Misdirection at its Finest

When YELP’s lock up expired, speculators guessed that the shares would drop, in line with other social media disaster who fell victim to a similar fate. But this time, the opposite happened! The stock soared 22%, comically horse raping shorts and sending them sea-worthy inside of “fag-boxes.”

Going into today, we all waited for the mighty Federal Reserve to print more money for us, so that we might enjoy a little unchecked, hedonistic decadence, and prosperity, through never-ending stock market inflation. Those who bet on QE3, did so in gold, silver and other commodities. If QE3 was not enacted, investors knew that gold and silver might plummet lower, amidst crowds of speculators heading for the exits at identical times.

The exact opposite happened!

This isn’t by chance, but by design!

The mythical powers that be are attempting greats feats of magic, right in front of your eyes. Eventually, you will become so disillusioned by non-sensical events, you will simply give up analyzing news, in exchange for VXX like complacency.

Complacency, order and organized chaos is the game plan, gentlemen.

With my money, I remain in a heavy cash position (35%) and have opted to stay that way until next week. I don’t see a sense of urgency to do anything right now. After all, euro-bonds are higher and QE3 is NOT a reality.

So what’s the rush?

Stocks are trading up with or without QE. Life is one giant Costanza trade.

Act accordingly.

Here I am spending a thousand dollars per day, everyday, for the unforeseeable future, all the while some poor schlepp born into some obscure town in 0hio dies from starvation because all of the blue collared jobs have been sent abroad. Am I to feel guilty because my deck has been stacked into my favour? If so, do I deserve this minour success because my Father and Grandfather worked liked dogs, and died poor, just to put food on my table?

The truth is, life is random. Nothing is destined to be and everything is organized chaos. The same rules apply to the stock market. Why did APKT blast off two days ago, yet trade lower yesterday? YELP traded lower 9 consecutive days ahead of their lock-up period expiration and then positively annihilated short sellers on expiration day to the tune of +22%.

Random horseshit.

Tomorrow the Fed will reveal their plans and the market is going to respond. It is entirely possible the market will trade down or up, no matter what. If the Fed says no, markets may bounce because the Fed “may do QE later.” Or, the markets may trade lower on the announcement of QE because “the news is baked in and the Fed is acknowledging a structural problem with the US economy.”

Random horseshit.

The true value of a company can never be determined over a short period of time, same goes for the overall market. Just because the market sold off today doesn’t mean the bull run is over. Furthermore, in the event we trade +300 tomorrow, that will not guarantee higher prices one month from now.

As investors, we need to have convictions. Lukewarm doesn’t pay the bills. If you lack the backbone to bet big when it matters, you will never amount to anything in this business. Having said that, the POMO perversion does not appeal to me because of the headline risk aspect. Because of that, I’ve been forced to suspend core thesis trades in exchange for pussified neutrality. In the not so distant future, I will, once again, allocate resources into companies that I find to be inexpensive.

Once the fucking Bearded Clam is out of the way, I will be swinging clawhammers and heavy battle axes, randomly, at homeless men in wheeled chairs–adjacent to idle manholes.

During QE1 and QE2 the S&P 500 gained about 30%. The biggest winners were found in basic materials. Incidentally, since the Fed stopped QE, basic materials have materially underperformed the market. Once high fliers like CLF, X and JOY now suffer under heavy anvils tossed by weaker than expected Chinese economic data. However, things are about to change, rather dramatically, should The Bearded Clam implement POMO tomorrow.

First off, you need to understand there isn’t a rush to buy now. If QE3 is a go, stocks will coast higher for a period no less than 6 months. It’s foolhardy to jump in ahead of potentially catastrophic news.

So, instead of worrying about QE or not to QE, I’ve been busy exploring the possibility that our moon, mind you, is in fact an alien space-station, designed to spy on us earthlings 24 hours per day.

Below is part of a screen I put together inside of the hallowed halls of The PPT. There you will find the biggest pieces of shit basic materials have to offer. Consequently, under QE3, that shit, mind you, will be turned into 24 karat gold!!!

