Crack is Where It’s At!

When I refer to “crack” I am talking about the spreads enjoyed by refiners, especially mid-continent refiners like WNR and HFC, with respect to their cost of crude to what they charge for retail distillates. Thanks to Obama, we have a fucked up pipeline infrastructure in this country. God willing (ironies abound!), the liberals in this country will prohibit any new pipeline from building built.

See WNR gets their crude from W. Texas, known as the Eagleford Shale.  They have to truck the oil from Eagleford to their refineries in El Paso–because there isn’t any pipeline infrastructure. Due to logistics, the crude at Eagleford sells at a discount to WTI, which is already at a $22 per barrel discount to Brent, the standard by which all electronic trading is based upon.

The result is WNR gets to steal from you, each and every time you fill up your tank. They are the most leveraged and best positioned at out all the mid-continent refiners. I was very early to the name a few years back, playing it from $12 to $24. Since then, the company paid off debt, made a shit load of money, and even issued a special dividend.

At the moment, 321 crack spreads are north of $26 per barrel. More importantly,  the Brent-WTI spread is north of $22. Anything higher than $10 is fantastic. Having a $22 per barrel discount is insane.

Where is the stock going?

Higher.

NOTE: You can monitor the spreads mentioned above in the drop down/scrolling market data at the top of site.

NOTE II: The words”Eagleford Shale” should be replaced with “Permian Basin.” The logistics remain the same, however.

Starts rose 3.6 percent to a 894,000 annual rate, the fastest since July 2008 and exceeding all estimates in a Bloomberg survey, Commerce Department figures showed today inWashington. The median estimate of 82 economists called for starts to fall to a 840,000 pace. Building permits, a proxy for future construction, eased after surging the previous month.

Okay? Let there be no more debate: the housing market is back. It doesn’t necessarily mean the economy is back, at least not yet. There is a demand for alternative investments in this country, as people with money hate the dollar, scared of bonds and suffer from nightmares over the stock market. It makes sense that the ocean of disposable incomes in this country be put to work in housing.

Who benefits?

From my experience, being a very big participant in the last housing boom: HOMEBUILDERS! (duh). You can mess around with derivative plays, like LPX, USG, OC and MAS. But let’s be clear, the companies who stand to benefit the most are the ones with the most skin in the game. That means PHM, HOV, BZH, SPF, TOL, MHO, LEN and DHI are all going higher.

Truth be told, we need the housing market to recover, in order to get unemployment down. Building big stupid homes is what we do best, similar to what the Chinese do with ghost cities and the ancient Egyptians did with pyramids.

HPQ is a disgrace. I can’t believe they got duped with Autonomy. Chanos nailed it the whole time, as he was short HPQ because of Autonomy. What a call.

BBY is tanking because the CD/DVD is obsolete. Look at all of the wasted floor space that is dedicated to CDs and DVDs. The company used to be the best–now they suck like all the rest.

This early sell off is child’s play. The market wants higher.

Wait for it.

Here is tonight’s take on the markets, purely from The PPT‘s viewpoint.  I write this summary of the days events daily inside the club, aka The PPT, and offer the lot of you a small hole to peer into, considering the holiday season and all.

A great man once said “you owe me.”

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Last week’s SPY and QQQ oversold signals worked almost to the exact day. It was discussed, ad nauseum, that the market, according to The PPT, should be higher by Tuesday or Wednesday of this week, based upon the 5 day hold principle. Moreover, I pointed to AAPL, and SVXY OS signals as de facto overall market oversold points. Well, the pressure gauge went to the extreme and recoiled fiercely today in grandiose fashion.

It was an 85% breadth day, with just 2 out of 196 industries below 50% breadth. Amazing.

There were 88 industries that gained more than 2%. It was a short killer day.

Small tools and accessories is the #1 ranked industry, led by SWK, SSD and SNA.

Interestingly, bonds had a big day too. XAA is the number 1 ranked ETF. XIV popped, validating yet another OVERSOLD signal, which was registered on 11/15 at $15.93.

AAPL was flagged OS everyday since 11/8, with the stock ranging from $527 to $558. With today’s 7% move, every OS signal was validated.

