iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
22,140 Blog Posts

Beware of the Headfake

For the record, I do not think we will start nosediving here. That’s too easy. Emotional rallies are hard to stomp out. As evidenced by the action in the semis this morning, there comes a point when people are sick of bad news and want to believe everything is priced in.

Early this morning I sold some longs. However, just in case, once again, I am throwing some long trades on again. I have a funny feeling they will try to gun this market later on today. I bought ROM and TNA.

Despite oil being cheap as hell, oil stocks are responding positively. For now, it makes no sense to get in front of the train. Bet against those names when the train has stopped, not when it’s charging ahead.

With that in mind, I stopped buying SRS, which I initiated this morning.

Look, just because I think the market is vastly overpriced does not mean it will collapse today. There is room for everyone to be right, considering what time frame you are looking at. Most people that I know, who are bullish, are long rentals, not long term positions.

With my money, instead of guessing when the market will drop, I rather keep both long and short positions, then use idle cash to scalp short term trades, in either direction.

For now, my bias is to be short, with a careful eye on the idiot jumping around in his green leotards.

UPDATE: Buying ERX, sub $40.

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Get Your Warning Caps Ready

Back to the real world:

Everyday this week and next, your favorite corporations will send a spokesman to the proverbial roof top, in order to scream: “we’re fucked.”

This morning, FDX, NVLS, NUE, NSM, TXN, BRCM warned, just to name a few. Tomorrow it will be a whole new set of names.

See, aside from charts, and internet musings from former bears telling you the downward shift in equities is over, in the real world, where people actually live, things are grim.

For example: 58% of modified mortgage losers are back in trouble again. That’s right, Joey Bag O’ McMansion can’t afford his 6,000 foot idiot home. Despite the government forcing his local bank to keep him in the idiot house, he can’t fucking afford it.

Are you listening to me?

He can’t fucking afford it.

As a result, all of those modified mortgages are going to be classified as in “redefault.” How fucking queer is that?

Across the pond, in the U.K., their housing debacle is just getting started. Analysts predict U.K. homes to decline by at least 20%, slumping into 2011. In Hong Kong, property sales are reeling. Don’t even get me started on Japan.

In short, all signs point to an extended period of worldwide contraction, well into 2010. If that’s the case, what the fuck are you doing buying bullshit?

UPDATE: I sold out of my UYM, FAS and BGU positions. Raising cash.

UPDATE II: I am initiating a position in SRS, nibbling at 200 share blocks from $82.

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At the End of the Day, “The Fly” Always Wins

Long time readers of this site know, not too deep down, this whole battle of popular consensus versus “The Fly” will end badly for you bird brained fuckers. Many of you pikers are felling good about yourselves now, with “The Fly” on a 1 week losing streak, while you scalp some coin off the bottom of my shoe.

Let me remind you and make a prediction: This time is no different than the countless times when I’ve proved you wrong; and, soon enough, I am going to put you fuckers to sleep, like old dogs, for trading against me.

Sure, you’re entitled to your own opinion and the right to make an accurate market call, every once in awhile. But don’t forget, “The Fly” wins all the time, even when he appears to be getting poleaxed badly.

New readers may put that claim into question and ponder to herself: “is this man serious”?

Yes fucktard, I am as serious as a cocaine induced heart attack. Moreover, let me tell you little shit faces, the Dow Jones is going to be deep water diving sometime very soon. The ongoing collapse of American capitalism (remember that) will not end with a few scrapes and bruises. It will end when your torso has been removed from your limbs. It will end when FDX says “oil is cheap, but we don’t got shit to deliver.”

Rates are low; but standards are super high. Homes may be down in value, but still expensive, compared to wages.

Please, let this rally be the opiate to lull you into a deep comfortable sleep.

“The Fly” has nothing but disdain for most of you and will gladly “wake you up,” with news of pending insolvency and personal liquidation, via a very bad negative equity situation.

Okay, shhh, go back to sleep now.

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A Rally Mounted on Nothing

So we are running higher, based upon a stimulus program, that is being funded by more debt? The banks are running because the Gov’t will not allow C go out of business?

None of this makes any sense.

