assured, profits will be ‘enjoyed’ by those brave enough to venture out into the woods. At first glance, said woods look haunted and wrought with flesh eating ghouls. But upon further inspection, it’s actually a paradise with dick sucking butterflies and marijuana-scented aromas permeating the environs.

The negative rate situation in Europe and Japan have been alleviating in recent days. Additionally, crude oil has bounced and earnings have come in better than expected.

NOTHING AT ALL can stop this market. You may fashion yourselves to be learned men, or even cynics who live in a state of denial. But the record highs in front of your faces are very much real, indeud. Anything to suggest these profits of enjoyment are undeserved– or the result of wanton manipulation– is blasphemous slander and falls in under, and in accordance with, rules and regulations against American rights to make a decent wage and to live comfortably under the umbrella of one big fucking giant government tit.

This is very, very desirable for me. Personally, Hollywood is boring to me, as well as U.S. media in general. With the purchase of Carmike Theatres by Chinese owned AMC, coupled with a potential BABA for NFLX deal, the great walled nation of China is positioning themselves to control U.S. cinema content.

I know some of you still pine for the days of freedom and ‘rights.’ But you’ve had your ‘fun in the sun.’ Now it’s time for a little middled earth totalitarianism. The American people are a disgusting brand of ‘Don’t Tread on Me‘ flag waving racists. The Chinese rules and censorship will whip this idled, welfare loving, state of catamites– right back into shape.

Unfortunately, this ‘low information’ reporter at RE/CODE doesn’t think the deal will happen. After China buys RE/CODE, I hope they fire him.

Shares of NFLX are sharply higher on this rumor.

It’s worth noting, NFLX is straight up since reporting an abysmal quarter. Good times.

You’re all having a splendid day. I figured this might make you feel a little better to know that ugly revolutionary ‘snake flag’ is going to be cast out from Americana.

Next up, ban pictures of George Washington.

Everything makes sense, with exception to the fact that the market doesn’t give a shit about the economy. It refuses to cede any real gains, as it pertains to chances of a Fed rare hike.

Yesterday, the chances of a September hike was 9%. Today it doubled, but only 18%. The chances for a December hike are just 40%. As a matter of fact, the market is pricing in zero rate hikes for the next year.

Whatever.

The dollar is still up big, commodities down, stocks up.

The market doesn’t always make sense, but today it does.

Let’s review.

Stocks are higher because the economy is doing well, as indicated by the July jobs report.

Yeah I know, 94m people aren’t in the jobs market. Fuck those people.

The dollar is surging v the euro because people believe the Fed will hike rates. Frankly, if the economy is strong, they should. Moreover, people should get over it already.

As a result of the perceived tightness in US monetary policy, the dollar gains are pushing down commodities.

If we’re being true and honest here, gold, silver, oil and the rest of them should trade down on the perception that the Fed will hike. This was the primary reason why I sold out of my gold positions. Moreover, this is one of the reasons why I am short FCX and oil drillers.

As far as bonds are concerned, the short duration yields will be affected most. As a matter of fact, US 30 yr should do okay, since we didn’t have QE in the first place. Plus, the market is always skittish about the global economy and will continue to buy our bonds in favor of Japan and Europe’s. Providing negative yields persist overseas, a floor is in place for TLT.

How can BMY lose $25b in market cap because of a failed clinical trial of a drug that does only $550 million by its chief competitor Merck?

I can’t even begin to rationalize this drop in a mega cap super star company, the crown jewel of Princeton, NJ.

Opdivo has become a foundational treatment that is transforming cancer care across multiple tumor types. While we are disappointed CheckMate -026 did not meet its primary endpoint in this broad patient population, we remain committed to improving patient outcomes through our comprehensive development program, including the ongoing Phase 3 CheckMate -227 study exploring the potential of the combination of Opdivo plus Yervoy for PD-L1 positive patients, and Opdivo plus Yervoy, or Opdivo plus chemotherapy in PD-L1 negative patients.”

I hear they’re working on chimeras in that sprawling prime real estate in Princeton. Seriously, this 18% drop seems a bit excessive. Then again, we’re an excessive people.

MRK is benefitting from BMY’s demise, which is doubly absurd.

Fuck yeah.

Last month we added 292k new jobs. Granted, many of those jobs are burger flippers at Wendy’s; but who’s looking at the details aside from me and a few others?

Unemployment rate stands at 4.9%, a little higher than what Trump is polling at in a Reuters poll.

“Solid labor markets mean households will be in good shape, incomes will be OK,” Michael Gapen, chief U.S. economist at Barclays Plc in New York, said before the report. Gapen also said the Fed probably will raise rates in September if hiring remains strong.

Labor participation rate, which is a stat that has been maligned as horseshit, came in at 62.8%, up 0.1%.

‘Merica.
Wage growth rose ahead of forecast, up 0.3% to $25.69.

The net result is a run up in futures. Markets should climb by triple digits at the open. Short dated yields are spiking, indicative of a possible Fed rate hike. That has to be on the table once again. If so, the markets have to be okay with it, being that the economy is adding 250k jobs per month and Q3 GDP is trackI got +3.7%.

If the Fed can’t hike under these conditions, they’ll never hike.

On paper, this is bearish for gold, short dated bonds, and bullish for stocks.

Goldman is out with a report predicting catastrophe is about to strike down the price of copper, by 17% in fairly short order. They’ve come to this conclusion, as a matter of fact, tracking 20 companies which represent more than 60% of worldwide supply. Like oil, supply is rising across the board in the debt laden copper space. The notion that any of the major commodities are enduring supply constraints is a bald faced lie.

Goldman said these 20 companies are set to increase supply by 15% in the coming quarters, which should put additional pressure to an already oversupplied copper market.

“Company guidance and our estimates suggest that copper is entering the eye of the supply storm,” analysts including Max Layton and Yubin Fu wrote in an e-mailed report received on Friday. A drop to $4,000 would be a 17 percent slump from Thursday’s close on the London Metal Exchange.

“This ‘wall of supply’ is expected to translate into higher copper smelter and refinery charges and ultimately, higher refined-copper production, set against softening demand growth,” Layton and Fu wrote. The metal is seen at $4,500 a ton in three months and $4,200 in six, they said, reiterating targets.

In July, Barclays Plc said supply may exceed demand every year through to 2020. The month before, Stephen Higgins, who heads Freeport-McMoRan Sales Company Inc., a division of the largest publicly traded copper miner, said more production has come on stream at a time demand growth in China has slowed.

At the time of this post, I am short FCX.