REMINDER: LAST TWO BIG MARKET DAYS — COLLAPSES FOLLOWED

SIRS

A remindoooor for your perusal.

The last two times the SPY moved up like this, the following day stocks were thrashed against the rocks — traders got their eyebrows punched clean off their face.

Today’s market looks wonderful. How will it look tomorrow is the question.

Markets always obsess over several key metrics during every crisis. Back in 2008, we obsessed over banks and oil. During 2022, we are looking at CS, and obsessed over interest rates and the dollar. In order to sustain this rally, we need euros to gain against dollars and we need bond to recover, or at least stabilize. If those things happen and we are not entreated to a horrific series of earnings warnings, we should rally 5% in October, maybe more.

On the other hand, since we are so oversold and since losses are so great, should the CS crisis metastasize, which often happens during bank runs, and yields keep climbing because of inflation — we could very well get rocked for 15% in October.

5% up, 15% down.

As for me, 85% cash, 5% UVIX, 10% BITO. I will begin to position for tomorrow after 3pm.

All of the things necessary for a sharp rally are present.

Harsh decline in CS reversed and went higher.

Large drop in US futs turned up and rallied.

Oil ripping

Bond yield collapsing

Dollar finally weak

Natural gas plummets

Over the weekend Ukraine went on another offensive and made gains in Kherson. It appears Russia is having a difficult time coping with US weapons and a motivated Ukrainian army. The market, for whatever reason, is more or less pricing in an end to hostilities. I don’t see it that way. The more success Ukraine has on the battlefield the more Russia will escalate in order to negate it. We are at least 1 year away from this war ending, since both sides won’t quit and both sides have plenty of men and equipment left to wage war. Therefore, pricing in a collapse in gas seems pre-mature, especially since there is no gas for Europe and 21% of their energy needs are from gas.

Or is the market pricing in the end of gas altogether? If there is no demand for gas, since the pipeline is broken, perhaps Wall Street views gas as the “persona non grata” for the energy markets now. We have bids in oil, uranium and coal — but not gas.

At the open of trade, I was drugged up on some cough pill Mrs Fly attempted to kill me with last night — so I just sold everything. Good thing since I was heavily short, but ended up 50bps thanks to a quick morning drop and I had 10% in GUSH.

The Quant for September is out and it’s off to a fast start, +300bps.

My opinion on stocks is simple: news aside this looks good. The mechanics of the market are working in favor of a continued rally. I just don’t like the willful ignorance of natural gas being down, or perhaps I am missing something here.

I’d be remiss if I didn’t at least mention all of the rumors and shit talking taking place online about an imminent DB-CS collapse, which will make Lehman Brothers look like child’s play. On paper, or at least CDS spreads, it seems to be happening.

The new problem child in the European financial sector. pic.twitter.com/9tb90ytwEL

— Holger Zschaepitz (@Schuldensuehner) October 2, 2022

If in fact it does happen, MAXIMUM FUCKERY and chicanery will take place, all thanks and praise to shmita.

$600 Billion: What Lehman Brothers held in assets when they crashed and took the economy with them.

$2800 Billion: What Credit Suisse and Deutsche Bank control in AUM. 4.6x more.

Credit Suisse is at a 'Critical Moment' now, says the CEO.

What lies in store for the world?? pic.twitter.com/VIaMU7dSLX

— Graham Stephan (@GrahamStephan) October 2, 2022

I can tell you if they go, C will go too. It’s all cobbled like a nice weave together and as soon as that weave gets pulled — odious looking bald people will be presented to the world and everyone will sell. No one likes a bald man.

And then there’s this.

MOAR FUD: CREDIT SUISSE CHAIRMAN OF THE BOARD IS NAMED LEHMANN ### $CS pic.twitter.com/7Ceio0GpcP

— iBankCoin (@iBankCoin4tw) October 2, 2022

These are the banks trading with most risk now, subjugated well below book value — indicative of high risk afoot.

Banks with lowest p/b ratio:$DB $CS $BCS $AEG $IVZ $NMR $C
data via @stocklabsapp pic.twitter.com/UvBMcNwjfY

— The_Real_Fly (@The_Real_Fly) October 2, 2022

Plainly, I don’t view this crisis on par with 2008, only because there isn’t the same level of subprime risk associated with bank portfolios. HOWEVER, when price to market caps begin to sink like this — the market forces banks to raise capital and that process is dilutive and then there are next targets and the whole thing takes on an air of panic — spurred on by digital bank runs as large money managers move their money away from institutions that are thought to be in trouble.

Remember, banks are all Ponzi schemes and essentially insolvent, making their money off the capital of others. When that capital gets called in all at once — it’s over.

Carl Icahn chimes in.

Icahn: "We printed up too much money, and just thought the party would never end."

"And the party's over."

— The_Real_Fly (@The_Real_Fly) October 2, 2022

Futures are up and oil is spiking nearly 3% on news OPEC is looking to slash production by 1m barrels come Wednesday. The futures mean nothing, especially when we are looking at banks runs.

Sleep tight tonight, fucked for faces.

Let’s put aside any notion that I am able to predict the future and/or posses the power to harness the space-time continuum via a time machine. Let’s look back in time, thanks to Stocklabs, and see what markets did following a really bad September.