The economy is not going to recover in 6 months. Therefore, buying into this rally is equal to playing with a book of matches, in the middle of a pool filled with gasoline.

I could understand the run up in basic material/construction names. But, I cannot support the view that commercial real estate has bottomed, or that banks are cheap here.

Banks are not cheap. They might have been cheap last week, but not after a 50%+ run.

I should be buying SKF and SRS here, down at these levels. However, with Santa Claus around the corner, and men with small brains on the loose, it makes sense to be careful and make my next move in a very deliberate/careful sort of manner.

Sometime soon, I will sell FAS, BGU, UYM and other longs, while the market chokes on black dust and crushes the hopes of people snorting mustard seeds.

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Battered Wife Syndrome

There comes a point when an investor loses his desire to make the hard trade. Instead of going with his gut, he will go with the herd, buying or selling, because it’s easy. Deep down, he knows the herd is always wrong, but follows them anyway, in an effort to outsource investment decisions.

If this is happening to you right now, pay attention, else find your account in a very egregious negative equity position.

The herd is stupid, full of gay bovine, who rather play Jenga at night, than study the history of the stock market. These people wear green leotards and frequent Broadway plays, on a regular basis, in order to conform. They visit third world nations, in order to “take in the atmosphere,” and donate money to criminal charities. If you are sick of losing money, instead of following them, go to cash.

Let’s say you made a few bad trades, and your account went from 100k to 70k. At 70k, you may begin to panic and switch positions to better suit the current trends. The only problem with doing that is you are late. You already missed the meat and potatoes of the rally. More often than not, switching teams, after a good kaning, will send your bullshit account down to 50k.

Let’s get more specific:

Say you are long 1,000 FAZ, 500 FXP and your head is on fire. First, dunk your head into a toilet bowl and flush, in order to douse the flames. Then, instead of selling all of your losers (FAZ, FXP), why not hedge it via a FAS or UYM long?

That’s exactly what I did on Friday. I sold 1/2 of my inverse shorts, regardless of the losses and went long UYM, FAS and KBR. As a result, I’m on the fucking hamster wheel to nowhere, FAST, today, up no more than .00001%.

But, my next move will be Godly. I will attempt to time my sells to coordinate with a near term top, always a dicey endeavor. However, at the same time, leave enough cash aside to correct mistakes, via going long/short for scalp trades.

Bottom line: Don’t give up, just because you’re a loser without a brain. Think about the market as a battlefield, where every decision you make gets you closer to killing that fucking homo in the green leotards.

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Enjoy the Brainless Rally

You know, I can’t give a valid reason for the market rally, aside from a pending stimulus plan and/or the market is sick of going down? Knowing full well how stupid people are, I bought up blocks of UYM, as if my head was on fire. The rational thing to do, in my opinion, is to fade the rally. I might start doing that, sometime very, very soon.

Until then, when in Rome, you might as well do as the Romans do and snatch the purses of slow minded tourists. And, you might want to buy what has been tossed aside, such as oil and other commodities.

But, in the long run, it is a mistake to believe the economy will inflate, at least right away.

Enough of the annoying voice of reason. Let’s talk about what’s running:

Infrastructure plays: ACM, PCR, FWLT and FLR.

Oil: RIG, NOV, OXY, HP

Tech: RIMM, AAPL, HPQ, IBM

However, at the end of the day, you must smoke ample doses of crack cocaine to think the market will go much higher, with SKF, SRS down at these levels. I don’t even want to talk about FXP.

My recovery plan was put into place on Friday. I ate a lot of losses in shorts and hedged with going long UYM/KBR. And, I built up a cash position of more than 30%, which will help me make quick/scalp trades.

As of 12pm, the only moves I made was to cover my GVA short and buy more UYM.

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A Mechanical View of the Market

I do not believe in system trading or technical based trading. I have a strong belief that human instincts are an invaluable tool, when making quick decisions. However, I also believe that in order to get good ideas, one must have great contacts and/or a mechanical system that will present ideas.

Hence, I created The PPT.

