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
21,513 Blog Posts

An Epic Oversold Rally Looms

The biggest gains will be found in SAAS and biotech, the hardest hit rising fastest. The shit stocks hammered to dust might not reflex right away due to weak shareholder based forced to liquidate. However, due to the pressure in the markets you should not expect a V shaped recovery and instead a series of pops and drops that might grind people worse than just a mere rout.

The first mistake was being long at the wrong time. The bigger error would be to short into the hole and get caught in a squeeze and then either double down on those shorts into an even further squeeze based upon recency bias. The back and forth of a bear is what makes it worst.

I’ll try to max gains into the squeeze and then keep longs and shorts and sell them fast, playing for small ball. I will, however, accumulate into any further weakness and will not sell because the next big move, in my opinion, is up.

Nothing more I can say but good luck. Futures are up 100, which means nothing. We’ll get better clarity when Europe opens for trade.

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A Wretched Bidless Biden Tragedy

That did not go as expected. We closed at session lows down 385 NASDAQS on top of a backdrop where SAAS and other high valuation stocks are already down 22% for the year. When bubbles pop and the pieces are picked up, we will know where the bottom was only after the fact. Before the fact, we can only guess.

Here is the PS ratio and historical valuations for tech bellwether CRM.

8.6x seems like a good level to dive in and I am heavily long WCLD — based on the fact that CRM is now trading 6.7x 2023 sales, providing they meet expectations. I sold almost everything early on, took immense losses in SHOP, MTTR, TTD and I initiated hedges in DRIP and SOXS. All of these moves on an intra day scale made sense and I still closed down more than 2%, finished the week off by 7%. I closed with a 26% weight in WCLD, 5% LABU and 5% UVXY just in case. I have 62% cash and the reason for this is I am now down 10% for January, coming off -2.6% in December. I have not managed the market well, a little too soon and a little too late. There are been so many trades I missed and sales I held off because I hoped for a rally. This trust, based upon the learned behavior of the market the past 12 years, has caused me to be complacent.

It is true the markets are oversold inside Stocklabs and it is true the oversold signal that flashed yesterday failed. This is not the first time the OS failed and it won’t be the last. These signals, at times, can be wonderful crutches and helpful in navigating the market. But there are times like now when the narrative is shifting and the ideas of a bounce are foreign and it is during those times we get true dislocation.

My best guess is for a sharp mean reversion rally soon but I cannot allow myself to bet too big because of my losses. The ultimate goal is to remain in the game and to limit losses during periods of duress. The best way to do that is staying loyal to stop losses and accepting the fact you were wrong and lost the chance at playing SHOP because it fucking tanked into your face you fucking moron piece of shit.


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Capitulation bottoms looks like what you just saw.

I rode into today with 20% of my book in DRIP and at the lows I was still down 280bps. It was hell and we might not be out of it yet, as SCAM WICKS have a way of popping up and dropping down those red candles. Nevertheless, it appears the panic selling has abated for the moment in spite of some harsh volatility still underway. The selling was indiscriminate — but there was strength in biotech and of course old man dividend stocks. The worst hit were in oil and tech and the tech debacle reached a crescendo of absurdity with stocks like MTTR off another 10% following a 60% rout the past month. It appears there are bids in the tape now and it’s tempting to want to believe. After all, hope is infectious and speaks to our aspirations. But how would you feel if this was 3:30pm barreling into the weekend ahead of the Putin led invasion of Ukraine?

Perhaps hedges are still preferred. Although if you hedge you miss out on a FUCK YOU SHORTS YOU’RE DEAD rally that can still happen. Whatever happens today will be forgotten and if you slept in you did yourselves an immense favor. The larger picture here is pain and this pain is pan-market across the entire industry and that negative wealth effect has consequences.

More later.

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This is most inopportune and most inconvenient and it will take a period of adjustment to trust to never trust the market and to sell it always and to also be mindful of oversold rallies, which can be vigorous and energetic to the upside almost as severe, if not more, to the downside. To sit here now with NASDAQ futures down 205 and predict lower prices would be juvenile. After all, most of you have been spoiled rotten the past 12 years in a bull market. But now the party is really over — since the Fed is over a barrel — ass exposed to the markets anatomy.

