Donut Mind if I Do

Unstoppable market we have here. It ignores Asia, Europe and everything in between. It has gone “Palin” and will not adhere to news, reason or seasonality.

I sold off a few small positions that have been lying in the old portfolio for a year or so, booking long term gains. I added to my FUQI position because it loves me long time. Aside from that, today was uneventful for me, as I do not own stocks trading 30x sales.

Nonetheless, I do have cash and will look to add to some names that have lagged. For the day, I was down 0.15%.

Those of you who are not punk kids and were trading during the dot com bubble should be very familiar with the term “new economy.” Ten years removed from the greatest bubble of all-time, which led to a 75% reduction in the nasdaq, here we are in another bubble. This time the bubble is found, yet again, in technology.

AMZN, NFLX, RVBD, CAVM, FFIV, CRM, OPEN etc. are in fatalistic bubbles. However, they also are saddled with large short positions, which serves as tinder for their respective share prices. I do not get in the way of runaway trains. If I was to explore betting against these names, I’d go with LEAPS, out of the money puts. Allocate a few g’s across a basket and just walk away. Back in the old days, I remember a good friend of mine had a monster winner: EXTR. Back then, EXTR went up everyday, like NFLX, defying all laws of gravity. The stock went up and split, then went up again. He had millions of dollars of gains in EXTR and never sold a share. He thought it would go up forever, since it was so hot for so long. The pitch was perfect and there was nothing that could derail EXTR, until the wheels fell off.

Right now the market wants to go up. There is a lot of hot money chasing a few names, so I seriously doubt we are going to see any significant sell off, barring some news.

Personally, I’ve given up on trying to time the top and will remain long biased until we overheat or breakdown. I like stupid stocks, like CHGS, HEAT and FUQI, let’s not forget MWW.

The point of this post: take profits when you can and never stand in front of runaway trains.

Today’s sell off is garden variety. It’s nothing. There is no pain being distributed to you jelly bellies. Let this marinate a little then the ZING! will sink in.

So you know, I will make money in my AEM, SPG shorts, despite the boom in CRE and gold. Things can get out of hand for a long, long time, as evidenced by the share prices of CMG, NFLX and CRM. That’s what I call multiple expansion. Cramer likes to remind people of how right he was, recommending those stocks. Trust be told, he had no idea those stocks were going to the stratosphere. It’s Resorts International all over again and no one can predict that. Buying  NFLX is more than retarded, but reckless.

Having said that, I am long a variety of lotto stocks, due to their nature. They are outliers and tend to ignore the trend, as evidenced by the pin action in RARE EARTH and other Chinese stocks today.

Finally, there is much to bellyache about the performance of VXX. However, I am not delusional and do not expect it to do well during melt ups. Big mistakes should not conjoin with weakness, in the form of public displays of unhappiness.

My favorite indicator of market frothiness is margin debt. When debt is on the rise, I tend to scale back and vice versa. At the present, margin debt stands at $255 billion, up 8.8% in September—the highest level since the infamous flash crash. Separately, most of the recent economic data is pointing to higher inflation (HELLO COTTON!), which lends to the idea that the Fed might not go “all in” with qe2. You know, it’s entirely disingenuous of the Fed to “target inflation,” proclaiming that it is “not high enough.” Well, color me stupid, but if you add in food and energy, current inflation is running hot at 10%.

The reality is: our government does not know how to create jobs. They are shooting peas at a tank and are frustrated by the durability of the tank to survive their onslaught of hard peas. We are not living in the 90’s anymore. The jobs market has moved to China and it’s not coming back.

Having said that, corporate earnings and balance sheets are as good as ever. I do not believe there has ever been such a divergence between the workforce and corporate balance sheets. Naturally, this is easily explained by the fact that most U.S. companies do more business overseas than here.

It’s easy to believe “China will grow forever” based upon what we are seeing there now. But, the real question is: if our jobs market continues to stagnate, at what point does our lack of consumerism affect the overlords at FOXCONN? In the meantime, go back to your casino, dressed like a stupid faggot. Place it all on black and hope for the best.

As for me, I will continue to look for cracks in the dam. Eventually, this city of idiot investors will be flooded with blood. I will be ready for such an occurrence, from the luxury of my frigate.

Paul Tudor Jones has penned a masterpiece, with regards to the impotency of US policy towards China.

Fun fact for tonight: if we accounted for inflation the same way we did before 1980, right now, our inflation rate would be 10% instead of 1.

QE2, y’all.

I imagine, this exact  conversation took place during today’s trading.

9am

Underling: Good morning Sir, I’ve made preparations for the safe delivery of poached eggs and toast to come here, within the next 5 minutes.

Boss: I have no time for your poached eggs. I shall be eating shorts this morning.

Underling: Oh, yes of course Sir. Right away with those shorts, right away (making jerky movements with his arms).

Boss: I see LXK, X and several other companies posted bad earnings. And, to top it off, the bloody Euro-fags are making the dollar rise. Get me my stock market laser beam at once!

Underling: (hands the Boss an Acme Stock Market Laser Beam)

11am

Underling: Sir, you have been sitting there with that bloody laser beam for hours, just staring at your screen. I’m afraid you’ve turned into a catatonic manikin of some odd variety.