My opinion of the market is to fade the rally. For the love of celestial bodies, states are running out of money and corporations are giving people the ax, on a daily basis. While it’s true, the market usually rallies, 6 months prior to an uptick in the economy; I want to float the idea out there that “this time is different.”

Nonetheless, since the current trend is up, I ran some interesting screens worth perusing.


PPT Overall Scores:
(3162 total)

Average Technical Score: 2.164 Sell
Average Fundamental Score: 3.596 Buy
Average Hybrid Score: 2.771 Sell

————————————————————

NOTE: All of the “Top Ranked” Screens below define Hybrid Scores, which is a combination of technical and fundamental factors.

Top Ranked Mega-Caps (50 billion or more)

1 DCM 4.44 82022360000
2 MCD 4.26 66371148080
3 NTT 4.07 65711916666
4 FTE 3.76 68559655227
5 WMT 3.71 213929635436
6 VZ 3.64 94275673618
7 AZN 3.64 55637150000
8 NVS 3.59 107763900000
9 JNJ 3.53 159038243893
10 IBM 3.49 108376755731

Top Ranked Large-Caps (10-50 billion)

1 CBY 3.79 11155407266
2 PSA 3.77 11351456541
3 LOW 3.76 31240493415
4 WAG 3.76 23764530558
5 SO 3.67 28217962551
6 AFL 3.65 20322979106
7 APOL3.65 11944629620
8 LLY 3.64 39759258055
9 PKX 3.64 17020718089
10 BR 3.63 34546790733

Top Ranked Mid-Caps (5-10 billion)

1 NLY 3.8 7658835099
2 VFC 3.77 5767962278
3 GPS 3.72 9155944486
4 FFH 3.7 5084037219
5 PH 3.7 5999716175
6 PBCT3.68 6479118839
7 CEPH3.66 5131366857
8 FRX 3.65 7130657709
9 SHW 3.65 6686811503
10 TSP 3.65 6572655364

Top Ranked Small Caps (1-5 billion)

1 ORH 4.52 2685682419
2 BJ 4.23 2176082243
3 DLTR 4.17 3661358701
4 SF 4.08 1054817148
5 COGT4.05 1149060894
6 ORLY4 3571518717
7 THOR4 1438842982
8 AHL 3.86 1543918429
9 WMS 3.86 1308245223
10 GVA 3.85 1685826408

Top Ranked Micro-Caps (under 1 billion)

1 OCN 4.54 498596414
2 ACET4.44 223954709
3 SHEN4.44 584037576
4 APSG4.34 192485248
5 SUR 4.3 631962470
6 JOSB 4.26 390782133
7 INT 4.18 877740000
8 EPIQ 4.15 575120980
9 MNRO4.15 399705564
10 ALK 4.1 896532785

Potential Short Squeezes (stocks ranked “buy” or higher, with large short positions)

1 BKE 3.86 63.2
2 JOSB 4.26 38
3 AMED3.08 36.7
4 VLCM3.54 36.1
5 CMG 3.52 33.8
6 SUP 3.58 33.2
7 INWK3.04 32.6
8 ETH 3.08 32.1
9 PNRA3.71 31.9
10 RATE3.54 31.8

Stocks with the Biggest Hybrid Change Last Week (ranked a buy or higher)

1 BJ 87.17 4.23
2 NZ 81.46 3.72
3 PHHM77.01 3.08
4 PMTC66.48 3.03
5 SAFM65 3.3
6 FNF59.13 3.66
7 HBHC57.69 3.28
8 SDXC56.86 3.2
9 JAS 56.04 3.23
10 ASF 54.68 3.14

That should keep you pea-brained pigeon fuckers busy for a few hours.

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The Important Matter of Mother Market

“The Fly” started off his day waking up to the music of the Gods. He jumped out of bed and dove head first into his shower.

Following his rinse, he went for breakfast, which consisted of 5 pancakes, 2 eggs, bacon, hash browns and three cups of hot hot coffee. Immediately following his morning snack, he went to his office to watch the employment data results on CNBC.

Much to his delight, almost everyone lost their job in November! The futures tanked and his positions increased greatly in value.