What is The PPT saying now?

The Overall Hybrid overbought level is 3.23 for the 3 month algo, which is comfortably higher than today’s closing score. It’s also worth noting that there weren’t any significant overbought signals in the macro ETF land tonight, with only three of minor interest: WOOD,CORN and HAO.

There are over 400 stocks flagged Hybrid Overbought on the 3 and 6 mo algos and 379 on the 12. Overbought stocks of note are: FTK, ENR, GS, LNKD, ANF and FOSL. Keep in mind, most of these stocks start to show weakness after the 3rd day of being flagged OB. Therefore, it is possible for them to stay flat or run higher until early next week.

Fly’s Lab produced 34 picks. Some of note are BODY, CEVA, QSII, KCG and SYNA.

Heavily shorted stocks, with very high technical scores, breaking the 20 day moving average are COLM, DIN, PRAA, CALM, CHE and RGR.

Stocks under $5 with big daily hybrid moves include ACAD, AMRS, THLD, RMBS and MTG.

What can move next? Let’s have a look at today’s laggards that were beaten to death over the past 1-2 weeks.

Criteria: 1 week return under -5%, daily change less than flat, market cap over $1 billion with average daily volume over 500k.

Here are the results, sorted by cap.

Standouts include AMX, BIDU, SNDK, KLAC, AKAM, BBY and RYL–just to name a few.

If I was a betting man, the safest bets will be stocks with mammoth short positions, breaking out with technical scores.

Here are heavily shorted stocks with technical scores over 3, primed for squeeze.

LEAP, TSLA, MCP, GME, COLM, CONN and LULU

And here are  heavily shorted stocks with technical scores under 2, not primed yet, but can get there if this run continues.

SPPI, P, SODA, QCOR, PANL, DMND and SHLD.

Lastly, here are some large cap stocks down more than 10% over the past two week that leapt in Hybrid Score today:  WFT, NYX, BTU, JOY and NVDA.

Bottom line: It was a much needed respite. Mostly everything traded up big and now the market has to prove that it is serious about moving higher. I’m not focused on industry breakouts yet, because it’s only one day of upside. However, I am sticking to my belief that silver will outperform most industries, due to temporary reflation, and will look to rotate out of EXK into tech or cash as the rally matures. The PPT validated all of the oversold signals from last week and does not point to any imminent danger in the markets. Purely from a observers standpoint, this market looks like it wants higher, before it can figure out how fucked up the world is right now.

I couldn’t resist the temptation of the sweet crack, as Israel drops “smart bombs” all over Gaza city. The powder keg, also known as Obama’s peace prize accomplishment, is on the verge of titanic eruptions– scheduled to effectively and purposely thrust cavemen into ash bins for expeditious liquidation. It goes without saying, I am very long in the WNR.

As the market goes BOOM, so do the wallets of consumers, clamoring to spend even MOAR money on turkey, gravy and stuffing. Shortly thereafter, a very hideously fat America will head out to the shopping malls to spend inordinate amounts of coin on “luxury items.” It’s funny that COH and KORS are considered luxury, when in fact they are reviled amongst social circles in NYC and other meaningful cities of substance.

With all of my talk and chest thumping, I’m barely up today (+1%), thanks to the homosexual nature of VHC. I am sure CHUCK BENNETT will explain to me how $32 was “such a good sale” today, in his never-ending and annoying quest to crush my VHC spirit. Little does he know, “The Fly” has zero regard for money and other trifles that plague the lot of you. As you’ve been told, I have other things at the top of my agenda. For example, I am on the verge of releasing the very best investor tool since The PPT. My world famous artistic programmer extraordinaire, VINCENZO ILLUMINATI, who fancies himself to be the “The Chevalier” of code, is hard at work–putting on the finishing touches of what he describes as “the modern day equivalent of Garcon a la pipe” for investors. It is scheduled to detonate inside of your offices– like a TZAR BOMBA– by pagan X-mas.

I’ve also been preoccupied with Mrs. Fly, whose ruinous spending sprees can only be matched with my penchant for obtaining coin.