They can’t back down from hiking with CPI approaching double digits. They cannot print more and also taper and hike — that is stupid. They can and will do nothing, until both rates and crude COLLAPSE. The problem with crude collapsing is war between Russia and Ukraine. Tomorrow Sec Blinken meets in Geneva with Russia, at which point Russia will make demands the US will not accept and the cast will be died and war will happen within a week.

Netflix announced weaker than expected results, just following yet another hike in their monthly subscription. For those unfamiliar, about a decade ago Netflix nearly bankrupted themselves after their first rate hike and it took Carl Icahn to instill shareholder confidence which led to a PIPE offering which eventually bailed them out. Since then, Netflix has gone straight up and with their newly founded riches have went on to make the shittiest fucking shows and movies ever created — truly establishing themselves as blue haired freaks who care more about their cocks than their content.

Following the news at Peloton, who said they’re delaying production of their fucking bikes, this is leading up to and dancing around and into the idea (bear with me) that a recession might occur whilst in the midst of RAPID NECK BREAKING inflation aka stagflation. You can see it in the housing related names like MTTR, TREX, FND, TOL and many others. Even fucking burrito stocks (CMG) get hammered daily.

Either one of two things is happening now.

1. We are pricing in a recession and there is no floor because we have no idea how deep it goes.

2. This correction is nothing more than that, highlighted by some harsh pullbacks in the highest valuation stocks traded — a well deserved albeit delayed response to exuberance gone mad.

Either thing does not help you trade tomorrow or into next week. Do not confuse the macro with micro. The next trade, obviously, is way up — immediately following getting blown the fuck out.

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It started off with bright sunny skies, horses peacefully grazing in the pasture with children picking flowers in the meadow — a pleasant view as you read your novel and sipped on your chardonnay. By lunch the sky began to cast and the subtle gray could be seen in the horizon, steadily but surely creeping towards you.

By afternoon, Peloton announced business was so fucking good they stopped manufacturing their product. Shares were cast heavily lower after a trading halt and the mood became grim — the skies blackened and the fucking horses became scared and stampeded through the meadows running over the children. The skies opened up and before you could see the sun disappear, lightening was striking down upon you — flashes of blue and white illuminated your fields — book set aflame and chardonnay ostensibly evaporated into particles.

The NASDAQ went from +230 to down -180bps and everyone involved lost big and everyone who shorted won big and everyone who tried to trade the ranges found themselves lost at sea. I bore witness to horrors, as my gains of +180bps vanished into thin air, with my chardonnay, closed down 150bps even after dumping 20% of my portfolio into DRIP. I had a plan and then I got punched in my face. Now I have to pray.

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News hit about a half hour ago that PTON is in fact fucked.

This also ravaged shares of AFRM now, as the Buy Now Pay Never schemers are closely tied and knitted to the testicles of Peloton.

It appears this news is NOT being digested well, as shares of PTON careen lower by 25%, vomiting onto the faces of the entire market. The NASDAQ really cleaved down a bit over the past hour and +170 is a nice gain — but we want more.

You might be asking yourselves “why the fuck does PTON affect the market?” Because retail, because it means GROWTH IS SLOWING. Maybe just maybe RECESSION LOOMS. All of these thoughts and much more are directly into the minds of managers now. Hence, you get a sell off.

We might recover from here and close near the highs. But rest assured, this is the first of many warnings to come and when they start to come in strongly — the market will then begin a process of really taking down multiples.

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Rebuild with Quality Stocks

If you fucked up and find yourself wishing for a miracle, your pink levels are 1,000% and you need to clean slate. Often times at market tops people get stuck with the most speculative stocks because risk was rewarding then and the highest returns were found in the very worst companies. During declines those stocks lead the way lower and the trap is believing those shit stocks will bounce the hardest.

That’s not the way this works.