Dressed in an all white robe, leather sandals, holding a blue can of Monster Energy Soda, he sat down at his desk and blogged like the wind. He told stories of tragedy, while chuckling, but by no means was he ever laughing. He threatened complete strangers, exclaiming with fury: “fuck a ham sandwich goat lover. I will punch your mustache off.” His day was off to a glorious start, indeed.

He even made it onto Twitter, in order to inform the 600+ idiots “following” him that their money would be his, very, very shortly. By no means was he kidding.

All was going according to plan, his plan, until noon.

As noon approached, his short positions, in banks and Chinese things, started to work against him. Earlier that morning, he sort of hedged a little, buying some stocks; but he quickly sold them—betting the market would, as it always does, “shit the shower.”

Time passed on and soon enough his trader/servant began to annoy him, making noises at his desk, drinking soda pop or snorting cocaine. Quickly, “The Fly” threw an orange at him and yelled “fuck you asshole.”

In a rage, he went to the internets, where he made some more idle threats to complete strangers. Much to his chagrin, he kept getting interrupted by pesky business acquaintances, via telephone calls, wanting to know what the market might do in the final hours of trade.

“The Fly” was annoyed by these questions, as his positions started to work against him. Luckily, he had a few hedges, from a few days prior. But it was becoming obvious, as well as evident, Mother Market had it in for him, on this day, Friday, December the 5th, 2008.

The comments on his blog quickly became deranged and idiotic, authored by anonymous goat lovers and/or fish face fuckers.

His heart began to race. His palms became sweaty. For fucks sake, he saw the market reversing right in front of his face, starting with banks/Chinese things, then eventually infecting his oil shorts.

By 2pm, “The Fly” was in full fledged retreat.

From 2pm to 3pm, wild and disturbing things occurred at “The Fly’s” office. These events were so heinous, so egregious, they cannot be repeated to anyone, without penalty of death and/or torture. Just know this, as the losses started to pile up, his mood changed from joyously jubilant to demonically dangerous.

By 3pm, it was clear to “The Fly” that his position was an outrageous losing one, not so much different than how Napoleon must have felt at Waterloo, or for that matter, any Southern army watching their homes being torched by Union patriots, back in the good old Civil War days.

He threw a ham sandwich at his trader servant and said “sell those fucking bastards now!!!”

The bellicose nature of his voice made the office plants die and the mirrors shatter. Quickly, the trader/servant started to book losses, and restructured to eliminate risk.

The market was about to close when the lights went out. “The Fly’s” office was as dark and cold as the sunless side of the moon. Suddenly, the marble paperweights on his desk began to tremble, amidst thunderous noise just outside of his office. Afraid like a little bitch, “The Fly’s” trader/servant ran for cover, hiding behind a filthy, disgusting trash can.

“The Fly” stood up, sword in hand, lightening in his eyes and yelled: “who goes there”? Without pause, he darted for the door, opened it up, ready for confrontation. Within seconds, a hideous gray haired woman, at least 9 feet tall, wearing a black robe, approached “The Fly” and said: “Guess who, fuck face”?

Shocked and amazed at the sight of this monstrous creature, “The Fly” became stunned, in a very “deer in headlight” sort of way. Things began to move in slow motion, as he saw this woman pull something from her robe. It was shiny and gold, and it fit around her bony knuckles.

For the love of little babies and currency, they were brass knuckles!

The next thing he saw was her clenched, brass knuckled, fist touch the ceiling, just prior to it quickly making its way for his nose.

Bloodied and semi-conscious, the last thing he heard was some bitch of a whore on CNBC celebrate the markets glorious green close, as Mother Market left “The Fly’s” office— drinking one of his Monster Energy Soda’s, she said: “See you monday, asshole (burpp).”

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Hot Dogs for Dinner

A ridiculous day for me. I covered numerous shorts today, with the intent to put them back on, early next week. Thank heavens I was long FAS, BGU and other longs, else the blood would have been extra bloody.

Much to my chagrin, I will lament all weekend about missed opportunities. Bear market rallies are incredibly fierce and make you regret the day you were born, when short into them. However, they never last and the reversal is usually equally fierce.

Bottom line: I got caught short, like an idiot, and now find myself eating a big slice of humble pie.

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