Solid Start

I’m going to put aside my bias, since that is redundant and boring, and throw out a few names that are worth looking at.

Tech stocks are now being viewed as “imminent m&a” targets. The deal flow is plentiful and investors are positioning for more deals. Some potential take over plays, in the tech space, include: VCLK, ARMH, ATHR, CRNT, ADTN, CY, CRUS, MRVL, RAX etc. Frankly, there are a lot of names out there being talked about as takeover plays. Recently, my interests have been in the “rare earth” space, thanks to “The Devil.” As you know, this is an industry that is dominated by China. However, there are a few names that trade here, specifically MCP, REE, both worth a look.

Regardless of the market strength, I do not like the banks. I do not like how they are trading and definitely do not like their business models. So, forget about them.

If you need to be long, the industrials, chemicals and commodities are where it’s at. I am talking EMN, IR, MT, FCX, EMR, MTW (interesting and cheap) etc. The big cap, big business, multi-national names is where value can be found, as well as growth. Ideally, I’d like to buy these names on a pullback. I even went through the trouble of creating a Growth at a Reasonable Price (GARP) portfolio, inside The PPT. However, due to this gorilla run, I’ve been unable to allocate funds. I am stubborn like that.

All in all, today’s a big day, with near perfect breadth. Typically, the market is sort of boring from 10am-3pm, as the robots take siestas during those hours. So, if we are going to see a push higher from here, it will happen in the last hour of trade. In my opinion, if you missed this move, it’s sort of too late and pre-mature (if that makes any sense) to buy now. You are much better off stepping in around 2-3pm, if you are dying to get in.

Indeud. The markets are ripping tits this morning, in what can only be described as “fantastic shit.” We had some durable goods numbers that were worse than expected and then some fudge fund manager, David Tepper, came on the teevee and said “The Fed will not let the market go down.”

VOILA, PRESTO! S&P moves up 14 handles.

You have to love this sort of action, as it defies logic, not so much different  than the ancient ruins of Puma Punku. Now, if I was a betting man, I’d opt not to bet today. Instead, I’d smoke cigars and whistle at the pretty women passing by.  The NAZCRACK, shout out to Krull, is spinning higher, with shit like NFLX hitting new all time highs.

I piss on this market. I vomit on its face.

Folks, this is what happens when shorts eat pavement. They capitulate and markets rip.

Personally, you could not make me buy stocks, even by gunpoint. Granted, I would like to have more long exposure today, considering the melt up to be. However, I can’t buy into a +100 open.

“The Fly” will be watching movies and shit today, while checking in on his losing bets via his spectacular iPhone.

NOTE: A few interesting plays worth exploring: MCP, REE—both “rare earth” companies (whatever the fuck that means).

Anyone in the business of managing money knows what tomorrow is: Wall Street 2 Day. “The Fly” will be viewing the movie, during lunch time. So, don’t expect to see me much around these parts tomorrow. Don’t leave any bullshit comments on this blog, besmirching the movie, for it is a classic. I really don’t care if the sequel sucks cock. I will view it, nonetheless, as Gordon Gekko is Bossman King. I will be posting my review here, for all of you small plebs to read at your leisure.

On a separate note, it was written that the markets would tumble, just in time for the movie debut, based upon the belief that “it’s all Hollywood baby.”

We shall see.

I am jaded, totally biased against the market. I am not a technician, nor a fundamentalist. I am a hybrid investor, shout out to Scott Bleier.

This is how I see things.

The last few days have been failures for the bulls, because the onus is on them. Due to the bull mode we are in, it is their responsibility to keep the ball rolling. Over the last few days, as well as today, all rallies have been sold. As a matter of fact, they’ve been sold aggressively. I know the market can rip tits tomorrow, based upon some rumor that the Bush tax cuts will be extended. I mean, that would force me to cover all shorts immediately. However, barring that, the economy is still struggling to getting worse. Taxes are going up and there is a lot of funny shit happening in the world of currencies.

If I was super aggressive, I’d be shorting banks here, with impunity, while going long treasuries. As yields come down, so do the profit margins at the banks. Having said that, I’ve been buying ridiculous amounts of TLT today. I am looking for it to run past $110.

Ultimately, victory will be mine, as I am the only person I know who talks to urinal shadows and zips through space in a fucking space rocket. The rest of you are merely pedestrian. Always remember, while mocking Senor Tropicana: at the end of the battle, it will be your head on the pike, not mine.

As planned, I shorted another 2,000 AEM @ $70.45, leaving me with one more bullet in the chamber. I am not perturbed by the price action in AEM. I expected to be wrong on my initial trades, which is why I opted to allocated my trades over 5 unique price points. Jewelry consumption is NOT driving gold prices up. It’s all hedge fund bullshit, the easy come easy go money. At the first sign of weakness, those motherfuckers will take their money, run, and leave you  in the shark infested waters without your handy, dandy Teutonic knight style full body armor.

