Markets Need to Hold Here

Today could very well be a pivotal day for stocks, but I’m out, 100% cash. I made 44bps and I sold out of everything — but still long in my quant of course.

My rationale is that I couldn’t give a fuck about a super awesome and amazing bounce. The market is diseased and my preference is not to be lured into rallies that are prone to fail.

Stocks might rise 10% today and if they do GOD BLESS. I’ll be back later to sell it short.

SIRS —

It’s over again. In the after hours CSCO missed and its shares are now off by 15%. This is standard stuff and we are soon to be ENTREATED to widespread earnings misses. This will CRASH the respective stocks, but perhaps get us into a twilight zone of normality, as we await the second half of 2022 sales projections to hit. I am not bullish, but maintain the position to trade bottoms when I see it. At this point, I am only using Stocklabs mean reversion for those oversold conditions, since the algorithms are geared to adjust to stress levels that a mere human mind cannot begin to fathom.

I gains 3bps today, mostly thanks to my oversized SQQQ position. I closed nearly 70% cash, a position in treasuries, dry bulk rates, and also 10% long in MOS.

According to text book, we should see a plunge at the open and then an attempt to bottom. Given the stark fundamentals we are facing, I would expect all rallies to fail, as pension funds and managers liquidate into rallies according to their mandates. We are in a period of deleveraging and malinvestment. In order to correct that, we might in fact overshoot to the downside.

I fully expect 20% lower from here as a base case and as much as 50% down under the conditions of a NATO loss in Ukraine. It’s relevant to consider the global impact of being humiliated in Ukraine and the recent gains by Russia against Ukr forces should give anyone rooting for the west pause.

SJM is down nearly 10%, the 4th largest drop on record. COST is off by 13%, the 5th largest drop for the stock on record. There is immense selling in consumer staples and defensive stocks today thanks to the one two punch of WMT-TGT earnings shortfalls. We are perhaps getting oversold in some of those names; but when it comes to the overall market — consider the following.

Above are valuation (price to sales) for the tech sector. As you can see we are nowhere close to where one could consider historically cheap. As a point in fact, we would need to decline 45% from here, based on current earnings, to achieve “cheap.” I did some due diligence on CSCO and learned their earnings DROPPED 40% during the previous two recessions. This is on par with what we just saw with TGT today. My point is, sadly, the sales part of the price to sales ratio might be plunging soon and thus valuations would need to go even lower to account for the recession to come.

We are still 19% above the PRE-COVID highs and we are +45% above the COVID lows. One could easily surmise the need to retest one and then perhaps the other. I do believe a 20% drawdown from here might provide time for investors to see if the economy is truly fucked. We might trade well from those levels; but up here, even though we are HAMMERED off the highs, is still too rich.

I am not attempting to short too heavily into the hole — because mean reversion rallies are a bitch. Instead, I am mostly cash, trying to fine tune exposure to commodities against short NASDAQ positions.

How many times do I have to remind you not to believe in fairy tales? This morning you see a small market rally and you went in and chased it and now your dick is on the ground, completely severed. There are various things to worry about today, NONE AS MUCH AS WHAT TARGET JUST ANNOUNCED.

“We did not anticipate the rapid shifts we’ve seen over the last 60 days,” said Brian Cornell, in a Wednesday morning call with analysts. “We did not anticipate that transportation and freight costs would soar the way they have as fuel prices have risen to all-time highs. While we were certainly anticipating the impact of overlapping stimulus and a consumer and guest returning to more normal activities, we did not expect to see the dramatic shift in many categories.”

Net profits have been HALVED and this is only the beginning.

Sir —

We are in the opening salvo of the next Great Depression, controlled demolition edition. I hate to say it, but Alex Jones was right again God damn it. Everything that is happening now was done in a pre-meditated manner to such a simple degree no one in finance is surprised. The CEO of Target was surprised, but not really. Trust me. The next phase of this collapse will be US sanctions on Russian energy and grain applying even further pressure onto supply chains until it breaks and we have calamity spilling out into our streets. Leave cities now, because when the food riots begin — fuckers will raid your homes and empty out your pantries.

Worst Target drops on record

Look at the carnage. Do not drink this blood.

As for me, I’m a professional. I walked into today 15% weighted in FAZ and now 75% cash, down 14bps for the session. Very standard and straightforward stuff.

Good morning lads.

A few things of note this morning.

TGT profits were halved, likely due to all of the looting and fuckery. Shares are on pace to endure its second largest single day decline ever, first was during market crash in 1987. The sympathy trades for this are far and wide. COST shares are off by 6% PM.

WTI and natural gas are bid higher, as the EU formulated a scheme worth $350b to remove themselves from Russian energy. The catch: it doesn’t take place until 2027.

On the war front, it seems the Russians might’ve lured Ukrainian forces north for a border pole selfie —- because those forces are now entreated to withering assaults and progress for the Russian army is hastening in Donbas. Things appear to be accelerating and it doesn’t look great for NATO.

