Thank You Sir, May I Have Another?

I was actually flat for the day. I would’ve been up had it not been for that murderous hamburger stock knifing lower on me each and every day. I walked away from today’s horrendous decline a champion, King of all Kings Boss of all Bosses. At least that’s what they want me to believe.

The only reason why I was flat is due to the miraculous turn in energy stocks, with SLCA leading the way for me. To be content with a draw is to be a servile, third estate, canaille, beast of a man. I am not a savage.

Pardon me as I fill up my wine glass to the brim, much to the chagrin of Mrs. Fly.

I am back.

It’s days like today that give you false hope. “I was only down a little, so maybe tomorrow I will do better.” And then the hammer of certain death punches you into outer space. Speaking of which, the homos at BBRY rebuffed a Samsung offer? Really? Those idiots need to be ousted from the company.

This is the bottom line: oil stocks made a miraculous rally today and are probably the best trading vehicles next to biotech right now. All of the issues  with this market still persist and the bears are still in control. Despite the market being near new highs, let’s not kid ourselves, whole sectors have been a raging bear market for almost a year. We are getting more of the same and I expect death, extreme death, to come calling next week–should the transvestites at the ECB decline to undergo QE with irrational vigor.

Markets are looking pretty good here, post open. All of the lemmings are running about, buying the dips, merrily and gleefully profiting along the way. Believe me, there is nothing that I want more than to either totally crash and burn or melt up to the sun, eject the bears out from the space capsule, then watch them disintegrate. My hell is this back and forth to nowhere.

“The Fly” is not a rocking chair type of a man. He enjoys a good challenge, 5 hours at the gym per week, and lots and lots of kinetic energy.

I love managing money and I also hate it. It has shaved decades from my life expectancy, made my life miserable at times, and filled with so much hubris during period of success that Mrs. Fly has attempted to kill me on more than one occasion. Even still, I cannot envision myself doing anything else.

Biotechs are bouncing hardcore here and the market has the look and feel of a reversal. But I am not a child and I am not drinking from an infant’s bottle as I write this blog. You’d have to be a servile idiot to just run out there naked without protective hedges.

As it so happens, that is exactly how I am positioned right now.

I am so mad right now I can barely write in discernible english.

Let’s go over the events that led up to today, crash day.

1. Plunging commodity prices, ignored by our central banks.

2. Zero growth in Europe.

3. Decelerating growth in China.

4. A Federal Reserve who’ve been talking about raising rates during a deflationary attack on markets.

5. Plunging yields, caused by flight to safety.

6. Flattening yield curve.

7. ECB head Draghi is all talk no action.

8. The fucking Nazis balanced their budget for the first time in 40 years, at a time when deflation is the risk.

9. Bond yields are now NEGATIVE in the following countries: Germany, France, Austria, Belgium, The Netherlands, Finland, Switzerland, Sweden, Denmark, Japan.

Retail sales numbers came in weak; but I am not concerned about that. Those numbers are for idle morons. You really need to judge retail on a case by case basis. Without a doubt, the drop in gasoline will be a net positive for good merchants. But crappy stores are just crappy and will never garner enough business. The drop in gasoline has been so sudden, so quick, that consumers haven’t even realized what the hell is going on, and have pocketed the savings. Give it some time, they will spend it all.

Futures are down more than 200. I’d like to tell you we can rally off the lows. But the truth is, we are in a deflationary vortex, at a time when central banks seem to be stuck in a morass of sheer and utter stupidity. The prevailing wisdom seems to be emanating from talking heads who literally want to DESTROY western finance through pre-mature rate hikes.

We need more cocaine. I’ve been saying this for more than 6 months. While most of you laughed at me and poked fun at my suggestion that another round of QE was needed, you will not be laughing after today–after today’s sit inside of the death vehicle heading straight for god damned hell!

Happy trading, fucked face.

The more I think about it, the less sense it makes. There isn’t a scenario in the world when stark raving mad deflation is met with soaring equity prices. When corn, gold, and wheat plunged, oil traders said nothing because oil was trading at $100. Now that oil has been destroyed, equity holders are silently watching, thankful for elevated, inflated, equity prices.