Stocks are lower, but nothing too dramatic. These sell offs are all too cliche. Just when you thought the market couldn’t go down, shouldn’t go down, wouldn’t go down, you get a pick ax to the cranium. BAM!

It’s important to note TLT is a non-stop ferris wheel of fun, firming up in the month of August because that’s what TLT does in August.  All of my positions are lower, except my HDGE hedge. Plus, my 35% cash position suits me just fine on days like today.

In short, nothing has been decided by the Fed. Therefore, it makes little sense to play Russian roulette with an automatic pistol here. Chill out, relax, and enjoy the bloodshed.

Yesterday I highlighted the honourably venerated “cock and balls” formation. As you can see here with this chart of TLT, way back in the early days of “hyper-inflation,” the cock and balls formation isn’t to be toyed with. Previous cock and balls formations have been seen and discussed on this blog, including WNR, LULU, VXX, YELP  and APKT (yesterday’s pick).

Tonight I bring you several cock and balls formations. Lucky you.

BEHOLD THE RESULTS OF The PPT‘s COCK AND BALLS FORMATION SCREEN:

(these are my picks)

The Cocks

ATML

AH

CCO

INFN

MANT

SFD

WNC

The Balls

MDVN

ATHN

COR

SBAC

N

FCF

DKS

PII

Tomorrow I will tell you which stocks posses both patterns.

NOTE: Which team are you on? (No homo)

I have been dealing with unbelievable problems with this new fucking home today, like you wouldn’t believe. Have you ever seen the movie “The Money Pit”? That’s my situation and I feel like committing arson because of it.

Stocks treaded water. But heavily shorted stocks like APKT, YELP and VHC splurged ahead, impaling shorts along the way.

We’re all worked up ahead of the Fed. You just know they will disappoint. It’s too goldilocks right now and I don’t believe in fairy tales. I should have sold some stocks today, but didn’t due to my fucking money pit. I need to make more money by focusing on the market, since I will be spending it all in the coming weeks and months ahead on this fucking house. I deeply regret not buying APKT, favoring the obscene ongoings of PPC instead. Nevertheless, hindsight is 20/20 and I have no complaints, being up almost  0.5% on a day when I expected nothing.

I’ll talk to you gents later when I cool down.

Even though I am cautious ahead of “The Hole,” I still believe this is a long only market. I’ve said that on several occasions. If you insist on having shorts, pair them with longs to accomplish neutrality.

With the market running again, despite my defensive nature, I’ve managed to gain nearly 0.3% intra-day, thanks in large part to LOGM and VHC. I should have purchased APKT yesterday. It had the look and still does.

I added to my meat trade, gobbling up shares of PPC like a turkey on bath salts. I am fairly certain PPC will be a winner. However, my position will be built slowly, as I enjoy to braise the shorts before eating them (no cannibalism).

YELP is a lunatic on the run, escaped directly from the asylum itself. I am speechless.

Last night I was going over Mrs. Fly’s portfolio, which consists of retail and restaurant names of her liking: absolutely outrageous.  I can tell you this for certain: she definitely knows her shopping. She’s a big fan of ULTA, SBH, TGT, COST, LTD,  FRAN,  KORS, AEO, CMG, AAPL–just to name a few. I queried her for beaten down plays, uninterested in chasing retail up here. The only stock she liked that was down is GES.

Top pick: Long the Bearded Clam

The market is flat and I am up a smidge. However, there is a lesson to be learned from today’s trading session in the shares of YELP.

All of you little creatures of the night, wannabe Einhorns and Ackmans, went short YELP ahead of the lock-up period expiring, which happens to be today. How do you feel about that now? The stock was down a dollar this morning, but then reversed– CONSTANZA STYLE– and is now murdering shorts by the dozen, up almost 4.

Nothing is a given, always remember that.

I have meetings today and will be checking in from time to time. I don’t anticipate much action ahead of the Fed.

You should take this time to stress test your portfolios and prepare for extreme volatility.

This portfolio was built by me (no Obama).

(In size order)

CASH

MCK

NFLX

HDGE

LOGM

Would you like to know what #6 and up is?

I bet you would.