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Dr. Fly

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.

OIL IS A PROXY FOR RECESSION; THE WAR TAKES A BACK SEAT

Wall streeters are famously retarded and always get caught off guard, raped and ravaged by the markets. Essentially, 95% of fund managers are long only morons who have tricked their clients into believing they’re special by performing at the market. This is why the market flushes out hard during periods of dislocation, as the permanent bull cadre of investor become extinct and extracted from the game of play. These people will always tell you they were up 9% on rally days, yet disappear for weeks at a time when markets are down and when they do show up, they magically have unlimited funds to average down again and again and again and almost always win using the Martingale Strategem.

These people, naturally, must look at their faces in the mirror and know before they fall asleep at night —- they’re god damned liars.

Moving on, WTI is lower tonight and futures soft. For weeks the market hasn’t give a shit about the war, most likely because it’s slow and grinding and NATO is losing. The most important topic for the market now is economic vibrancy, or lack thereof. As such, one can most adeptly monitor such things in the price of crude. As you can see below, the price has been trending lower.

More than that, oil stocks have gotten annihilated, down more than 20% from their highs. I’d posit the most important thing for markets now is for Vladimir Putin to make more money selling crude in the coming weeks, as summer wanes and the autumn and winter looms, especially for the Germans, who will most assuredly face the coldest winter in decades.

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SHAMBLES

My move is complete and House Fly is in complete disarray. We never really thew stuff away from our 6br home in Princeton and stored it in our first NC home’s garage for 3 years. Now with this new house, a much smaller home than the NJ monster, our two car garage is packed to the ceiling with junk. The interior of the home is in complete shambles and the painters are coming Monday.

TBH, I’ve purchased maybe 5% of the junk and just financed this hoarding for the past decade plus, as I am now in possession of a complete junkyard.

First order of business will be to throw all of this stuff away when my wife isn’t looking.

The workers ripped apart my $12,000 horse hair mattress — but I’m not mad at them because their job was hard and this type of collateral damage is to be expected.

Their leader was asking me about the economy and we started small talk, moving into the war chat which he knew nothing about. He’s too busy to pay attention to such nonsense, which unto itself is illuminating.

Ok, I’m gonna head out to eat now.

More later.

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BEARS ABORTED IN BRAINDEAD RALLY

It’s always comforting to see the NPC’s at peace with markets surging higher — especially since I know they’ll all be flayed alive in the coming fires.

Over the last week we bore witness to an 8% rally in the NASDAQ, based off a little of this and a little of that. This has once again emboldened the permanent bull class of imvestoor to remain obstinate and boast of their returns largess, as they meander between their multi-layer fictions. It’s all an elaborate scam — but they enjoy being lied to and never consider selling because it would fracture their world view.

I, on the other hand, have no world view, only moments of passing interests and contempt.

I finished the week where I began, flat, and have a full roster of old man stocks with a monster sized hedge in FAZ.

HAGW, I will now proceed to break my back moving more boxes.

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RAMP OR CRASH THE CLOSE?

Once again healthcare and tech are hard off session highs. They’re still up, but if you chased into the melt up you’re now down 3% for the session.

Chasers will never find respite in a bear market.

I actually don’t think we will pull back too much more into the close. Hell, we might even close at the highs. Whether we can follow through is another story.

Because financials are holding the market up and I happened to be 15% weighted FAZ, I doubled down and made it 30% because nothing says conservative like having 1/3rd of your account long an inverse ETF into a short squeeze on a Friday.

I’ll need to accumulate some longs into the close.

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DO NOT FALL FOR THE TRIX

Listen to me:

You’re being coddled again by a benign tape in the midst of a full blown economic collapse. The winds of war are raging and everything you once knew about globalization is over.

Hence, investoors are once again diving into this ARTIFICE head first.

Don’t you know it’s a trap? Aren’t you aware of the fact that nothing can stop the collapse?

I was mostly long into the open and collected my gains and kept my 15% position in FAZ intact. I might still close it out just to be done with it. I will not chase and I will not be influenced by what others are doing. Even if I barely do anything the next week, I shall not cave into the notion that stocks are priced to bid higher for 2022.

It’s also important to remember that my opinions are just that and not prophecy. I am wrong at times and have been known to do a 180. Nevertheless, I am highly convinced of the bear case, but also can never rule out the power of mobs and the influence greed can have on markets.