Below are returns for QQQ in the month of September and October from 2000-2008.

Sept 2000-2008

October 2000-2008

It’s evenly split, if we’re being honest. We’ve had 4 previous double digit collapses during September since 2000 and in 2001 and 2002 markets surged in October to the tune of 18%. The down years were -8% and -15%, respectively.

I took liberties to asses which sectors or areas of the market did best and it wasn’t small caps. IWM underperformed. It wasn’t oil; but times were different back in the aughts. By far the best performing area of the market was in the semis, with the SMH sporting 20% gains in 2001 and +24% in 2002. If we were to have a repeat and long SOXL, gains might exceed +50% for the coming October.

For the September that just ended, the SMH was down 13.5%.

If we continue lower, well then, I’d surmise UVIX, TZA and maybe even DRIP would do best. The price of oil, although RIGGED lower by Biden SPR releases, is ultra sensitive to global GDP. If economic collapse is coming to a European city near you — then we should assume oil will bid $60 by Xmas.

Listen to me. You might think you understand how the market works; but you don’t know shit. At junctures such as this one, human intuition must kick in and you must see the forest through the trees. It’s happening now. All of the bullshit has leaned onto one side of the boat and it’s about to be capsize into the fucking sea — where the blood and the feces will flow heavily and those standing in the way of correction will drown in it.

October of 2022 will go on record as one of the worst ever. We are now mirroring 2008 and if history is of any ancillary use — we shall bleed in October.

I’d like to tell you “it’s not all doom and gloom, hey take a look at this trans-homo-sexual cosmetic stock making waves in America” — but I cannot.

It’s over.

This is what you’re gonna do next. Sign up for this info form and find out about our fucking stock contest for October. The first person to blow up his account to zero will receive $1,000 clean from me. This is how the good folks at Stocklabs help out the poors.

I closed the session at the highs +165bps, by trading like Merlin in and out of longs and shorts — quite frankly a dizzying array of fuckery that I sometimes partake in to test my trading skills. Ignore the AH’s lift, total fughazi. We spill out and knife lower on Monday.

Congrats and ciao.

Rundown of today's Putin speech today pic.twitter.com/9kwJaLoHqI

— The_Real_Fly (@The_Real_Fly) September 30, 2022

Happy trading fucked for faces.

On this last day of September have you leaned anything? Bankers in England were saying had it not been for the Bank of England intervention into the GILTs market — they would’ve had a Lehman styled event and wiped themselves out clean.

Russia is on the move and scheduled to send “large echelons” of military equipment into Belarus by November for a Kiev surprise.

The United Steaks most likely committed terrorism by blowing up Nord Stream 1 and 2.

The world is a fucking powder keg and we have lunatics at the wheel.

This is what I do not, aside from whatever might happen today.

We are going to crash thru the fucking floor boards during October, as all of these FX issues and spiking of rates comes to a head. We are vulnerable here, just like we were after the collapse in September of 2008 which led to an absolute panic during October and then November.

To help, the good folks over at Stocklabs are hosting a TRADING CONTEST for October. But instead of asking you to make money, I will instead permit you to do what you do best: blow your accounts to smithereens. First lad to create a portfolio inside SL with a balance of $100k and blow the fuck up to zero will receive $1,000. It’ll be like Brewster’s Millions and I’d be interested to see how many of you triple your accounts in an attempt to zero them out.

I do what I can and during the blood month of Halloween, on the precipice of doom, I am happy to help.

NASDAQ Futs has been +120 until early morning here. I’m not sure if it was due to Putin’s speech; but the weakness occurred at the same time.

Here is a rundown of what he said:

Today is the end of the quarter and I suspect volatility. Market would love to trade up here, so be careful with your shorts. The fact that we dove lower at the open after giving up big gains in the futures markets might bode well for stocks if we reverse up. Either way, this chop makes it very hard to trade and if you go to eat a sandwich you might miss a giant pivot and end up fucking yourself for the session.

I bulked up heavily on GUSH with a large UVIX hedge and own some BOIL. With 55% cash and losses of 6% for September, I am bound to close out the month an extreme loser. I can succor myself with facts on the table, such as “this has been a terrible month for stocks” and how I outperformed the broader indices. HOWEVER, my benchmark isn’t the broader indices and I should have done better, especially since I expected a September collapse and talked about it forever.

I can blame my week off for COVID and how I shed nearly 10% off the highs due to COVID brain trading. BUT, today’s -2.85% was all me. I longed into today like an absolute pavement ape.

I’ve had many periods of sucking wind and it’s never easy to trade in chop. I am emboldened by the fact that I always make it out the other end fine. Eventually there will be a tape that is custom built for me or I will see something other’s don’t or can’t and propel back to annual highs.

For the year I am +42%, so it’s not all doom and gloom.

I cleaned it all out and took my losses like a fucking man. I had two choices: revel in my own stupidity OR do something about it.

I bulked up on UVIX and added to my GUSH position and the balance is cash, at around 70%.

The Fed said this about 30 mins ago.

FED’S MESTER: RECESSION WON’T STOP FED FROM RAISING RATES

Do you understand what that means?

ZERO CHANCE OF SURVIVAL. THERE IS NOTHING YOU CAN DO TO STOP IT.