Boss: Shut up at once, you fool. I am waiting for the precise moment to exact the perfect blow.

Underling: Blow away Sir. Blow away.

1pm

Boss: (PEEEEEWWWWWW, ZIIIING, ZAP!) Take that you ridiculous cocksuckers!

2pm

Underling: Sir, I see you have exacted revenge and restored your honor. Well done, might I add. Shall I fetch you an afternoon cup of tea?

Boss: Yes, I have restored my honour. But I do not require your tea. There is more laser beaming to be had.

Underling: Very well Sir. Laser beam away. Do it well and fast.

3pm

Boss: (PEEEEEWWWWWW, ZIIIING, ZAP!) Take that you fucking cows!

Underling: Oh yes, Sir, an excellent shot indeed. Off with their appalling faces! Shall I make preparations to have your royal blue cape delivered?

Boss: Yes, do so at once.

4pm

Boss: (walking around his office, gallantly, dressed in a royal blue cape) Yes, I shall leave this matter in limbo, until tomorrow. It will befuddle them all.

Underling: A well executed plan, Sir. You showed them very well and good indeed.

Boss: Tomorrow, right away, I shall laser beam all of their faces off at once. It will be magnificent. It will magnanimous. It will be magnetic.

Underling: Right away Sir. Your magnets will stick to their iron heads. Shall I make arrangements for your shuttle?

Boss: To the shuttle we go. I will take up this matter first thing tomorrow morning (grinning all the way to the shuttle).

To be continued.

What a shocker!! On a POMO day, the market has reversed all losses and went green. I wonder what precipitated that oddball sequence of events? Hmmm.

Let’s talk seasonality. It’s a little hobby of mine to peruse through seasonality data, in order to get a feel for the market. It’s equal to knowing what fruits are “in season” or not, when buying groceries. I realize some of you rubes like to eat watermelons in December; but there is something to be said about timing your fruit consumption. You should try it sometime. Before I get into the data, I want you to all know how much I hate not being able to curse. God willing, the market will just vomit on itself, touch down on 10,000, just so that I could go about my life being me again, instead of some jerkoff who doesn’t know how to talk properly.

The BIG theme for November is BIG industrial companies. Most of the standouts are old school smokestack companies, who are fueling the growth of BRIC. MMM has been up 77% of the time in November with an average return of 2.69%, over 31 years.

Here are some notable standouts (note: full screen is in PPT)

MTD, PCL, MAC, LXK, FMS, NLY, ABV, SLG, RMBS, PCG, CNP, IR, NU, NST, OGXI, ZRAN, FPIC, GTI etc.

As for today’s tape: I am enjoying it quite a bit, with intra-day gains of 0.93% aka “more money than you will ever see in your life.”

Letter X bled out 52 million in quarterly losses due to “lack of recovery.”

Chairman and CEO John P. Surma (U.S. Steel) said the results reflect “the uncertain economic situation in North America and Europe.” Customers that are not under supply contracts are reducing inventory levels, while orders from those under contract reflect the “traditional downtime taken late in the fourth quarter,” Surma said in a statement.

Here’s the bottom line: is QE2 enough? Is it enough for China to grow at a remarkable 9.5% every quarter for eternity (because it’s all one big coincidence after another over there) sans a U.S. recovery? While it’s true, profits are soaring, but at what expense? If you haven’t figured it out by now, the expense is you. You are the cost of doing business and corporations are fleeing you, in exchange for BRIC’s, as evidenced by X’s woeful numbers.

As you know, I am politically indifferent. I used to be a life long republican; but then I flippe flopped and voted for Obama. All incumbents MUST be voted out. I realize putting new GOP’ers back into office might end up being one big circle jerk; but it’s worth a shot, no? The current trajectory is dreadful and our leaders do not get it.

Finally, today is a POMO day, so don’t get all disheveled with yourself if the market reverses and spits in the face of those who bet against it. Under normal conditions, this market should nosedive, just based on X’s earnings. But with today’s HFT dominated trade, who knows?

Chess did a quick video about The PPT. Very useful for those of you who are trying to understand it better.

As an aside, it’s interesting to note that the highest closing hybrid, during this rally, was 3.09, on 9/3/2010 (previous Hybrid highs easily eclipsed 3.20 on many occasions). The very next day, the market sold off, sending the Overall Hybrid all the way down to 2.39, representing THE LARGEST HYBRID DECLINE EVER (-23.11%). Why am I writing with BIG STUPID LETTERS? I don’t know. However, I do know this rally has been very suspect, almost fish-like in its unending nirvana. To be fair, I changed the OVERBOUGHT cycle, just prior to this rally, lowering the bar to 2.95 from 3.10. Under the previous rules, The PPT has nailed this rally down to the last tick of TNA. I read it wrong and paid the price.

In recent weeks, a compromise was made, whereby the OVERBOUGHT range is still 2.95, but it must accomplish that score with 75% or more of large cap stocks ranked “buy” or higher, in order to be considered OVERBOUGHT.

In other words, The PPT won, even though I lost. How apropos.

I added to my MWW position, solely based upon the idea that it is an illogical position. Having said that, the stock looks poised for $17.

Just to recap: the market sold off into the bell, in order to scatter some shorts all over the living room rug. Tomorrow, The BEARDED CLAM will vacuum them all up, and more.