Only Refiners

I’m not interested in anything, aside from the occasional JAZZ trade, than the refiners–RIGHT NOW. Are you seeing the divergence between Brent and WTI crude today? This will be talked about soon. Mark my words.

Brent is up .30 cents while WTI is down $1.60.

PAY ATTENTION, JACKASSES.

I haven’t been this excited over the refiners since my WNR days. I abandoned them because of the shrinking spreads. At one point, WTI surpassed Brent in price, placing stocks like ALDW, ALJ and DK into the ‘fag box.’ However, things have changed since then, haven’t they?

Upgrades will be introduced to the public square and short sellers sellers will be carpet bombed, a la Dresden.

How high can they go?

Back to new all-time highs.

How’s that, pal?

I started a new position in JAZZ, looking for the $100 roll.

During the Bush years, many of you partisan jackasses out there derided the 2003 recovery as being ‘lackluster.’ For some strange reason, you felt Bush, in all of his awesomeness, had control over the economy. The end result of the Bush economy was a grande crash of epic proportions, which helped pave the way for the Obama regime.

Just like Bush, Obama has no control, whatsoever, over the US economy. It’s run by corporations, for the corporations, and there is very little government can do, other than offer temporary stimulus.

Having said that, I’d like to acknowledge today’s jobs report as “the new norm.” They were terrible and will continue to be terrible because your stupid kids aren’t prepared for the 21st century. Keep telling them it makes sense to be a cop or a god damned fireman, or even a doctor. They’ll hate you for it later.

Jobs are being exported because corporations want cheap labor. If you want a high paying job, forget about a manufacturing plant and learn to code. If you don’t want to code, learn how to play this stock market racket.

The Federal Reserve will continue with QE. This morning’s numbers solidified the fact that the economy is still too weak to grow on its own. The rich will get richer and everyone else will fall by the wayside.

We’re heading into earnings at 27x sales. In the real world, sans the internet hype, if you wanted to sell your business, you’d fetch anywhere from 3 to 5 times sales. Due to the nature of YELP’s potential and overwhelming liquidity in the internet sector, it can sustain a share price of 27x sales, providing they smash earnings estimates.

Are you feeling lucky, punk?

To put things into perspective, NFLX is trading 5x sales. At the very top of the internet sector is LNKD, trading at a very meager 22x sales. FB and Z both trade at 21x sales and everyone else is stuck at around 13-16x sales.

What does this mean, Fly?

If YELP doubles their revenues next year, this means nothing–nothing at all. The 27x sales will begin to look cheap, at around 13.5x next year’s revenues. It all depends on the earnings and outlook.

If you want to gamble, hold the stock through earnings and wish for the best. On the other hand, if you are risk averse and do not care for 20% price swings, sell it and pray to the olde Gods (they are the vengeful ones, unlike the new one’s who like to participate in cocaine parties, drinking and perverted behavior) that the stock will sell off–down to LNKD type valuations, allowing for a reentry into said shares, with all of the love and grace that a Father shows towards his daughter getting married for the second time or graduating from a community college with a GPA of 2.

JP Morgan has reached a deal to pay the government $13 bill in extortion, even after the fact that they effectively saved western finance through the bailouts of numerous failed banks–including Bear Stearns and Washington Mutual.

I don’t know what the government has on Jamie Dimon, but he’s doling out record payments to the US treasury for reasons unbeknowst to anyone at all. The proceeds of the new government windfall will likely fund left wing, degenerate projects, perhaps hypodermic needles for struggling actors and artists or condoms for teenagers. Either way, this is redistribution of wealth on a record scale, sacking half of JPM’s annual earnings without a fight.

Doesn’t Jamie Dimon have a fiduciary responsibility to protect the capital of his bank? Remember, this is the guy who volunteered to hold the feces filled bag of Bear and Wamu for the government, much to the chagrin of his shareholders. Fast forward a few years, post crisis: this is the thanks he gets from the O.

Back to the markets: I am almost all out of YELP. I got lucky and started selling first thing this morning. I love the company, very much so, but feel emotional drawn to the refiners now. Therefore, I am shifting my focus away from the richly valued social media space to oil, ahead of earnings.

Top picks: HK, ALJ, BALT.

Ever since I was a young boy, playing amongst the oil derricks and barrels, I knew I’d grow up to be an oil man. Over the course of my illustrious career, on numerous occasions, I’ve thought about “going back to the well”  and have taken stakes in many companies with success.

Well, this morning I am pleased to announce “The Fly’s” reentry, officially, into the world of black gold. I pared down my YELP position to be something of an after-thought, mere child’s play, and have sold out of all TRLA. With the proceeds, I’ve acquired shares of ALJ and HK.

I did so with unremitting vigor and tenacity and will continue to do so for as long as I live.

I sold out of TRLA. With the procceds, I am looking to buy discounts.

UPDATE: I sold some of my YELP position.

With this morning’s move lower in WTI crude, the Brent-WTI spread is now more than $10 again. Just a short while ago Brent traded at a discount to WTI, causing many to flee the refiners, scared of their own shadows. However, now that the spread is widening again, Mid-continent refiners are back in play, the rage of Wall St.

As such, Goldman Ball-Sachs upgraded DK this morning. I expect all refiners to trade higher today, and for many weeks to come, which is why I went long ALJ on Friday (time machine).

Other refiners worth exploring are ALDW, TSO, HFC, WNR, PSX, MPC and CVI.

As for ALJ, with 29% of the shares sold short and spreads widening again, I predict extreme hardship for those embedded in a bearish position here. The stock can easily rise to a level seen just 6 months ago, or $17.

With the SPY +3.8% for the month of October, I think we can rule out a seasonal fall calamity. The last time the SPY went up 3% or more, during October, was in 2010, 2006 and 2003. After a strong October, the SPY traded flat in 2010 at 0.0%, up 1.98% in 2006 and up 1.1% in 2003 in the month of November.

HOWEVER, in December the mood turned quasi-pornographic, with +5.03% in 2003, +1.34% in 2006 and an outrageous 6.68% in 2010.

In other words, based on recent historical factors, the market is only getting warmed up now, setting up for a rather libertine end to 2013.

Fun fact: the market used to trade on Saturdays, from 10am to 12pm, from 1873 all the way to 1952.

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This story was written in August of 1929, two months prior to the historic stock market crash that led to the great depression. The moral of the story is, don’t get caught up in the rhetoric and trust nothing.