The deflationary boogie monster is making the rounds. Let’s not kid ourselves: nothing and no one will escape it, which is why I am 100% certain another round of QE will be needed to save us–once again. There are so many mixed signals out there, it’s hard to tell reality from fiction. But, what’s tangible and real is stock price performance, year to date–albeit a young year indeed.

What’s working and what’s not?

Not Working (greater than -10%)

Oil, steel, semis, banks, farm and construction, alt energy, specialty retail, dry bulk shippers, personal products, industrial equipment, credit services, application software

Working (greater than +10%)

gold, silver, biotechs, drugs, chinese burritos, oil tankers, restaurants

Now let’s analyze, shall we?

The weak stocks represent global growth, industrials, consumer oriented retail, software, banks and credit.

The winners represent wanton speculation in chinese black boxes, biotech lottery picks, oil tankers as a result of plunging oil prices and a few restaurants who benefit from lower crude.

Without a doubt, we are off to a dreadful start for 2015 and all of the early signs point towards a market that is on the verge of correction. Considering the extent that commodities have corrected inside of the deflationary vortex, if we are to go down, it is going to be a brutal and vicious affair–swift and barbarous.

Sleep tight.

We round tripped from +280 to -150, back to break even, and then lower again. Am I supposed to participate in this charade? Am I to pretend that I have an edge in the intra-day machinations of this nonsense? Computers, generated by perverse algorithms, are whip-sawing this market to and fro. The only person (s) who can successfully win in this tape are either the degenerate day traders or long term investors.

This sort of tape is the death knell for swing traders, which, unfortunately, constitutes the majority of you.

When I sat down to write this blog, the market was up 5; but now it is down 46. It has a certain “throw in the towel already” tone to it and I fear many a momentum stock will be immediately relegated to the trash bin tomorrow morning.

Do you recall that tech rout, during March-May of last year? The market behaved similarly: gap ups were faded and any rally was met with gigantic sell orders.

Truth be told, I am becoming a bit paranoid around the lot of you. The timing by which some of my positions are declining suggests chicanery, which in turn has resulted in my wearing of the infamous ‘African Jungle mask’. I know who you are and endeavor to kill you. Do not think that my paranoia cripples me, for it provides me with the power of 10,000 suns. “The Fly” will never relent, or forgive, so just know that when you bet against me.

Speaking of which, GPRO is knifing lower due to Apple filing a patent for a high def camera. Really? Are you people out of your fucking minds?

Back to my ritual.

It’s hard to describe how bad today’s reversal is, truly. It never felt right from the beginning, up so much on such little news. I didn’t want to believe this would happen; but none of my stocks were acting like a +300 day. Now we get this: pure, unfiltered, hell.

Biotechs are leading the way lower, naturally. And, much to my surprise, homebuilders are following in tow.

I’ve gone from being +1.5% to down 1.5% in just a few hours. The unfortunate part about the reversal is that the markets are still open for another 1.5 hours. I dread to see what this sell off looks like at 3:50.

But I don’t want to get super-negative on you, just yet. Let’s try to paint this pig, optimistically, and not panic out of the first real reversal of 2015. Who knows, maybe the market recovers and closes up  for the day? But God damn it, I strongly doubt that could happen. By the looks of it, we should see a centaur kicking his way onto the NYSE by 3:30pm, ushering in the apocalypse.

Again, I am trying to remain optimistic. Let’s just walk away from the computers and do something else. That sounds like a swell idea.

Resist the temptation to get long biotech here. I find myself increasingly lured into the sector, which can only mean it is ripe for destruction. The JP Morgan conference is ongoing and all of the money managers who knows dick to doorknobs about medicine are loading up on biotech winners. The second these stocks stop working, rest assured, they will be swinging in the gallows.

Now would be a great time to make a lateral move. With my money, I have a lot of irons in the fire. However, only one sector stands out as ‘must own’, due to prevailing circumstances, and that is the homebuilders.

