Don’t Forget to Dress Your Window

Market psychology is very fragile right now.

On one hand, my “intelligent” bearish friends are scared shitless of a “technical breakout,” which can send the Dow up another 200-300 points. On the other, my bullish friends are booking profits here, afraid to ride long into earnings season.

One reasonable explanation for the recent rally is end of quarter window dressing. Fund managers are drinking the bottom kool-aid, putting cash to work at a frantic pace, in order to polish up their marketing material.

Expect the winners to keep winning, while the losers do nothing.

Additionally, it seems everyone has anointed the demise of [[BSC]] as the seminal moment which will mark the bottom for all eternity, similar to the Long Term Capital collapse.

This, as you know, is absurd. The problems we face today are far more systemic and will be spearheaded by a recession.

My bets are on Joey Bag-o-Donuts’ inability to buy a 3rd plasma tv, not a total collapse of the banking system—resulting in a market crash. That’s stupid.

I accept the fact that the government will backstop the banks and keep them afloat. However, they cannot make people shop at [[BBY]] or buy houses from [[HOV]].

To hedge against my short selling stupidity, I’ve been buying [[DGP]] and [[EWH]].

Consumer confidence fell the most since Nixon. According to Case-Shiller, home prices plunged by 10.7%. A new record. Congrats Mr. Hovnanian.

And, to top the shitsicle off, the dollar has fallen the most in two weeks, versus the euro.

Cognizant that money managers will paint the tape this week, for brochure purposes, I will buy more gold, via [[DGP]], in order to hedge against my [[SMN]] position.

Remember, SMN has several gold stocks in its holdings. If commodity related names melt up into Friday, DGP will offset my SMN losses quite efficiently.

Also, keep your eye on [[FXY]]. Should the dollar continue to weaken versus the yen, this rally will end quicker than a gay parade in the middle of Tehran.

Top pick: DGP

UPDATE: Due to my high tolerance for pain, I will not cover my [[MON]] short. Instead, I will let the dust settle, then short more. The nerve I have!

Damn you Mr. Monsanto and your evil seeds. Those fuckers have been poisoning people for a hundred years; but today they had to reaffirm guidance. Where’s the luck in that?

None, I tell you. “The Fly” does not like Mr. [[MON]] and his fucking seeds.

Like I said yesterday, when in doubt, short [[LEH]].

This is a perfect consolidation day for the bulls. The sell off is orderly and no real damage has been afflicted to key stocks or sectors. The banks are pulling back from a terrific run, and to fill their place; ag stocks are ripping higher today.

I must say, this is an impressive tape.

However, I just can’t shake the voices in my head, telling me: “yo, asshole, psst wake up. It’s all bullshit.”

So, I will slavishly buy more [[SKF]], [[SRS]] and even [[SMN]], while throwing seeds at my fucking trader/servant.

Keep in mind, down 50 doesn’t mean jack-shit. In order to regain control, the bears need to send the Dow lower by 200. Frankly, I do not see that happening today.

I just exchanged my remaining [[MVIS]] shares, with a cost basis of $4.50, for Treasuries, via the new Fed window.

Developing…

UPDATE: Go check Woodshedder’s chart chomping analysis. He is, barnone, my favorite chart guy on the internets.

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

Everyone is piling into homies, financial and tech. The credit crisis has ended and investors are putting cash to work.

The only problem: people are losing their fucking jobs.

Don’t take your eyes off the employment picture son, else you will end up being foreclosed on. An ironic twist of irony, indeed.

So, with everything gapping higher, I like my chances going short here. Look for max pain, for the shorts, at around 12,800. I will be very aggressive with my downside bets, up at those levels.

During the day, I had some “space alien magician” buys and shorts, not worthy of repeating.

Just be at ease knowing, “The Fly” is smarter than you and will end up making far more in this market, than most of you combined.

Finally, going short ag stocks here may work, even in an up tape. Much of the bull case here is deflating commodities, while inflating banks. So, I can see a scenario where stocks like [[POT]] and [[MON]] trade lower, despite the market melting up.

NOTE: Fuck everyone on CNBC who said the word “bottom” today.

NOTE II: I love this post, for a multitude of reasons—particularly the hastily manufactured photoshop. Not too much different than the “hastily” priced [[BSC]] deal.

Holy Shit Warning: VLO guides Q1 EPS $0.10-0.35 vs $0.91 First Call consensus

Instead of buying stocks up here, go play with small sticks of dynamite or hand grenades. Take the pins out, wait 3 seconds, then put them back in. It’s fun and nerve racking, at the same time. Just be sure to powder your hands up, prior to taking on this endeavor.

Look, buying up here is equal to declaring the Dow and S&P will be down, less than 5% for the year. Stranger things have happened, but in my book that’s plain ol’ chicanery.

When shit is running, the rookie move is to jump in at the top and end up getting your fucking legs and arms blown off, by a failed “pin reentry,” via slippery hands.

There is no way we end 2008 down less than 10%. So, with that in mind, get drunk and feel free to short [[LEH]], with the courage and bravery of a lion in a chicken coop.

However, seasonality is on the side of the bulls. Often times, even in bear markets, the indices advance during April-May. So, be prepared to live on edge, if you are short here—for about a month.

After that, during the summer, you can kiss this fucker (market) goodbye, as big money walks away from the asshattery, leaving assholes in their place to eat pavement.

Top pick: Short LEH.

That fucker will come out swinging, telling the unwashed to ignore terms, such as “bear market rally.”

Watch and learn.

NOTE: Cramer is always wrong. Fade him.

UPDATE: Bingo! I was right. Fly wins again.

I sold short 1,000 [[MON]] @ $105 and 2,000 [[LEH]] @ $47.55.

Disclaimer: If you sell short the above stocks because of this post, your wife’s cooking will decrease in quality, frequency and quantity. And, you may lose money.

I bought 2,000 [[SRS]] @ $92.15.

Disclaimer: If you buy SRS because of this post, “The Fly” will destroy himself, rendering iBC useless. And, you may lose money.