Bottom Feeders Step In

I like this look–big flush out followed by perverted buying.

Also, the IYR is up. All we need is TLT to bounce, then we’re looking at a +200 point day.

I am a buyer here.

UPDATE: I paused my buys until market stabilizes.

Small caps are getting crunched, especially my IMMR position. I will buy more and bring the position back up to 30% of assets when the time is right. For now, I am waiting to see stabilization in TLT. The lower is goes, the more selling in the SPY.

I don’t have any positions that needed tending to, aside from IMMR–as I am 70% cash and have been before the sell off. Any meatloaf throwers in the comments section saying otherwise will be quickly discarded and banned from the league of gentlemen.

Don’t get upset and ponder as to why your stocks are careening lower. This is what liquidation looks like, fat margin clerks smoking cigarettes, selling out positions with reckless abandon.

A fantastic buying opportunity is right around the corner.

I am hearing a better than expected grain season in S. America coupled with a sharp increase in Chinese steel production has led to a spike in shipping rates. How is Chinese steel demand spiking if their economy is in the pits? There are so many cross-currents that make no sense. One thing that is crystal clear is higher shipping rates means a faster path to profitability for shipping companies.

My favorites are FRO, NM, SB, EGLE and DSX.

As for the market, who know’s what it will do today. It looks like a higher open, yet I wouldn’t be surprised if we sold off. I have a list of stock that I want to buy into the margin calls. Let the weak sell out and get flushed out. We will be there to eat their lunches when it happens.

– The People’s Bank of China injected 50 billion yuan ($8.17 billion) into the financial system on Thursday after a cash squeeze pushed money-market rates to record highs, Bloomberg News reported, citing an official at a state-owned bank. The money was supplied to a single lender through short-term liquidity operations and more lenders were in talks with the central bank to obtain financing, the report said, citing Hao Hong, chief China strategist at Bank of Communications Co.

In an effort to save face and avoid national disgrace, the Chinese fraudsters have injected 50 billion yuan into the banking system to help loosen up credit.

As a result, Japanese losses have been stemmed and Asia markets are only going down, as opposed to crashing through the floor boards. The aussies are merely down 0.2%.

Both US and European futures are pointing to an increase of 0.45% at the open of trade.

Japan is lower by 2.2% and the rest of Asia is about to open.

All eyes on credit markets, especially SHIBOR.

1 wk SHIBOR in death mode

How can we buy any dip with charts like that?

UPDATE: CHINA INJECTS 50 BILLION YUAN TO STEM CRISIS.

I went into today’s trade 60% cash. I’ve been in that position since yesterday morning. Even with most of my assets in cash, I lost 3% today. That’s freakin’ ridiculous and I feel like killing someone for that. But then I sit back and think about all of the plebs out there, the less informed, who stepped into today 200% long, then feel a sense of relief that intelligent life still exists and it’s me.

Towards the end of the session, I sold YGE for a 6% loss.  I did so because it can drop another 7% tomorrow. It’s better to take small losses than the largess varietal.

Look, this is very simple, people. It’s either different this time, or not. Well is it?

LISTEN TO ME YOU STUPID BASTARD.

In the past, according to the algos inside the halls of The PPT, stocks bounced quickly and hard when the technicals deteriorated like this. We’ve hit these dour technical levels 8 times over the past year, and 7 times the market bounced for an average return of 3% over a 10 day period. HOWEVER, the data is unconvincing over 1-3 days, with mixed results. I’m objective enough and smart enough to understand that nothing lasts forever, not even POMO.

The Risk Appetite Index has been warning about the danger out there for more than a month. For those of you who are unitiated, the RAI is an index inside of The PPT that tracks credit, worldwide. Have a look.

It’s different this time because Bernanke is going to retire from the Fed and because China is undergoing a credit scare. To alleviate pressures, China will need to cut rates and fast. There is going to be a tradeable low soon–but it isn’t today.

My gut tells me China does a rate cut Sunday night.

SHIBOR

There is a possibility that the Chinese credit crisis to come is about to happen right now. There has been a violent move higher in short term rates in China, something new, something really bad. We all know China has been persona non-grata for most of the bull run, since 2009. However, they could become incredibly relevant if their economy screeches to a halt due to a credit crisis.

However, any continued tightening in credit will be relieved by the Chinese through emergency rate cuts, so there is a catalyst to trade on. That’s why I am not shorting, but opting for cash.

If China goes to hell in a hand basket tonight, longs will lament the day they were born tomorrow.

Let it close without your participation. Raise cash and pick your next fight carefully. This is just beginning.

My buy list is focused around housing, tech and financials.

Everyone is freaking out over Chinese credit. We all know they’re first class liars, men who steal for the pleasure, not need. Last night SHIBOR soared. Borrowing rates are going up in China, which is leading the media to surmise a ‘full blown’ manufacturing crisis is in the works. Don’t believe everything you hear on the goggle box. The fact of the matter is credit is getting tighter everywhere because rates are rising. Remember, just because rates are higher, we aren’t destined to die in a vat filled with pig vomit. Banks bank coin when spreads widen.

The fear is the loss of the Fed bid, plain and simple.

I am getting crushed on the 40% of assets long today. IMMR and YGE are coming in pretty badly. I know the selling is overdone. More than 90% of stocks are lower today, typically a buy signal for stocks. But I’m not worried about losing money on just 40% exposure. My losses will be made up in spades if and when I nail the next inflection point. I need to time it perfectly, get in big, then get out.

I intend to make 10% on my next trade, inside of 2 days.

For now, I am utilizing the tools available to me to find stocks on sale. No one wants to “get back to normal.” We want POMO and we want it all the time.

You can’t say Le Fly didn’t warn you.

Both gold and silver are being washed out this morning, down 5 and 7% respectively. I want you to understand something very important: the capital costs to mine for gold and silver is extremely expensive. Most of these idiots can’t make money at current levels and before you know it, they will be filing for bankruptcy protection. The net asset values of all miners will be marked down today, potentionally leading to credit downgrades.

The miners are the banks of 2008. They are in death spirals. Don’t be a hero. Avoid.

Bonds are getting killed again, with the 30 yr nearing 3.5%. Both Europe and Asia got smashed to the tune of 2.5%. The trend is very easy to identify: full blown liquidation of all assets, sans dollars, due to the belief that rates are heading up.

But it’s deeper than that, lads. The underlying fear is the end of Benjamin Bernanke. He is the bitch killer, the one who regulated bears to fag boxes, similar to what superman did to the villains in part 1. But now Obama wants him gone, replaced by Janet Yellen. The market isn’t going to like that, believe you me. Do you remember how hard the market dropped when Greenspan resigned? No one knew Ben and thought he was a putz. It’s very possible that a new Fed chair steps in and jacks rates higher immediately.

The negative for stocks is the possibility of the Fed bid being pulled from the market. That means we’re on our own again, a very hard spectacle to envision.

Last night Obama fired Bernanke in an interview with Charlie Rose. The very next day, stocks drop 200+. Coincidence, I think not.

^^^That’s the real story.

If The Bearded Clam is out, so is Le Fly.

I am not buying this dip and may take the God damned summer off, positioned like a Caesar, 60% cash, up 31% for the year.