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The Nightmare is Almost Over

The movers are scheduled to move house Fly to its latest and greatest locale tomorrow. Over the past two months I’ve been quite busy with mortgages and a competitive housing market and more recently moving boxes and packing boxes and moving giant televisions into the new place, where it seems will once again prove to be temporary, as I shuffle around the country like a gypsy in search of a carnivale.

Over the next month or so, we have numerous projects all lined up that includes the installation of a library, new floors, carpets, paint, hardscaping etc. The point here is to fix things up to a standard and then after it’s all done complain about it not being good enough, because we’re all so entitled spoiled rotten brats with nothing to do other than to needlessly meander in the creation of our own manifestation.

I will take this opportunity to escape into the golfing fields, perhaps for good, becoming a pro tennis lad serving balls at the speed of light.

As it pertains to markets: very bullish. But don’t forget, it’s Friday.

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REGARDING ALGORITHMS DURING ROTATIONS

My Quant was shattered for another 3% today. YTD, losses are now 2%. Granted, -2% is much better than the market. However, it’s down more than 20% from the highs. Full disclosure: I know this is a problem with the quant and part of that lies in the fact that oils have been destroyed this month. The quant was mostly all oils for June.

So what is the solution and how can the quant invest with me dead and not be destroyed?

There are two solutions.

1. Shorten the holding period from 1 mo to maybe 2 weeks. But even if I did that, losses would be enjoyed since markets were trending down.

2. Create a technical threshold whereby when it’s triggered the account automatically hedges.

On the broader topic of using Stocklabs algorithms and intelligence tools: they are not the holy grail. These tools, although more advanced than anything I’ve seen on the market, cannot duplicate human intuition…yet. As we progress with development the tools will get smarter and the accuracy improved.

When going from terrible to great in a sector, you’d have to expect the algorithms to miss this move in terms of backtesting. For example, biotechs were the worst performing sector for more than a year. Had you shorted when our algorithms said to over the past year, you’d bank… up until the point when the sector bottomed and turned higher.

The predictive elements of the system cannot tell if some stock or industry is undergoing a pattern change. However, our technical rankings can show there is strength.

Here is a chart of the technical scores for all healthcare stocks. You can clearly see Stocklabs is showing you there is a ramp.

Based on this change in mood, I went long a sundry of biotechs.

Why.

THEY ARE LITTERED WITH SHORT SELLERS and if these sector continues higher, the squeeze can and will be epic.

Bear in mind, this could also be a short lived rally and if markets dump out — I’m sure LABD will recover some of its recent losses. The point here is this — the quant is my brain but dumb. My living brain but smart is my trading, up 49% YTD, +200% in 2021 — trading live. I’m not a guru, just better than anyone that you know or will ever know during the balance of your lives.

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BIOTECH HAS BOTTOMED: TRUST THE SCIENCE

There’s no denying the biotechs are back in force. The gene editing stocks are leading and mostly everything else is higher by 3%+. Aside from that, SAAS is sharply higher by 5%.

What do these two industries have in common?

They were the most oversold.

Are we seeing a catalyst?

Yes. Commodities are collapsing and with it interest rates.

Rates crested near market lows and now with rates coming in, morons think the market has bottomed and inflation defeated.

The market is wrong, but I’m not one to fight mobs. I’m fully invested, hedged, looking for a continuation higher for risk assets tomorrow.

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ANOTHER DAY, ANOTHER COLLAPSE

Nothing is safe. All rallies canceled. Each morning we gap up and then collapse into the close in a clown car.

Look at the % from session highs via Stocklabs.

Admittedly, I got hooked into some growth stocks and even an oil. I’ll be forced to avg down in oil. I’m hedged so the losses are non existent, now flat for the day. It is frustrating to trade in a market like this, which is why it’s probably smartest to limit risk and resume light summer trading.

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Constructive Action in Healthcare

The worst performing sector, biotech, has done the best the past week, surging by more than 10% and standing out during upswings. For the entire year, LABU has been getting drilled up until recently.

Has it bottomed? The action is good, but only cosmic scientists can determine whether cash burning biotechs into a deep recession are good buys here.

Within the healthcare space, I prefer large capped pharma like BMRN or MRK. If you’re interested in alpha, the gene editing stocks move the quickest: NTLA, EDIT, ILMN etc.

Early going it’s all biotech and tech. Energy and ag are being rotated like a bitch, sending those stocks down deep into the red. Although cheap, I don’t like chasing stocks down the sewer. I’d prefer to buy at end of day on names like MOS.

I’m up 23bps, 30% cash, 10% SQQQ.

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