The Sell Off Had NOTHING to do With ‘Rebalancing’

Just when I thought the cocaine addicts from CNBC could not hit a new low, they did it again. At the end of the trading day Maria Bartiroma and some other talking stick said “this sell off is the result of rebalancing.”

Really, stupid?

This sell off has NOTHING to do with end of month rebalancing. I cannot believe they are spewing this crap. Get to cash and get your defenses up, for the rollover happened when bonds rolled over.

This sell off is a result of a risk off environment in Japan, which threatens the yen-carry trade perversion. On top of that, interest rates have been spiking. See TLT. With that, REITs and mortgage related names are under pressure. These are the market leaders. The big cap dividend leaders are getting smashed too. You have to recognize when the tape becomes difficult and respect it. Don’t make asinine excuses for the sell off. There are many people on margin who need to be blown out.

Basically, the dumb money is being clawed back, as it always does through time. It’s been too easy for too long.

Watch Japan. Watch IYR. Watch TLT. Watch XHB. And don’t watch CNBC.

With the proceeds from my PAMT sale, I added to both IMMR and ANFI.

It doesn’t feel good having one’s $FRO deflated like this, long 1.2 million shares into what appears to be a death spiral. Clearly, the market is testing my resolve here, as I do not need to hold the shares any longer, being up in the high 20% range for the year. Me doing so equates to being a “maniac investor” and I wouldn’t have it any other way. With the types of draw downs that I endure on a monthly basis, it should come as no surprise as to why I do not manage a fund and instead have opted for an advisory role. People who toss money into funds do not like beta and I certainly bring a lot of that, along with the alpha.

The point of this post is not to bore you with cheap psychiatry sessions, but to inform you that people who bought gold and silver miners yesterday are complete fools. Listen to me now: the sector is dead. Buy the blood only, avoid the momentum trade.

My price target for IMMR is $20. God knows it will take a miracle for me to hold it that long. Look at RBCN today. Ughh.

I am looking at the REITs and they’re getting the old back of the trunk knife action. On the other hand, regional banks are doing great. They benefit from a steepening yield curve. Short RETIs-long banks? It might work. But I’d rather not sell short REITs, thank you very much.

The top two stocks on my watchlist are HOV and HBAN.

Oh, and MDB related stocks are getting poleaxed: UNXL, PAMT, CLIR etc.

Higher interest rates is bullish thing for certain banks. With the yield curve getting “curvier”, I like HBAN, KEY and CMA.

The market is soft this morning, but who knows how it will play out. Every dip has been a buying op. But, not all stocks are going up anymore. On weak days, 75% of stocks trade lower, making it much harder to bank coin off swing trades. Most people get frustrated and over-trade tapes like this. I’ve always found it to be useful to “stop trading” when the tape gets convoluted. My style of trade is not conducive with day trading, even though I can do it as good as anyone. But I need to take down big positions in liquid stocks, which is hard to do in a stock that’s gapping higher within a 2 hour window.

If this tape is hard for you, trade small and take some pointers from some of the talented day traders on the site: Ragin Cajun, Option Addict and Raul.

OVTI is exploding to the upside. I really like that name, evidenced by selecting it for my semi-managed GAPR index inside of The PPT. Using the algorithms and my opinions, I manage an index of growth stocks at a reasonable price (GARP), inside of The PPT, on a semi-annual basis. Year to date, it’s up almost 40%.

Top picks: IMMR

I can’t believe SYNM and MGPI popped today. You don’t understand, I monitor everything. I was “eyeballing” these two stocks in particular because they’re so lowly and lame. To this point, I took a trip into the “houses” of homeless stocks this evening, taking copious notes along the way.

The point of this exercise is to identify these small pieces of offal before they “go mansion” on the markets and buy condos near the shore for themselves.

Here’s what I have so far. If you were smart, you’d affix alerts to some of these names, geared towards momentum (I use 2%+ for the session).

GEVO
GSAT
CPRX
PSDV
PRMW
AFFY
END
AMRN
DNDN
CYTK
ZIOP
VICL
ACRX
NLNK
ACHN
MM
IMI

Note the over abundance of mad scientist stocks, doctors making medicine to kill people instead of making them feel better. Always be careful of the FDA when playing these stocks.

We went from solar to boats to alternative energy stocks to silver and now to alternative fuels. Shares of SYNM and MGPI are skyrocketing for reasons unknown to the sun, moon and the stars.

REITs are getting smashed again, which is good for prospective buyers–negative for everyone else. All eyes on Japan tonight. After that 5% beat down, 15% over the past week, they need to rally the NIKKEI. My bias is to be cautious in the face of these issues. My boat stock, FRO, got crushed today after bad earnings. I always thought they’d report bad news. This is a multi quarter play, not some magical shift that occurs overnight. The boat trade is dead. If you’re not long term, sell now and allocate funds elsewhere. I am holding my shares.

IMMR helped hedge me against the FRO loss; but I am still down about 1% for the session. Being that the market is up and the stocks I sold are up, my 45% cash position is actually hurting me today.

I can only hope for a further shakeout in the market, so that I can do some buying.

After looking around for some ideas, I find myself too conflicted to start new positions here. With TLT dropping, horrific seasonality ahead for the miners in June, I cannot justify getting long for a quickie now. There are only a few sectors that interest me, one being solar, and it’s too rich to buy up here. The other, believe it or not, is the gold/silver miners. However, if you saw the seasonality stats for some of these names in the month of June, you’d cringe at the prospects of being long one into the teeth of a beatdown.

There are many speculative stocks trending here and maybe I am being too risk-averse again. But I have my gains and a plan to buy REITs, when no one else wants them. I will be there to buy when the last sell ticket is cast.

Until then, I will wait in the shadows, tending to my FRO, hoping IMMR can continue to offset its wilted ways.

NOTE: My cash position is upwards of 45% now.

Once again, the market makes jackasses out of the people (like me) who sold into what appeared to be “warnings” of an overheating tape. As always, this is one giant bear trap, devouring suckers whole at the expense of reason.

I am looking to reallocate cash now.

DEVELOPING…

The idiots over at TSLA have decided to triple the amount of “solar powered” charging station, enabling drivers to travel “coast to coast.” Also, in their infinite wisdom, they’ve decided to make a sweepstakes out of the announcement of their new ‘super charger’ supplier–to be announced today at exactly 1:30 pm (est).

Because of this news, the alternative energy sector has been on fire, with the likes of soon to be bankrupted companies shooting higher–in the hopes that they might be the recipient of “The Great TSLA Super Charger Contract of 2013.

According to the market, the contestants are:

CPST
BLDP
QTWW
UQM
ARTX
FCEL
PLUG
ABAT
HYGS

NOTE: Following this historic event, the shares of 99% of the sector in question might come under extreme selling pressure.

In light of the recent correction in REITs, I want to buy some, simply because I do not believe rates are going up. The natural buy here is TLT; but upside is limited due to the bull market in stocks. I am going to provide two groups of stocks, one that offers conservative returns and the other is straight up high beta cocaine gambling–high risk and reward.

List 1.
KIM
HCP
WPC
VTR
AEC
AVIV
NNN
O
REG
BPO

List 2.
JMI
IRC
SBRA
NCT
MTGE
RPT
UHT
AGNC
ETFs
PHK
PTY
JRS

These stocks are buyable now. If the losses should deepen from here, I will be an aggressive buyer.