Futures Are Doing Fantastic This Morning

Nasdaq futures are up almost 20 this morning–very exciting. Citibank reported better than expected earnings, PANW was upgraded, and YELP defended for being the bastion of organic growth that it is. What can go wrong?

I am looking forward towards a fun filled day of profit, without any sell offs or “profit taking.”

To celebrate this event, I’ve ordered a single waffle this morning for breakfast, alongside my usual protein rich Greek yogurt.

I realize the futures traders are getting a bit overzealous here, by not predicting a horrendous open.

Trolls: this is your chance to set the record straight. Feel free to litter the comments section with expert advice, casually discussing the years of professional investment money management experience and the personal milestones you’ve amassed while gaming this market. Perhaps this is a good occasion to let me know how embarrassing it is to be forced to read this blog and watch me draw down daily. Or, if that fails, you can simply enlighten us how you’ve managed to trade with flawless integrity during all periods of the market, over the past 20 years.

NOTE: When doing this, feel free to forget about the 7 year track record of excellence that has been displayed on this site, every day, for the benefit of the millions of people who read the site.

Troll flo

According to the pristine trading pits where the futures guys concoct their prophecies, NASDAQ futures are down a whole 7 handles, after fair value. The Dow Jones Industrial Average is set to careen lower by 20 points.

I’ll deal with your ne’erdowells later.

Register and enjoy it with my compliments. Hopefully we can help you out a little this weekend, to prepare for the week ahead.

PPT

ChessnWine and Ragin Cajun’s 12631

After Hours with Option Addict

Who’s happy to see ZOES come public today? Just think, we get to see another 10 or so IPOs next week. Quite frankly, I think I’m gonna run out of popped corn watching these things.

Let’s talk turkey.

No one is going to step in front of this market on a very scary Friday the 11th afternoon when car recalls captivate the American public and THE BLOOD MOON looms in the not-do-distant future.

The Nasdaq is plunging again and nothing can arrest it. Remember, crashes happen when markets are weak, not strong.

We are readying to crash; get your helmets ready. The very thing that is so hard to predict, the black swan of black swans, is happening right in front of your eyes. Everyone is running towards treasuries and utility stocks because the flight is on. NOTHING can stop the sellers of WDAY, FEYE, YELP and SPLK, as they have an infinite amount of shares and there are literally ZERO buyers of those stocks.

All of the asset managers are away, golfing, prepping for easter dinner, blood moons, things of that nature.

If you are short, sit back and enjoy the shit show. We will crash because we have to crash. There is no other way out.

Ciao.

NOTE: Grandma Yellen is preparing for bedtime, as she has two doctor’s appointments tomorrow morning, one at 6am and another at 7am. She will be in bed by 5pm and is very happy because she got to travel into town today to buy a new broach, in celebration of her new role at the Federal Reserve.

I slept in this morning, so that I could avoid seeing the market open. I haven’t been getting sleep in weeks and I am beginning to feel burned out. I forced myself to stay awake to around 5amish, so that I wouldn’t wake up when the market opened. From the looks of the market, I might have missed the worst of it. But we’re not done with this nonsense. Since we haven’t reversed off the lows and jackknifed higher, there’s only one way to go: DOWN.

Why should we go down?

Why not?

It’s a Friday and scary things happen over the weekends. Why, there could be a war, a pestilence, or even another car recall!

I am glad to see utilities trading higher for the year, up 10%, while growing their revenues at 3% per annum. But their PEs must be cheap, right?

WRONG AGAIN.

The utilities suck and so do I.

Into the final 3 hours of trade, I look forward to riding my Four Horsemen of financial instability into the train tracks, to be run over by speeding locomotives.

I am going to make this short and to the point, since the majority of my recent blogs have been long winded, bloated, crap pieces.

1997, 1998, 2000, 2001, 2008, 2011, 2014.

Which one of those doesn’t belong?

Each and every big market pullback was based around a reason, whether it be a stupid reason or a real one like in 2008. But at least there was a reason for the collapse, whether it be LTCM liquidation, Asian Contagion, Dot com bust, 9/11, Credit Crisis, Euro Scare etc.

Do you remember why the dot com bubble bursted? It’s true that valuations were excessive and the market got ahead of itself. That’s not why it crashed. It was almost a self-fulfilling prophecy. Confidence jacked the market up and then the lack thereof took it all away. See, companies were coming public too early, losing money, and using the capital markets to fund their businesses.

What does that mean?

Well, XYZ came public and part of their business plan was to do secondaries or raise capital through bond issuance, in order to fund operations. To be honest, there’s nothing too disingenuous about that either. That’s why companies list: access to capital.

So when XYZ’s stock price cratered and they were unable to issue shares because the market was shot to hell, liquidity dried up for them and they went out of business. With a snap of a finger, just like that, dozens of stocks vanished, all bankrupt due to lack of access to capital. Without collateral, it’s real hard to issue bonds.

Imagine 12 tech stocks, all who buy products from CSCO, going belly up at once. Now you know how the domino effect wrecked the large cap players. It was all one giant house of cards.

Are things different today?

You betcha. For the most part, companies have lots of cash on the balance sheets and most tech companies make money, hand over fist.

