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
20,629 Blog Posts

Futures Open Soft; We’re Not Set in Reality Yet

Looks like I will open for trade tomorrow FUCKED — since I have a 5% position in DO and she just filed for bankruptcy. WLL filed for bankruptcy and is up 350% since then; but usually a filing is met with some initial selling before the details are hashed out. It seems to me, this bankruptcy might be the one to open the floodgates to a tsunami of filings in the weeks to come — rendering the oil patch uninvestable.

With bankruptcies, you will see credit downgrades and mark downs at banks. We are still trading in fantasy land and I expect traders to buy dips until reality starts to seep in.

When should that happen?

About a month after the global economy re-opens we should start to get some estimates for revenues and earnings. Without imposing my bias, I think it’s fair to say the balance of 2020 will be decided by the after-shocks of COVID-19 and if it re-emerges following the end of quarantine. The next drop will be large and catch many by surprise.

Presently, we are -35 NASDAQS now and crude is stable at $16.55. I read a note by Goldman today which predicted another rout in WTI futures, possibly under $0. I also read that Banks of China clients took more than a $1b hit on the negative $37 WTI drama of two weeks ago.

Whatever happens tomorrow, I enter the day at 65% cash, which provides me with a lot go options — should I need to average down and implement a Martingale Stratagem to escape a poorly placed trade. I suspect markets will want to trade higher, but will eventually sink into the pits of hell. I closed out my shorts Friday because of the collapse in the VIX, suggestive that investors are normalizing. This of course means the next crash will catch many off-guard again. I of course do not know when it will happen, only that is will happen some time in 2020.

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23 comments

  1. i_am_nemo

    DO was $70 seven years ago and trending down ever since. Buy the IPO when they reissue shares.

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  2. narcist

    Well, sorry about DO. (How about change the ticker symbol to DONT?)

    Buy-and-hold just ain’t my steez. It makes even less sense these days.

    I do keep a few topical stocks just because of the longevity of COVID (at least till Election Day). Back in early March I mentioned TDOC being my favorite stock. It still is.

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    • moosh

      What do you think about ONEM? I’ve been in for a few weeks looking for it to play catch up

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      • narcist

        I’m not seeing the momentum in ONEM. If I must choose between the two, I’m still with TDOC.

        VEEV is another stock I’ve been holding, and it has a non-negative P/E ratio if that matters.

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        • moosh

          Yeah, that thing just sits there. I already have some TDOC, but thanks for VEEV

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  3. Mr. Cain Thaler

    I don’t want to spell out a timeline that’s not my thing.

    But whenever 2021 earnings estimates finally cross 2019 real earnings, this market is going to start to roll over hard.

    The current Shiller PE ratio is 26.56. We’re going to the 10-15x range. The recession is already so much worse in so many ways than 08.

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  4. tjnyt

    DO proves my hypothesis: money is electricity, flows out of IPO, and dies into bankruptcy. Circuit completed while keeping many employed in productive work in the meanwhile.

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  5. Po Pimp

    Futures up 1.0%. Buy buy buy.

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  6. spinthathamster

    If nasdaq is bullish, we are going to see new highs amidst one of the worst recessions in 100 years.
    9% off the top + bullish = new highs.
    When I thought I have seen it all…

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  7. Mr. Cain Thaler

    Crude oil now sub $30 until April 2021. Was March 2021 last week.

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  8. Mr. Cain Thaler

    The global food supply chain has been disrupted. We’re now moving into a significantly more dangerous phase.

    https://www.bloomberg.com/news/articles/2020-04-26/world-is-running-out-of-russian-wheat-when-some-want-it-most?utm_source=allcaughtup-article

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    • spinthathamster

      For people, this could get ugly. For markets – human extinction is already priced in 🙂

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      • Mr. Cain Thaler

        Scene: the year is 2100. Aliens arrive to discover Earth devoid of sentient life.

        To their confusion, about fifty bank trading servers and a Federal Reserve POMO buy algorithm someone forgot to turn off are the only evidence of the prior civilizations that used to exist.

        The S&P 500 is at 27,968.

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        • alty

          Poor guy. It’s only a trading account. Luckily denial is only the first stage, and things will get better for you.

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  9. richardweiner

    Penis goes in vagina.

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  10. og

    And the hated rally continues.

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