Rev Up the Magic Machines

I am really, really heated right now, due to the surge in shares of SHZ. In my quest to win Chinese Lotto, I had conducted about an hour of research on SHZ, like last week when the stock was $1.13. Seeing it at $3.20 in pre-market trading is equal to having the winning lotto numbers at home, sans ticket.

Here are my notes inside of The PPT

On a separate note, seeing shares of AMLN get obliterated this morning, thanks to the FDA, reminds me why I avoid biotech stocks like the plague. They are nothing more than pinless hand grenades waiting to blow arms off.

Thus far, pre-market, stocks look poised to bounce at the open. People know longer trade this market, only computers. So, having said that, do not expect the market to adhere to any semblance of reason. Doubling down on my “having said that” demeanor, I am a seller into any rally, due to the novelty of it all. I am interested in stocks trading down, all the time, no matter what Bill “The Jackass” Miller says on the teevee.

Deeply embedded in one of the worst trades of my career (VXX), I am reminded of how cyclical this business is, with regards to “getting the market.” I’ve been through so many hot/cold streaks. It no longer affects my confidence. The important take away: no matter how bad/good you are trading, the trend always changes. If you are enjoying yourself now, nailing the market, remember the times you were retarded, running down Wall Street with your head tilted sideways, panicked over margin liquidations.

See folks, life is all about redemption. Some of us are really good when dealing with adversity, others fold like the NY Mets coming down the stretch.

As for me, well, I will not trade the opening tick or anything before 10am. Too much noise, not enough substance.

This is an exercise of futility, so bear  with me (pun intended!).

Let’s imagine for a moment the stock market starts to slope down on the “other side of the mountain.” Pursuing that train of thought, I have taken the liberties to educate you about the lessons of 2008 and other past market melt-downs.

Hedge funds and institutions, for the most part, ride the same group of stocks, up and down. There is a certain criteria that must be met, prior to buying a security, stemming from basic price points, market caps to PE multiples. Every institution has its own set of standards. What’s important to acknowledge, through easy to find reportable data, is what they are buying. Once you know what they are buying, ironically, you will also know what they will be selling in the future. Remember when FCX and NOV were nosediving into the ground, during the credit crisis? That had nothing to do with fundies, but hedge fund liquidations.

Now, if you are going to short any of the names mentioned in this post, do so with caution, for they are heavily sponsored by Wall Street’s greatest money gatherers. The criteria was simple: find stocks, via The PPT, that have been accumulated by institutions, over the past month, add in some performance data, minimum market cap and forward multiple information and voila: I found myself a nice list of idiot stocks to gun after.

Naturally, once the Fed starts pumping more miracle money into the market, I might need to purge this list from my mind. But, for now, I reminisce about the times when stocks adhered to the basic principals of fundamental analysis.

Here is “The Funnel” aka “hot money magnets”

(note: for PPT users, here is the actual screen)

AAPL, GFI, GG, QCOM, SAP, EC, ECA, V, MON, PAAS, SCCO, GOOG, BID, SKS, AVB, GOLD, ROK, BXP, FRT, KO, APC and NKE.

Get in the funnel.

With the Pimco, Blackrock and the NY Fed suing BAC, the floodgates have been breached. This should open up the banks to massive lawsuits, worldwide, for selling fraudulent MBS. Again, it’s not about the home owner, who gets a stay of execution. It’s about the mortgage process not being legal, which essentially opens up a legal loophole for institutions to be “made whole” on their MBS investments. It’s not a matter of being “nit-pickers.” These institutions have no choice, whatsoever, than to sue the banks, as it is their fiduciary responsibility.

Now we know why the banks were sitting out the rally. Smart/insider traders knew about this news and positioned accordingly.

How will this affect the market?

Again, it’s only my opinion, but this lends to the idea of a pause or sell off, following such a big run. Investors will want to digest the news, evaluate the potential damage to the banks, and book profits, ahead of the elections.

What type of downside action are we looking for?

I am looking for total destruction of this entire move higher, bringing the Dow down to about 10,000, or a smidge lower. I make such predictions with a big grin on my face and pistol in my pocket.

Finally, I sold out of a bunch of rentals today; but still hold other “stuff.” I am not quick to jump in the bear cave , following a 200 point decline. Ideally, I can sell out of more longs, on a reflex bounce tomorrow morning.

UPDATE: I sold short SPG.

