Setting Up For a Beatdown

The summer winds of reflation have sparked an epic short squeeze of Koranic proportions. Every manager with a series 7 license is buying Apple Inc. [[AAPL]] on margin, in order to celebrate Steve Jobs’ new liver. While I agree with many of the optimists, particularly on the topic of renewed economic growth, businesses are still struggling mightily alongside the average hamburger eating American getting poleaxed out of their pathetic jobs, with great vigor.

My target on the Dow, from the very beginning of this rally, has been 9,500 Dow, 1,000 S&P. Believe me, it is tempting to up those targets, rationalizing my long positions—while hoping for more. The reality is: at current levels, the risk/reward ratios are becoming unfavorable for a balls on the guillotine position. If you have big dicked gains, sell some stocks and go litter your local beach with empty beer vessels. If you are heavily short, down a fucking mile deep in losses, hang in there a little bit longer and average up on your positions.

Aside from the fact that the housing market is set to endure another round of ARM resets, the market always rapes market participants of their coin, during the months of September-November. Be smart; don’t be a jerkoff.

While on vacation, “The Fly” will not be executing any trades, no matter what. If people do not like it, they can go fuck themselves and find a new magician. However, when I return, I intend to bolster my cash position further (currently 32%) and look to initiate some short positions, especially in the banks.

See you dumb fuckers in about a week.

Senor Tropicana, in between errands, sold some more Ciena Corporation [[CIEN]] and a few other items, in order to raise his cash position. The market looks great and people are doing lines of blow off the bronze statue down on Wall Street. Hence, I want to be a net seller here, especially when Jim Cramer is fondling stuffed animals.

In short, I do not think the market will tank, any time soon. However, I do believe it makes sense to lock in hard fought gains, in exchange for a little peace of mind.

Bottom line: I still have about 70% of my assets invested, so I am not exactly jumping off a cliff here with these minor sales.

[[ERIC]] just won a bidding war for Nortel’s assets, beating out Siemens and Nokia. Alcatel-Lucent (ADR) [[ALU]] and Juniper Networks, Inc. [[JNPR]] are fighting eachother, quite feverishly, for a lucrative Verizon Communications Inc. [[VZ]] contract. Life is bountiful for the Barrons of Bandwidth, despite the economy sucking balls.

Remember, AT&T Inc. [[T]] is committed to trimming down their vendor list to a select several dozen. In my opinion, this bodes well for names like Alcatel-Lucent (ADR) [[ALU]] , ADTRAN, Inc. [[ADTN]] and TEKELEC [[TKLC]] .

People, these are parting shots, if I might be so bold. “The Fly” is set to embark on a mini-vacation of sorts. Purposely, in an effort to extend my lifespan and lower my blood pressure, I will not being watching the markets, whatsoever. I might post a few times, late at night, to tell you about my adventures with Mickey Mouse and the gang. But, for the most part, you will be on your own.

I know this news is almost as bad as hearing, for the first time, the tooth fairy and the sandman are fake, made up by mentally ill parents. But, it has to be done; therefore, it shall be so.

In order to prepare myself for a “worry free” vacation, I have delegated my business responsibilities to someone extraordinarily irresponsible. This way, when I return, the value of my steady hand and perfectionist ways will rise in value, sort of like my stocks, sort of like my life. And, by the way, I will depart having no less than a 30% cash position.

In short, life is good at The House of Fly, with year to date gains just short of 65% and balls the size of cannon grape. Once Flotek Industries, Inc. [[FTK]] goes “gorilla with a grenade” bananas on the market, my gains will be north of 75%. Indeud.

As for the blog, I am giving headline power to all tabbed bloggers. So, while I am away, you can enjoy the mysterious ways of Woodshedder and his southern charm. As you could imagine, Mrs. Fly is in a frenzy, trying to pack enough clothes and supplies to sustain us for several lifetimes. During tomorrow’s trading session, without a doubt, I will be sent off to complete a variety of last minute chores, none more important than the next.

