DECLARATION: THIS RALLY SHALL HOLD

I am going to give you a look inside Exodus to show you what I look at, when trying to evaluate the market.

The Indices are higher; but that’s only part of the story. We want to look behind the curtain to see how the key actors are performing. For the day, with exception of a few, like FCX (which is news related), they are doing great.

Market breadth is most important to me, which is now in the mid 80% range.

We can break it down further and see where the weakness lies and if those industries are vital to today’s rally.

Aluminum is the only industry lower today, out of 200 plus in Exodus. Do you believe it can derail today’s rally? Is AA that important?

One little industry is lower. Who gives a shit?

As a whole, today’s rally is broad based, robust, and ripe to pressure short sellers to buy back shares.

Here is my short squeeze screen, featured in what we call “the grid”– up more than 3.3% for the day, on a median basis.

It runs 8 pages deep, which tells me shorts are covering.

Lastly, I look at risk. I do this by monitoring my ‘Bubble Basket’, which is an index of stocks that I built, filled with high valuation momo stocks, that is the perfect barometer for risk appetite.

It is up nearly 2%, with only a few laggards.

Only disaster can derail today’s rally. I think we close at the highs.

Shares of FCX are getting poleaxed again, down 7%, after the Indonesian gov’t told them to set aside $530 mill for a fucking smelter. Also, just the other day, the Chief of FCX Indonesia resigned. And, to boot, Freeport is trying to sell a stake to the gov’t of Indonesia for $2.7 bill.

The whole scheme screams fuckery, largess.

The Indonesians smell blood in the waters and are now demanding the cash strapped FCX deposit $530 mill, for a retarded smaller, that’s only 14% complete.

The Indonesian unit of Freeport McMoRan Inc must put a further $530 million into an escrow account, a government official said, among other requirements for the miner to extend its permit to export copper concentrate from Indonesia.

The funds are intended to be a guarantee that the Phoenix, Arizona-based company will complete a smelter in Indonesia, which is pushing to boost returns from its natural resources.

The amount would add to an estimated $80 million the U.S. mining giant set aside in July to obtain its current export permit, which is set to expire on Jan. 29.

The requirement adds to pressure on Freeport, whose stocks have tumbled 36 percent this month and hit their lowest in more than 15 years on Wednesday, hammered by falling prices for copper and oil, which the company also produces.

“This money is the remaining amount they should have spent on their smelter so far,” Coal and Minerals Director General Bambang Gatot told reporters on Friday, adding that his team had not heard back from Freeport on the requirement.

A Freeport Indonesia spokesman told Reuters the company was still in discussions with the government on the matter.

According to Gatot, the smelter project, estimated to be worth up to $2.5 billion, is now 14 percent complete.

Energy Minister Sudirman Said said on Wednesday the new smelter should be 60 percent complete by now.

“We have warned them from a long time ago,” Said said, referring to the export permit deadline.

So their export license is going to expire on 1/29, which would completely screw the company over and Indonesia knows that. So, they’re tightening the vise on their heads. I bet they’d love to just seize all of the assets and kick FCX out.

These are the risks when doing business in the land of the savage.

How valuable is their Indonesian properties? They value one of their mines there at $16.2 billion. Without Indonesia, FCX is bankrupt.

It’s been a long time since the market truly went higher. Despite seeing futures up 225 and oil up more than 5%, I am sure the weak jawed bulls will somehow muck up today’s rally. Nevertheless, the ground is set for a huge 100 NASDAQ day.

Bearish sentiment was so high, long term bears in the comments section were so glib, you just knew today’s eventuality would materialize, sooner rather than later.

Even so, I will use the lift to reduce my SPY exposure, selling out of another tranche of my SPY.

Would I chase this rally on the open?

Recent trends dictate opening lifts should be sold, not bought.

No words–just melt up. News is unimportant. Bears will rue the day they decided to sell short the market yesterday, for today’s trading session will devastate and appall them.

Full compliment rally in both NIKKEI and crude. U.S. futs are following in kind.

See you in a few hours.