LLNW is screaming here, likely due to take over rumors, being the arch rival of AKAM. Other stocks like ANAD and AMD are running with equal energy, just not as high. Tech is where it’s at today, led by the crown jewel of American innovation, AAPL.  CRE is decidedly weak, as well as banks. But let’s not get it twisted: today is an awesome win for the bulls, fending off a head on assault by the “spastic palsies” (bears) this morning.

For what it’s worth, I am having a decent day, with gains in EWZ, VXX and  TZA. As you know, I’ve decided to allocate half of my cash (25% of assets) into TLT, based upon the win-win scenario produced by none other than The Federal Reserve aka “Clam Bank.” The Fed likes low yields and people buy long dated treasuries to store value. Like I said, win-win.

Into the bell, I expect more of the same. Then after that shit is done, more of that.

Tech and retail are on absolute fire right now, led by gains in NVDA, AKAM, EQIX, NFLX, GYMB, M, NWY etc. The fact that the bulls managed to reverse today’s losses, while Europe was down 1%+, is amazing.

The market can go straight down today and I will still be floored by today’s rally. If you are in the bull camp, you are not surprised, naturally. I mean, if I was a Yankee fan, I wouldn’t be surprised to see them win another World Series, it’s just the sort of thing they do. This market is sort of like the Yankees, winning all the time, regardless of news. It does not matter, up, up, up.

It’s very hard to get in front of that. As I type this, breadth is turning for the better and upside momentum is gaining. Regardless, I try to avoid making rash decisions on days like this. I have my mind set on what I want to do. For the more flexible types, get out there and scalp a few trades. I’ll be busy allocating half of my cash into TLT, over the next few trading session.

I am here to lecture you a great deal. Although you might have a little money saved in the bank, you are nothing more than a chimpanzee in a suit, farting from chair to chair. I’ve noticed, because this is what I do, that you are very low class and do not have the basic manners that would allow a person such as yourself to talk to a person, such as myself. Believe it or not, it is a rather tedious duty to constantly remind you of your place. Do us both a favor and scurry back into your cubicle and fuck off something awful.

This is a site for distinguished gentlemen. If you are not one, see yourself out. Thank you.

Back to business.

The market opened with a gap down; but anticipate the asshole dip buyers to make an appearance. They will likely try to reverse today’s frown and turn it, well, upside down. However, as it stands now, the breadth is too bad for miracles. 95% of the banks on my screen are red. In addition to that, pretty much every sector out there is bleeding red.  I do some marginal strength in retail. Bottom line: it will take a lot of buying to turn this ship around. I just don’t see it happening today. We’re overdue a prolonged sell off.

At the moment, my top picks, of course, are TZA, VXX and short AEM. Gold is in one hell of a bubble and is dying to catch a $100-$200 beat down. Finally, treasuries look especially attractive here, even more so ahead of monthly dividend payments.

Poof! Your bullshit rally is gone.

-Merlin

UPDATE: In light of the HORRIFIC pinless hand grenade action in VXX, over the past two months, I thought it made sense to make a “VXX HALLOWEEN COSTUME.” Basically, I’ll be giving them away, once RC comes up with a contest idea. If you have any contest ideas, drop  a note on his blog. Once you take delivery of said costume, be sure to scare the kids in the neighborhood with it. However, something tells me the adults will be more frightened by it than the little ones.

I couldn’t care less about today’s move. We can knife lower 300 and I will shrug it off like nothing happened. I am positioned, right or wrong, for a move lower. I am emotionally invested in seeing this market trade down. I know that is practically illegal when managing money on a professional level. But sometimes you have to go with your gut, not your eyes. This is one of those occasions for me. That doesn’t mean you should follow me or believe what I am saying. I’m just throwing it out there.

I’m not a big believer in gold; but will never bet against it in a big way. My sole short is AEM, based upon the idea that what goes up must come down, if only for a short while. I am long a big amount of VXX. It’s not a hedge any longer, really. Considering my longs now represent less than 25% of assets, my bias is definitely short. One important note about my VXX position: I do not need to see my cost basis of $23ish reached. It’s a losing position and it’s big. Because of its size, I am unable to add to it. Basically, I will likely sell the entirely of the position on a meaningful move up.

With regards to my TZA position: my basis is low $31’s. On any decent pullback, I will book profits and move on.

In short, I am not looking for some sort of fucked up 2008 tape, just a sharp correction, spearheaded by the easy come, easy go crowd. You know, I’m looking for a little elevator action, especially in tech. After that happens, I’ll be back to buying dips again.

Easy come, easy go.

Get your popcorn ready.