My final market related post, at least for the next week, will be delivered to the internets tomorrow evening. Proper attire (tuxedo, white gloves) is mandatory.

To iBankCoin’s annual Champagne Party, hosted by “Le Fly” and his staff of white glove wearing butlers.

Dress code will be enforced, via severe baseball bat beat-downs at the door. Men: You MUST wear a Ted Baker blazer with a fucking pocket square. Additionally, if anyone shows wearing an Ed Hardy t-shirt, there is a better than average chance that your life might end, outside of the Champagne Party.

If your watch is not a conversation starter, then it must be boring. BORING WATCHES will NOT be tolerated. Quit having a boring watch: Quit having a boring life. Moreover, if anyone is caught wearing shoes with rubber soles, you will be shot on site. All Champagne Party participants must wear shoes that cost more than $400.

And, finally, all female “Champagners” must leave their fat friends at home. If you want to feel good about yourselves, go to the fucking gym and get fit. Dragging along some sad fat friend, just so that you can feel better about yourself, is equal to Chinese water torture. As you know, torture is strictly prohibited at all iBC Champagne Parties.

[youtube:http://www.youtube.com/watch?v=Q7RVp3DvX1o 616 500]

Life is good and the market has been very rewarding to those who had the cajones to be a player. However, let’s not forget the homeless guy on the street corner covered in feces. The economy is coming back, but not good—yet.

It’s important to buy stocks when no one else wants them. Equally, it’s vital that you, the internet leech, take profits when Cramer the Clown is fondling stuffed animals (bears) on national tv. Take some profits, have a drink, and do a few hundred lines of coke (just kidding).

Following a glorious two week run, “The Fly” is raising cash, while chuckling at his bearish counterparts for missing the rally. While I am gone (leaving Tuesday morning), I will have no less than a 30% cash position. Believe me, it pains me to sell stocks like OmniVision Technologies, Inc. [[OVTI]] and Corning Incorporated [[GLW]] ; but they’re only stocks. I can always buy others and make money in just about any environment, long or short. I rather book the profits now and chill out with Mickey Mouse, than be a nervous wreck on a potential GLW earnings disappointment, effectively coercing me to punch Goofy in the fucking face.

In other news, the frolicking fondlers at Flotek Industries, Inc. [[FTK]] are gaining forward momentum. Regardless of where the stock trades, I am in the name for the duration, or until it hits $3. Finally, [[ENTR]] looks pretty sweet too. If their “Moca-chips” made any substantial headway into Time Warner’s set top boxes last quarter, the stock will double in price. Last I checked, Verizon Communications Inc. [[VZ]] is gaining 500k Fios subs per quarter, all containing chips from ENTR.

Booyah.

WINSHIP UPDATE: It will come as a relief to many of you basement-dwelling lowlifes to know that THE INVINCIBLE NATIONS OF IBANKCOIN have added an egrgious lifestyle column. Although “The Fly” cannot gain anything from the words of its author (Jason Treu), the vast majority of you stand to benefit a great deal from any advice that might assist you in overcoming your life-long struggle as a piker and/or repeat offender.

In light of my pending vacation, I am raising cash here, selling out of some of my biggest winners.

I sold out of Corning Incorporated [[GLW]] , north of $16.70

I sold out of OmniVision Technologies, Inc. [[OVTI]] , north of $12.50

And, I sold out of Atmel Corporation [[ATML]] , around $4.10

At the present, my cash levels are just north of 30%.

You know I laud Goldman just to piss you fuckers off right? Seriously, if Goldman is so gangster, able to front run everyone’s trades and get away with it, I say we get what we deserve. If the regulators are not interested in pissing on Goldman’s head, well then, neither am I. Instead, you frisbee tossers should be picketing outside of the SEC’s offices, demanding justice. Sadly, you won’t; because you are just internet people with an ax to grind, disgruntled over getting pawned by Mother Market and her fucking Goldman robots.