The inverse genre of the ETF world are ripping jaws off bulls and face kicking them to the moon. But most FINRA regulated advisors are clown’d by being banned from buying and selling these products–unless clients send a letter in telling them to buy them. It’s wholly retarded, one of the many instances in life where a small, but loud, minority of morons ruin a good thing for everyone else. In other words, back in 2009, when the market took off, idiot brokers and advisors kept clients in these short term products and rode them down 99.9999%–which forced FINRA to move against these time bombs–removing a very vital hedging product from responsible managers.

So, I’m removing them from this screen and giving you the best performing, non levered-inverse, ETFs for 2016.

HDGE +13.3% (bear strategy, non-levered)

ZROZ +7.6% (zero gov’t bonds)

EDV +6.9% (gov’t bonds)

BBN +5.2% (taxable munis)

TLT +4.35% (gov’t bonds)

IAU +4.1% (gold trust)

GLD +3.96% (gold)

PHYS +3.55% (physical gold)

FXY +2.2% (yen)

CORN +2.1% (corn)

SOYB +1.1% (soybeans)

This is not a revolutionary idea, to observe regional banks that may have significant loan exposure to the oil and gas field. Using very simple search methods in Exodus, I isolated some banks with big short positions that have been underperforming this year–as well as banks domiciled in oil rich regions of the country.

Here’s what I came up with

When oil goes to $10, will you buy it? Or, because the world will be a smoldering cauldron of impoverished pestilence, will you wait for lower prices? If I told you last year that oil would troll down to $26, you’d tell me to get the fuck out of here and to play with a box of jumping jacks in the middle of a train yard. Prevailing wisdom suggested it’d go back up–thanks to recency bias. You’ve been programmed to believe crude is supposed to be expensive–but history says otherwise.

Oil always traded below $30 and only spiked after we attacked the shit out of Saddam Hussein, in order to seize his nuclear warheads and give away his mustard gas to Syria.

Cramer discussed oil this evening and schooled you rock-heads about the great oil collapse of 1986, a year that will go down as the single greatest year in the history of mankind–a year in which the NY Mets humiliated the Boston Redsox and won the World Series.

Cramer posits, oil can go to $10–because people are fucking morons and don’t realize $10 in 1986 dollars is $22 today.

You’re all doomed.

Breadth closed in the low 60% range. If it weren’t for oil stocks up more than 7%, we would have rolled over today. Banks got smashed, namely TCBI, IBOC, FITB and a myriad of regional banks. To me, it looks like short sellers are starting to target banks who might have exposure to oil and gas loans. NO ONE WAS TALKING ABOUT THIS up until now.

Total exposure is upwards of $900 billion. You heard it here first and will continue to hear it from me.

I sold out of 1/6th of my SPY position this morning and have a schedule of sales lined up from now until 2/2–all detailed in the Exodus blog. If you haven’t signed up yet, take advantage of the fact that Jeff Macke is guest hosting it for the entire month of January and have a look at my drastically different investment philosophy, which is based solely around the predictive algos produced by the system.

In summary: today was a suckers rally and was not the bottom. Sell the rips. Reduce your exposure. Get long gov’t bonds. Brace for impact.

Harvard Professor and Davos hot-shot believes there is a risk of a great depreciation of the Chinese currency. As the government tries to liberalize their economy–persons of extraordinary pessimism– aka the chinese people, will venture the hell out of China into calmer waters.

This is having a debilitating effect on the Chinese economy, which is rippling throughout the global economy–pushing commodities lower. This is the 3rd leg of a sequence of crises since 2008.

Fucked. In the streets.

Legendary investor George Soros is short U.S. stocks, emerging market currencies against the dollar and long U.S. gov’t bonds. He believes 2016 is a year destined for deflation, one that pressures stocks and causes the Fed to reverse its dastardly rate hike mistake and cut interest rates back to zero.

Some highlights:

The U.S. economy is slowing down because of deflation.

It became apparent after oil dropped and households saved the savings because they felt prices would drop.

The Fed rate hike was a mistake.

QE works; but has a diminishing return.

He sounds pretty sharp for a 200 year old.

Long TLT.