Stand By: The Market is Being Courrected

Nevermind your charts for the moment. We are going to calibrate the precise bottom of this trading range to the exact tick. This is what The PPT was built for, identifying ranges and it has timed the bottom, over the last 12 months, with 90% accuracy. Over the history of The PPT (2008), the algorithms have timed the exact bottom, give or take 1-5 trading days, 73% of the time.

The first mistake you’re gonna make is believing these choppy waters are shallow. They may or may not be shallow. Or, perhaps this is the beginning of something significant, something extraordinarily deep. When buying bottoms, never go all in. Moderate yourselves, knowing it’s more of a process than an event.

I will have many more names on my shopping list by this evening. You should be looking for names that would’ve ripped today, like AMBA and HOV, had it not been for such a devilish tape.

Sorry to upend Ragin Cajun’s plea to follow the path of Gint, but I cannot agree.

Gold and silver are in dreadful bear markets. More than that, the general indices are plunging. This is not the time for idle speculation or half measures. If you haven’t secured your own destiny by now, someone is in the process of doing it for you.

Markets are in turmoil. Are you prepared? Did you take the necessary steps to avoid giving back your ill-gotten gains?

They were ill-gotten because they were never yours to keep. As you can see, the market is taking them back now, neutralizing the dumb money, as it has done for centuries. This is the clawback that I warned you about. Don’t worry. It will not last forever and we will make a fortune buying the margin calls of others.

Be patient and eat plenty of sandwiches.

Locking in a big winner here, upping cash position to 55% in the process.

You don’t have to jump back in at the first sign of strength. The day is long and there is plenty of time to reverse lower. Plus anyway, you should be shopping for names that have been sold off, not hitting new highs. If that’s the case, these names are down 15% over the past month. If they’re going back to new highs again, what’s 1-3% of missed upside in the big scheme of things.

To crystallize my opinion: one should exhibit a modicum of patience here and not try to catch quick trades. The play is to buy larger cap or highly liquid names that have been sold off. If top tier REITs are off by 18%, why bother playing in the gutter with the filth and the offal?

Step 1: Have cash for dips. If you have cash, be patient. The market sell off can last much longer than you think.

Step 2: Buy quality; avoid filth.

Step 3: After catching a bounce, drink champagne.

Step 4: repeat steps 1-3.

I’ve been watching this market like an old, wise, owl–plotting moves and slapping elderly people in the face for frowning at me sideways. With my 45% cash horde, I am going to buy just three stocks, which will absorb all of my money–putting me at 100% invested–for the turn–for the win.

As the market marches lower, the list will change, naturally. Here’s what I have so far (don’t tell anyone else about this. We wouldn’t want other jackasses, aside from yourselves, front-running me).

AMAG
ANGI
APO
ARMH
ARR
CRM
EVR
FB
KBH
MAC
N
NMR
O
RAS
SCTY
SLCA
WDAY
WPC
YELP
Z

I closed flat today, even with the market getting hit. I do not want to trade in stocks of the day when the tape is bad. Those spec stocks can get crushed in an instant, so it’s not worth the risk.

I’m not gonna sell IMMR, MU or FRO. Everything else is fair game.

I will be looking for names that are growing revenues more than 15% yoy, that are down more than 10% over the past month. There is a very long list building and those who have been smartly placed in cash, especially those adhering to the core principles outlined inside of 12631, will reap the rewards when the market turns.

First you have to sack up and buy the blood. Therefore, you need to know what to buy.

I know you all want to hear the big gay call, long or short. But “The Fly” is here to tell you to quit wasting your time searching for unicorns. Markets do not crash anymore. They simply decline in a very orderly fashion, with a sense of style and honour. After the decline is viewed as “sufficient”, it is gently walked back up, amidst weeks of daily 40 point climbs.

Yes it’s true, the market is being flushed today. Major kudos to The Devil for making that call. However, this correction did not come out of the blue. I’ve been a coward for more than a week now, saddled with 45% cash.

Here is why I am hesitant.

That is an index that I call “The Risk Appetite Index” inside of The PPT. It is a compilation of muni, government and sovereign bond funds. It has plunged to new lows, thanks to renewed fears that the Fed hasn’t an exit strategy and rates are going up. This, of course, is ridiculous and will be proven wrong in time. But for now, this is the “prevailing wisdom.”

I will buy back into the markets when TLT stabilizes, The Risk Appetite Index stops going lower and IYR gaps higher on volume. Until then, we might grind lower for another 2-3 weeks, maybe even longer.

It’s June and if you’ve traded successfully this year, you have good gains to fall back on. Don’t be overzealous and press your luck into a poor risk environment.

There will be easier tapes than this one. Bank on it.

I have millions of dollars burning a hole through my pocket, orphaned cash looking for a home. For a solitude moment, I was thinking about allocating some of it into VXX and VIX related scams. Then I remembered they were of course scams. I’d rather miss out than lose money in those bastards ever again.

While the market sinks lower and The Devil presses his 8 figure short bet on IWM, I’ve been researching new issues. After all, the ipo market is where new, fresh, names will be found. Rarely will a small pennied stock climb from the ashes to become relevant. Using a specialty screen inside of The PPT, here are some of the ipos that interest me.

WDAY
RLGY
BLMN
EVTC
TMHC
WLH
AMBA
FWM
ANFI (I am Long)
SCTY
MZOR
FLTX

I am just sitting on a pile o cash, doing nothing but watch the paint dry. The tape, although higher, lacks the style and pizzaz that I’m used to. I just don’t feel like doing anything, long or short. Some of my friends are heavily short, looking for a crash. But I think that’s “wishful thinking” and this market will continue to mark time, grinding investors into dust and snorting them up with long straws.

Am I supposed to buy these shooters with real money? I need to own liquid names that can absorb a million dollar ticket without jarring the share price. Therefore, it goes without saying, I am patiently watching, trying to decipher the clues, almost desperate to find a good name to buy in size.

Look at these Japanese banks, swinging around like solar stocks.

NMR +8%
MTU +7.5%
MFG +8%
IX +8.1%

I don’t have any firm opinions on the markets or Japan. However, I think it’s fair to say “the powers that be” deserve the benefit of the doubt. They’re innocent before being proven to be guilty as sin. Markets have been good and we should assume they will continue to appreciate. The worldwide policy is to forget or abandon rebuilding the economies, in exchange for inflating asset prices. This means anyone with debt is screwed, or anyone who is trying to “make it”. It also means that if you have assets and have “made it” already, you are in the captain’s seat.

Enjoy.