Russia also expelled French, Italian, Spanish, and Finnish diplomats.

NASDAQ Futs are down more than 200. I told you not to get hooked. It’s over.

It was a very nice market — wasn’t it? For a moment there after Fed’s Powell started to TALK SHIT the markets crapped out and many of you dove headlong back into the concrete pool SHORT. You SIR were of course wrong. We could be in a bear market and still feel like things are getting better and how stocks might, dare I suggest, go back to record highs. These are lies and what you need to understand is — the world doesn’t work according to your fucking schedule.

For example: The morons at Tiger Global, who have become billionaires being morons whilst I blog and tweet all day with other morons, sold out from $20b worth of nonsense — booking LARGE DICKED LOSSES. This is a bellwether fund and Chase Coleman III is a well respected moron in the hedge fund industry. It would not surprise me one bit to see the market fucking V shape into his stupid face now that he’s out. Who knows what was happening? Perhaps a cabal of jewish bankers got together in a dark boardroom and plotted to eject the one WASP left standing amidst their playground. Or, maybe he just got it wrong and needed to sell and it’s all coincidental.

To us it means nothing at all, background music. This is why it’s important to not be an ideologue when trading. Leave your politics and your passions at the fucking door and trade to win every day. Take the Ws the same as the Ls and try not believe too much.

As for me, I am doing splendidly. However, it’s worth noting, Mr. Coleman III is probably doing much better but feeeeeeeling much worse.

Funny how that works.

Please do not misconstrue my incessant bearshitting commentary. I often say one thing and do another.

FOR EXAMPLE:

I hate stocks and wished they’d go to zero, probably due to some not so deep seated psychosis going on with me, but permit my Quant and Algo accounts to be 100% long. My trading is most often long and only bearish for short durations. I hedge my losses and find safe havens and then jump in when blood flows through the streets. I would of course PREFER to only see downward spiraling tapes. But, I imagine, after awhile it might get redundant.

The NASDAQ is +260 and today’s action is as boring as yesterday’s inaction.

I am quite pleased with my results, 55% cash +190bps in trading — much bigger returns in my other accounts. I have been hammered down in a FAZ position that makes up 10% of my holdings, now off by 8.5% or so. I could’ve closed it out without an issue many times during the day but I didn’t because the XLF isn’t known for such big one days moves. My best move, in all likelihood, will be to TRIPLE DOWN in FAZ — because nothing says stubborn like betting thricely on a positions that is not behaving nicely.

See what a poet I am?

Listen to me.

Bear markets are not your friend. They seek to destroy you and you can never rest your guard. Think of a bear market as a really bad neighborhood. Would you walk thru said hood with gold chains, fancy shoes, and no gun? Why, you’re liable to get raped out there looking like that.

When in a bear market one must assume there are criminal elements everywhere and you must carry your gun and be prepared to shoot. I always say, shoot first and ask questions later.

This entails selling winners when they present themselves and not loitering around for too long with them wanting more. Again, if you loiter around with your gains, someone is likely to take them from you.

Standard stuff.

Lastly, sometimes it makes sense to be on the offensive instead of always looking over one’s shoulder. This means you too can rob others of their valuables, providing you’re armed. If you see someone with a fancy watch or hat, feel free to take it. Do as you like, this is a bear market.

I’m +135bps early going, defensive but yet also on the move.

No Sir — I will not chase.

The Stocklabs 4000 Index is higher by 1.6% this morning, led by all of the nefarious scoundrel stocks that knifed lower yesterday. There is of course a chance the wall of worry is scaled higher for more than just 1 day. But I err on the side of caution in bear markets, which is why I am at recourd highs and you’re still trying to dig out from your own grave.

I went to cash this morning, only leaving my underwater FAZ position intact for the time being. I will close that out too and be 100% cash, up around 1-1.25%.

My algo driven account gets closed out tomorrow and that fucker is +7% today, fully long via TQQQ based off the Stocklabs oversold signal. That account has been used exclusively for oversold signals in 2022 and is now +18.5% for the year. My quant is also up 1%.

But this isn’t about me. You’re either reading for enjoyment or to glean into my warped mind for financial advice; but I will provide you with neither.

Good day Sir!

The NASDAQ closed down 155 and I know many of you are fixing to toss yourselves into lit fireplaces, unwilling to withstand the fires of the market and the general economy. But before you do, perhaps look at the silver lining of today’s tape. Although Elon Musk is predicting recession for 12-18mos (that’s called a depression fucked face), we enjoyed 50% breadth and numerous commodity stocks closed at session highs.

I shed 60bps in an underwhelming session but feel good being fully invested heading into what may very well be a truly horrendous session. I say this because, like all good things, it’s over. War and famine are all but assured and the notion of higher stocks in an era such as this is fanciful nonsense.

NEVERTHELESS, all we require is perhaps a single day or two to sort things out and make some more coin to fund elaborate and ornate libraries in our newly purchased overvalued homes.