So then why are stocks crashing?

Could it be THE BLOOD MOON?

The scary part about this drop is that I can’t think of any catalyst that might arrest it. There is nothing to be resolved, or that the Fed could do to help, or Obama can say to assist with confidence. No one cares. This drop, if not stopped soon, will crush consumer confidence and cause a real spiral in the real economy.

The fiction will soon become the reality, unless we stop going lower.

https://www.youtube.com/watch?v=mIUY3PO4E0g

The majority of my holdings are in 4 stocks: WDAY, FEYE, SPLK and YELP. I bought them because they were growing their revenues (LOL) and were winners, led by fantastic management teams. All of that means absolutely nothing today, as this basket of hell, death and aids netted me losses in excess of 10% (that’s right, 10%…for the day). I am beyond words. This is more than what I signed up for and ponder to myself the very meaning of life.

As a general rule, I sell after 10% losses. This time around, I rode these stocks straight down the toilet bowl and now swim with them in the raw sewage, with the rats and alligators.

I sold out of some small positions today, CLIR, FLXN and ANGI. But the money raised from those sales do nothing for me, as I am completely decimated amidst a crowd of geeks laughing at me for being so stupid.

With today’s sales, I could average down in these stocks again; but the life has been drawn out of me and I am giving up. I won’t sell. However, I intend to drift away on a small piece of wood, into the sunset, without any paddles or provisions. It was just meant to be, a fantastic blow up, broadcasted live in a public forum for all to scrutinize. Please do not let my newly found tone of pathetic contrition stop you from poking fun at my state of affairs, as I would not grant you safe quarter if the scenario were reversed.

The reality is the market eats its young and spits out the old men from windows. It’s never personal and just because you suck now and lost a a bunch of money, that doesn’t mean you can’t regroup and rise again from the ashes. Greed is a wonderful emotion, but it cuts both ways. You get to make all of that money during the good times, but suffer, abhorrently, during the bad.

Bottom line: Assess the damage and stay in the game. For me, the market crashed today, and funnily enough, it’s barely down 1% for the year. Fuck me running sideways with a pineapple.

https://www.youtube.com/watch?v=Bv2j4nWeYEY

A few weeks ago I discussed the merits of N and how the stock was a good representative of the current cloud/bubble/undervalued growth situation. It is my belief that N is a true tell for the market and I highlighted how it might be due for an oversold bounce. Only once in its history has the stock done what it’s doing now, and that was August-September of 2011 when the stock dropped more than 30%.

Thus far, since March, N’s losses are now nearing 30%, which puts it firmly into the retardo to the downside oversold area.

It’s worth noting, September of 2011 was the bottom for N, as it soared by 40% in October. No one wanted to buy stocks in September of 2011, even me. The chartists were out and about, betting against stocks due to technical factors, merrily banking coin along the way–until magic happened.

This market runs on magic. It’s the missing component in everyone’s models. It’s not tangible, as you can’t see it or hear it. It cannot be quantified.

In summary, I hate myself, stocks, the business, money, the teevee–everything but the blog, which has proven to be very therapeutic during this “process.” But it’s important to take a step back and look at what’s happening and put it into prospective, historically. Even if this is the big olde dumbass top, it shouldn’t happen overnight. The initial decline has been accomplished, at least in the leadership stocks. Mass carnage has been imposed onto guys like me, other managers of money, and people who are generally bullish on growth. According to the stock market handbook, THERE SHOULD BE A GOD DAMNED PERIOD OF RESPITE, WHEN ONE MIGHT BE PERMITTED TO DRINK A CUP OF EARL GREY TEA (a little milk and dash of honey) WITHOUT BEING RUDELY INTERRUPTED BY LIFE THREATENING MONETARY SETBACKS.

I am sitting here in awe of the decline in my portfolio and asking myself (literally talking to myself) “why am I still in these stocks?”

Pardon the negative tone that is about to embrace this blog, but this is exactly how I felt in 2000, when the market collapsed–HEADLONG–speared by tech stocks. But even then, during the very worst period in stock market history, stocks went up for month’s at a time. This rout is unique in its “elevator pattern”, whereby all of the gains from last year are stricken from the record within weeks.

Looking at my four horsemen of financial misery (SPLK, YELP, FEYE, WDAY), you’d think all of them missed earnings today. You’d look at these stocks and say “HOLY COW, they’ must’ve guided down for the next decade.” Sadly, it’s just another day at the office.

I realize that my pessimism, which is my natural state, is something that can be deemed to be “a contrary indicator of grande capitulation.” However, you’d be remiss to start buying stocks now, as I’ve dedicated my life (my actual life) on seeing this through. I don’t know why I’ve been so stubborn, as to risk everything for something so small. But it just doesn’t make sense to me.

All of the IPOs coming out make me sick and also feeds into my inner-bear, one that believes this is a sign of panic, on the part of private equity and investment banks. They are throwing too many new issues on the table, in too short a time frame, which leads me to believe they are keen on the market going lower.

Playing devil’s advocate here, there is really nothing to hang your hat on. The price/sales ratios are still high, after 40% drops. Nothing is baked in and I am not really in the mood to go through a tortuous earnings season, following this rout.