Red Hot Chili Peppers – Scar Tissue

[youtube:http://www.youtube.com/watch?v=nX2qlTn6t24 450 300]

I am leaving early today, totally disinterested with the chicanery taking place in banks. As a result of today’s melt up, I sold out of my [[FMCN]] position and I reloaded my shorts in [[TCB]]. And, I bought more [[SKF]], [[SRS]] and [[FXP]].

In addition, I threw on some hedges, going long [[UYG]], [[MS]] and [[STI]].

As an aside, I covered my shorts in [[CMA]], [[BBT]] and [[Mi]]. And, don’t forget, I am long [[WB]].

In closing, I spit on banks; but respect the fervor of the bulls buying this shit. So, until proven wrong, one way or another, I will keep a short bias—but hold sufficient longs in order to stem catastrophic days like today.

This back and forth action can kill traders. There is a lot of noise in the market now, ranging from arresting all short sellers to killing all banking CEO’s. If you’re trading this market, like many of you are, try to be hedged at all times.

For example:

Long Banks/Short Tech or Short Oil/Short Banks

You need to examine sectors and how they correlate to one another. Recently, airlines, retailers and automakers have been running, as oil slips. Naturally, many of you think short oil/long airlines is a good trade. However, keep in mind, that is a very levered bet. Should oil bounce, you are double fucked.

The appropriate trade is long airlines/long oil.

In my opinion, the market will keep a tight range, until the annual September-October fuckery, when everyone gets killed.

The current theme is to kill the oil speculators and those who are short banks. The common denominator is that both of those trades have been wrong, for a very long time. It’s almost as if all of the losers banded together and went out for revenge against those who have been banking coin. Egregious and erroneous behavior.

This trade will end, as all trades do.

Now is the time to identify good entry points into energy stocks, like [[CHK]], [[RIG]], [[OXY]] and [[SU]].

And, at the same time, look to sell short some fucking banks—due to the fact that the carnage is far from over.

Just to fuck around and test out iBC’s new proprietary software, I bought some [[AUXL]]. I will explain this software in greater detail at a later time. Just know, it is my brain translated into code.

Top pick: Short [[TCB]]

I bought 2,000 [[AUXL]] @ $36.65. And, I bought 2,000 [[SKF]] @ $133.

I sold short 15,000 [[TCB]] @ $13.05.

[youtube:http://www.youtube.com/watch?v=LSEm3SyCHKE 450 300]

With oil down and another gigunta MER writedown, asshole dip buyers find it reasonable to buy the banks, apparently. As a matter of fact, yesterday’s entire leg down has been erased in the banks. Go-fucking-figure.

If there is one thing to learn from all this, just know that the market is never right. I know a lot of people out there love to say “the market is always right.” I don’t think so.

The market eventually gets it right. But, for the most part, it is chockfull of brainless chickens, clucking away, buying stocks with impunity.

At these levels, I like [[SKF]] and [[SRS]]. Hell, I even like [[FXP]]. But that doesn’t mean I will be right tomorrow. For all I know, I can be wrong for the next month or two. However, as you well know by now, my God given right is to bank coin in the market. So, one way or another, I’ll figure it out.

At the moment, I am redoubling my shorting efforts in [[TCB]]. This stock, like many other regionals today, is sprinting higher, for no good reason. In my estimation, this fucker should be resting its laurels around $10.

Furthermore, I am taking this spike to sell off some more longs.

I told you all along, the CDO’s on the balance sheets of our glorious banking institutions are worthless. All of the “writedowns” taken was just PR to placate the helpless employees and long term shareholders. These banks will be “writing off” their toxic paper, like [[MER]], over the next few months. Again, the underlying asset behind the paper has depreciated beyond repair. The CDO’s are worth nothing.

MER is reporting a sale of their CDO’s, but they are financing that sale! After it’s all said and done, they got 5 cents on the dollar or a punch in the nose (with brass knuckles). Rewind a few weeks to the Bloomberg sale, you will find MER financed that deal too. WTF!

What’s the point of selling shit, if you are the one giving the other guy the money to buy it? Does that make sense?

All of the banks, from [[LEH]] to [[MS]] to [[GS]] need to write off assets.

Most importantly, they (banks) are killing shareholders, via dilution.

Listen to me, don’t you understand that in order to get back to where they were, market cap wise, the stock needs to climb to ridiculous valuations, due to all the new shares in the float? Shares of WM or LEH will never get back to their all-time highs, in my estimation.

Finally, I hear all of this talk about the housing market bottoming. For those people, I ask you this:

Who is going to buy the homes?

After all, if you are interested in buying a home right now, you need to put a down payment of 30-35%, depending on your situation. If you’re lucky, you will find a local bank that will accept 20%. However, for the most part, banks are not lending.

So, if banks are not lending, due to lack of capital, how will all that inventory move?

In closing, I would not touch the banks here. Instead, I’d take advantage of any spike to sell them. In addition, if you’re short steel stocks, get out. Numbers out of [[X]] will likely buoy the sector for a few days. And, I concede, oil is broken here. [[DUG]] looks decent, up to $40.

Fuck banks.

Good Night.

UPDATE: Merrill Lynch is a criminal organization.

[youtube:http://www.youtube.com/watch?v=caG5OVN0ZRc 450 300]