With sincere hopes of black smoke and bustling metal, rummaging throughout Wall Street, I sold out of PWRD, AMKR, CSIQ and BRCD, in order to reduce my long exposure. It has long been a personal dream of mine to see the stock exchange punched out with a steroid induced robot punch to the scrotum. Looking at today’s tape, it looks like a good starting point. Keep in mind, little girls, I am not overzealous in my pursuits of happiness, with a touch over 25% of assets in VXX, short AEM, short MELI. However, with the right sort of “pin-less” hand grenade action, I will be shorting many more stocks in the not-so-distant future.

Into weakness, I will pare back my longs, due to the outside chance that we have jumped into the crevasse.

NOTE: I added to VXX

Wow, AAPL is down a whole 2%, following disaster-filled quarterly results. The real news is the dollar, which is ripping tits, lending to the outright devastation of the pseudo gold standard. Needless to say, I believe there is money to be made short gold stocks. My favorite is AEM, due to its size and stupid nature.

The reflex rally in the dollar can last a long time, regardless of the fundamentals. There is so much hot money out there short the dollar, should they get squeezed, it can get very, very ugly. That’s the problem with free money: everything is distorted. It’s the reason why NFLX is above $150, Hong Kong real estate is in a bubble and why oil/copper are in the stratosphere. When the music stops, everyone runs for the small, narrow exit aka “the funnel”, effectively trampling over one another—crushing skulls along the way. That’s what can happen to the dollar, with a little push of course.

As for stocks: we are barely down 1%, so I am not excited. Yes, I believe we should trade lower. However, this market is all about defying the basic principals of fundamentals, so who knows where it’s going next?

Breadth is terrible. The mood is somber. Stocks are richly valued. QE2.

Your call.

(photo: Jakegint celebrating a lotto win, alongside Woodshedder and Jeremy “The IT Guy”)

Today’s Chinese lotto winners were:

SPU, JST, LIWA, TSTC, CHGS and XIN.

Please be sure to play more Chinese lottery tomorrow.

NOTE: this blog was paid for by your Chinese overlords.

What can I say? I hope you all bought more lotto tickets for tomorrow’s drawing. I won today, via  JST. Even my two shorts went down, MELI and AEM. Foreclosuregate is over, so yesterday’s news. Cocaine + 0.75% borrowing rates= cheap at any price.

The following is based upon a true story, during a different time. But the sentiment is exactly the same, as are the words.

“Look, look, look: take the stock market, okay? Take the stock market and put it into your checking accounts. I have a client from Oman and he buys 50,000 shares of AAPL at $150, then sells it at $320. It’s very nice and very clean money. Right now I buy BIDU at $105, very easy. Then, in two or three days, I will sell it at $190. I take the stocks and sell them and deposit the money into my checking. It’s very easy. Bernanke, that bitch, is going to put the cocaine in the market. All you have to do is sniff it up. Good, or no?

I have a stock, it is a very bad. It goes down everyday. Then, I realize, the CHARTS ARE LYING TO ME. It does not speak the truth. I take 10 million dollars and I buy Chinese stocks, all very nice and clean. They all going higher. This morning I bought JST very cheap. I sell it tomorrow and do 40 thousand gross. Look, look, look, America is like a whore for the money. All I do it stick my dick in and play a little, no?

I got to go. I have a date with a beautiful blond. She is a whore. I pay $250. Do you want to come?”

For a while, I had it this market all wrong, trying to reason with it. This is a market built, from the ground up, for the most ignorant people on Earth. No one cares about ANYTHING. Coincidentally, aside from my family, neither do I. “The Fly” can get as ignorant as any of you, probably more so than a factor of 5, as evidenced by my taste in “music.”

I’m not even investing any more, just straight up gambling from a lotto perspective, with millions on the line. Live fast, die hard, that’s the way I like to play.

Into the stratosphere, I am buying stocks that have earnings “issues,” like JST and BRCD. Also, I am long large quantities of FTK, MERU, CSIQ, without a care in the world. Bring the market down; I dare you.

Do you want to talk about the economy or riots in France or the fact that the GM ipo will watermark the top in this market for the next 10 years? I gather the answer is no, due to your reluctance to pay homage to the basic laws of fundamentals, all being ignored by the “BIDU crowd.” A new breed of investors are being baptized by long only robots at Goldman. Frankly, why get in the way of a good party, when the coke is free and the booze is fluid?

Bottom line: My bias is long until we stop going up.

I bought 10,000 JST @ $11.65.

Disclaimer: Nothing to see here. just playing lotto.