My favorite is TPH. But you can buy LEN, TMHC, MHO, PHM or BZH.

The FHA is lowering annual insurance premiums, which is projected to spur 250,000 new home sales over the next 3 years. Couple that with record low rates, an improving jobs market, plunging oil, natty and copper, and you have a cocktail for an extraordinarily bulled up housing market. You can play it via proxies too, like LL, OC and USG. However, in my experience, if housing is going to forklift higher, it’s best to just buy the construction companies, as they’re levered to new homes sales and price appreciation.

I don’t like gap ups like this. The market is behaving like a child. Nonetheless, this is a trend that should continue and doesn’t pose horrific dangers–because the hot money isn’t here yet.

What a wonderful scene this morning, as the entire oil and gas industry sinks to the bottom of the ocean. At the same time, interest rates sink lower and every commodity known to man ‘normalizes.’ A skeptic might paint this beautiful piece of art as bullshit, hem and haw, then sell everything short. After all, it’s unbelievable that our beloved cost inputs (commodities) should trade lower each and every day. Surely it has to mean something ominous, something scandalous: death beckons, I just know it.

Or, we are re-entering the sort of market, a normal market, that doesn’t give a shit about commodities. Pray tell me, back in the 90’s and early 2000’s, did you even give oil or copper a second glance? It was only during the mid 2000’s, when China started to build ghost cities for future urbanites, that anyone really cared about miners and oil companies. In the past, oil was no more than 5% of one’s portfolio. Why? Because oil sucked.

Guess what, jackass? Oil sucks, yet again (extra Count of Monte Christo).

Eat the gobbledygook and try to behold the splendor of cancer medicines and software companies that aim to kill hackers. As inputs come in and interest rates sink into the dirt, the American consumer grows richer. Very soon, we will all prance about the boulevard in fur coats and canes made from 100% ivory, procured for us by our man-servants in the African jungles who enjoy killing elephants for sport. Our portfolios will grow, by leaps and bounds, permitting us to open harems stocked with the finest of wares.

To accomplish this future reality, this elysium on earth, all that you have to do is eat, mind you, the gobbledygook.

No, farmers aren’t driving lambos and it would’ve been a spectacularly stupid idea to leave your NYC condo for a fucking farm house in Nebraska. Commodities are in the midst of being ‘normalized.’ The great inflation scare, spurred on by feverish Chinese growth and then Fed QE, has ended. China is back to being a garbage economy and the Fed is chilling, atop 100’s of billions in bond market gains, unrealized, from the dark days of 2009.

I felt it’d be apropos, given we’ve almost lapsed 5 years since Jim Rogers’ incredibly inane prediction on commodities, to have a look under the hood of the raw commodity complex.

Five Year Returns

Oil -56%

Natural Gas -82%

Sugar -52%

Uranium -51%

Cotton +14.5%

Coal -61%

Copper -28%

Silver -11%

Wheat -43%

Corn -35%

Timber +42%

Gold +7%

Palladium +21%

Cocoa -21%

Coffee -21%

Don’t fuck with Dr. Bernanke.

SNDK is being gutted, alongside a myriad of oiled stocks. Breadth stands at 34% and biotech seems to be the last bastion of hope for this bulled up market. Then again, I envision the peni guillotine to come down upon those who chase medicine man stocks up here. Let’s not forget how Penny Dreadful those biotech declines can be.

Tanker stocks are catching onto main stream Wall Streeters. I invite them to BEHOLD the glory that is NNA, for its share price is absurdly undervalued.

Homebuilders are holding their erection and there are pockets of strength in software names. It’s a traders tape, certainly not something to invite Grandma to play with her retirement funds.

The Dow’d Jones will smash through 22,000 this year, amidst celebratory champagne corks exploding into the faces of those who bet against stocks. But, before we get there, games will be played and men with jelly donut faces will be ruined, tossed out from windows into idle sewer pipes.

This tape isn’t for your grandmother.

Trade with vigor and please expedite your tragic ending, so that the rest of us can begin enjoying this cheap gasoline fueled market.