Those stocks are finished for good, or at least for a while. The stocks to bounce first are ones of the highest quality, names like SHOP, SE, SQ, TTD, SAAS stocks, NTLA. Yes I’m talking my book because I know what should rally during an oversold bounce. I know because I’ve been doing this so fucking long it is ingrained in my DNA.

If we reverse lower today and this small bounce given up, you would expect some truly horrible price action to follow. Don’t spend all your cash and if you’re selling short, consider it a hedge against longs. Net shorting into a hole often leads to men jumping off buildings.

My position is 50% cash, the rest long in quality names. The cash will be used to average down or in or even up into the stocks mentioned above.

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This is the worst economic environment since 1819. The piece of shit President is more concerned with COVID shots for 5 year olds and voting rights than what the fuck is happening in this cock-sucking market. We have ARKK down 49% over the past year. This is exactly what the average retail investor has withstood.

We are in fact rudderless, drifting off into the sea of sharks — consumed by the inclement weather — forlorn and lost. This is the worst month since March 2020 and just like I blamed Bush for being a feckless hazard piece of shit in 2008, I am blaming Biden today. The man is for all intents and purposes dead. He is in fact a useless caricature of what a man is supposed to be, let alone being a leader for the free world. The word free is humorous, since we are less and less free each and every day. The cunts just passed the infrastructure bill that will place KILL SWITCHES in all of your cars by 2026.

Biden and his ilk do not care about the market or the economy or anything else. All they care about is profits for Pfizer. I cannot tell you why and I hate to tell you this too — but voting is overrated and I couldn’t give a fuck about votes. Let’s talk about the IWM and how is spirals each day and how stocks like SHOP are off by 30% the past month, pricing in a Russian invasion of Vancouver.

We have been cracked like an old plate and no one is around to pick up the pieces.

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You can’t buy anything, oils, tech, bonds, cryptos, with exception to gold today but who in the fuck is buying gold into the close? There have been several false set ups today, all have failed and now we’re steaming lower again. I’ve resisted the temptation to trade because -6% for January is quite enough and I don’t need to take risk when the set up is poor.

The one silver lining today is -4bps in the 10yr, a much needed release on the pressure valve — which has laid waste to housing related names like TREX, FND and TOL.

Some stocks are just completely decimated, like MTTR — off by 50% the past two weeks.

On a wider lens, the collapse of civilization is at hand, as dysgenics grips the west and subsequent IQs plummet generation by generation as the dominant peoples die off and are replaced by fucking morons of underclass reprobates. Because of this, insidious malefactors are now in control of all facets of the country, which is driving the other 40% mad. We are collapsing in more than one way. The future of everything you see before you, on a long enough timeline, is Detroit.

The death-spiral will accelerate as Darwinian conditions produce low IQ leaders and purpled haired catamites cast a pall upon what was once considered a great civilization. Whether it happens now or 10 years in the future — it is inevitable.

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One of my most hated penchants of Wall Street is its desire to always retest the lows. Last night the NASDAQ futs tumbled 150 and now we’re up 126; but it’s weak like Ukraine and plenty of stocks are down over fears of a reversal in order to RETEST ZE LOWS.

Why must we retest the lows?

I often asked myself this very question as I attempted to make sense of the world. But it’s of no use. The market always wants to retest the lows because it SHAKES others out and causes them harm and ruin and Wall Street loves that sordid blend of misery. It’s all fun and games until your margin clerk liquidates your fucking account and tells you to fuck off.

Early going I was up more than 100bps and then the fade hit so I sold and sold and sold until I was left with just two positions in my trading: WCLD at 16% weight and SHOP at 5%. My Quant is fully long and my new Algo based account is 33% long TNA. I am +70bps in my trading because SAAS is strong and is ignoring the weakness underneath the veneer of this tape. Breadth is just 53% and I would not be surprised to see the markets reverse into the close. It’s important to note we are in the midst of a legitimate crisis, as Russian troops and equipment steam towards Europe, menacing the fucks in Ukraine and the Baltics. If Russia invades the Ukraine, expect sharply lower prices. I do not know how we might price in the specter of cruise missiles landing in Berlin.

As for today, keep an eye on bond yields. Should they pressure higher, stocks will drop and vice versa.

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