Here on iBankcoin, we talk about making money, even if it means smoking cigars with Goldman robots, if you know what I mean. I do not concern myself with conspiracies, unless of course we broach the topic of FAKE LUNAR LANDINGS.

My point: “The Fly” wins all the time, regardless of pin-striped suit wearing, tommy gun wielding, cigar smoking robots at Goldman.

As for the tape:

Small down day is to be expected, following yesterday’s clown raping of the bears. The buy list includes: CEVA, Inc. [[CEVA]] , TEKELEC [[TKLC]] , Alcatel-Lucent (ADR) [[ALU]] and ON Semiconductor Corp. [[ONNN]] . However, there is a strong possibility that I will do nothing, opting to throw slices of hot pizza out the window instead.

We all see what’s going on, don’t we? Semiconductor names are blowing away estimates, thanks to inventory adjustments/end user pick-up. Instead of giving you food to eat, I will attempt to teach you how to hunt for yourselves. Understanding how cycles work is imperative, when buying the chips. For most people, including most money managers, going with a diversified ETF or just Intel Corporation [[INTC]] is the preferred course of action. However, if you are adventurous and want to play the sector like a fucking musician playing chop sticks, listen to me very quietly.

Here is how the semiconductor foodchain works:

MEMC Electronic Materials, Inc. [[WFR]] produces silicon wafers

Applied Materials, Inc. [[AMAT]] , KLA-Tencor Corporation [[KLAC]] , Lam Research Corporation [[LRCX]] , Novellus Systems, Inc. [[NVLS]] , Varian Semiconductor [[VSEA]] produce front end equipment.

Teradyne, Inc. [[TER]] , Verigy Ltd. [[VRGY]] test the wafers.

Amkor Technology, Inc. [[AMKR]] , Advanced Semiconductor Engineering (ADR) [[ASX]] , [[SPIL]] and Entegris, Inc. [[ENTG]] assemble and package.

[[SMI]] , [[CHRT]] , Intel Corporation [[INTC]] , Micron Technology, Inc. [[MU]] , Taiwan Semiconductor Mfg. Co. Ltd. (ADR) [[TSM]] and United Microelectronics Corp (ADR) [[UMC]] produce the chips.

QUALCOMM, Inc. [[QCOM]] , Tessera Technologies, Inc. [[TSRA]] , CEVA, Inc. [[CEVA]] , Rambus Inc. [[RMBS]] license intellectual property to chip makers and collect egregious royalties.

Naturally, there are other minor players that compete with the above companies and other foreign names, like Hynix and Samsung, that are major players. But, for the most part, that is the food chain. Other names, like Advanced Energy Industries, Inc. [[AEIS]] and MKS Instruments, Inc. [[MKSI]] leverage themselves off the front end and can produce exceptional returns during semiconductor renaissance periods. And, companies like Rudolph Technologies, Inc. [[RTEC]] (yield management), Cymer, Inc. [[CYMI]] (laser light source supplier) and Kulicke and Soffa Industries Inc. [[KLIC]] (copper wire bonding), [[ATE]] (sells the machines that test the wafers) supply vital parts to the food chain, giving keen investors early hints to cycle booms and busts. My point: when the food chain is busy and the foundries are ramping up production, like they are now, you can make reasonable gambles that end user sensitive semi’s, like Broadcom Corporation [[BRCM]] , Texas Instruments Incorporated [[TXN]] , Marvell Technology Group Ltd. [[MRVL]] , Diodes Incorporated [[DIOD]] , NVIDIA Corporation [[NVDA]] and Atheros Communications, Inc. [[ATHR]] , will blow the barnyard door off earnings estimates.

If you want to get a feel for how the semiconductor industry is doing, start by studying the food chain, then work your way down to names like RF Micro Devices, Inc. [[RFMD]] and Skyworks Solutions, Inc. [[SWKS]] later. This is the basic premise behind studying any industry, whether it be oil, ag, telecom or chips; there is always a food chain worth examining and exploiting.

This one goes out to the Tim Knight crowd.