Lastly, I’ve been orchestrating a financial coup over my great list of enemies, all to be financed by the winship that you continue to witness here on this first tier site. We do not write on a third grade level, like the majority of your favorite financial blogs out there. As a matter of fact, I piss on them, while smoking a cigar filled with their ashes.

Top picks: WNR, VHC, SWHC, EXK and NXPI

I restarted a position in WNR, hard as fuck.

This rally is more than I expected. Very soon stocks will be in overbought range, as investors sashay in and out between egregious gains and losses. Some of you are curious about the ongoings over at VHC. The answer to that is simple: the stock will not break out until they ink a licensing deal. Plain and simple. There are two camps out there now–one that believes and one that doesn’t.

As a big shareholder in VHC, I like to view today’s stock action is “temporary retardation.” Wait until the flame retardants wear off, THEN STRIKE AT THEIR HEARTS WITH ARROWS COVERED WITH KEROSENE! We will know more about VHC when Apple and them hammer out a deal in front of the judge on 12/14.

YELP looks really good and I regret not buying it. I also like WNR here, with WTI-Brent spreads above $20.

Bottom line: I am having a sub par day, up barely 1%–thanks to weakness in VHC.

In the very short term, I like industrial plays like TEX, MTW and silver via EXK, AG, PAAS.

I went long NXPI position. That will be my sole tech play. I am playing this bounce very simple and will not confuse things with unnecessary positions. There is little to no chance of surprise negative news this week, on a micro and marco level. It is a waste of time and transaction cost to broadly diversify in a market that is trading as a convoy. Therefore, I am sticking with 4, maybe 5, names for now.

VHC, EXK, SWHC and NXPI.

I might add to that list later on today or tomorrow.

My intention is to reduce cash from 45% to about 20%, then get back to cash by Friday. It’s a gamblers paradise out there and I’m destined to get mine.

The market is bouncing off the fucking walls here. Any semblance of good news is likely to fuck up shorts something awful this week. All of the problems still persists, but it’s the week of grandiose gluttony this week. For the love of Fed calls and negative equity balances, quit shitting in your showers. Get out there and kill something!

There is no way to know what sort of effect the Turkey Gods will have on equity prices. But they’re here and ready to kick the stuffing out unsuspecting speculators.

I’ve been gambling on the caprices of the Turkey Gods for over a thousand years and they’ve never disappointed, purely from a entertainment standpoint. By the end of the week, a large subset of investors will be reduced to ashes and tears.

I’ve managed to keep a 45% cash position intact, throughout this dreadful and calamitous decline. At the same time, I’ve been exercising my rights by using the Orbital Space Cannon (OSC) on the cavemen in the Gaza strip. As you know, they are without iron dome. My disposition is, as always, to outstrip everyone else.

My favorite plays for a reflex rally is silver, via EXK and semis via IPGP, NXPI and maybe some CRUS. I’ve been tempted to buy YELP, but the volume is too thin for me. Homebuilders bounced hard and should trend up with the market. But let’s keep it simple. Everything is down, so when we reverse, everything will go up. We will bathe in 80% upside days and hand out golden coins to poor disheveled boys in the sewers, asking them to “fetch me the newspaper, chap.”

Got to love this pitched fork shit.

and MOAR secession

We’re down 6% since October. I would not be surprised to see the market fall some more, before November is done. But even during the very worst markets, December has served as a respite, an elixir for the malnourished, through outsized gains and superficial, careless risk assessment. No one gives a shit in December because Santa Claus packs a street cannon and everyone is drunk as shit.

Trading desks are manned by small boys, amateurs who are afraid to do anything that might upset older, stronger, men.

Here are the returns for the month of December, since 1993.

74% of the time, we trade higher. I see no reason why this trend can’t continue. Granted, the fiscal cliff offers absurd uncertainty, a truly homemade crisis being thrusted upon us by drug addled, sex crazed, perverts. The pain is halfway done, members from the internet. Close your eyes and WAKE UP in December, for joy and splendour awaits you.

http://www.youtube.com/watch?v=iLddJ1WceHQ