Futures McPlunge Lower — Terror to Strike Wall Street Tomorrow

Dow futures are now off by more than 350 points and Chinese stocks are getting hammered to the tune of 1.1%. Over in commodity land, oil is plunging — lower by 2.3%. Rest assured, today was a day that will live in infamy — the day the party ended and Apple confirmed our gravest fears.

What is that, you ponder?

How about ZERO growth at Apple?

Stocks like NVDA, trading at 9.9x sales versus their historical median of 3 will warn too and get decapitated by 75%.

So what are we to do?

Frankly, run.

You cannot win, so you will need to liquidate early and hope some assholes with small brains buy the early morning dip, for once that occurs the real drop will happen.

Analyzing today’s moves, I stand to shed a good deal of money tomorrow. I’ll need to sell TNA, BRZU, SLCA, HUBS, CLF, CC, OSTK, and RNG — most likely for a collective loss of 5%. That represents 40% of my trading account. I have another 40% in TLT, DRV, NUGT, AG, and EGO — which I’m hoping will offset some of the losses in the aforementioned stocks. I see gold is up 0.3% in the overnight session and the 10yr is lower by 3bps to 2.63% — which mean TLT will be nicely higher.

With the Yen spiking higher and markets collapsing, I might make an additional 8% in DRV — which is a 10% position.

My pivot will be most important. Will I short into the hole and get raped on a reversal? Or will my shorts catch a wave lower, one that cracks and breaks, and ruins 2019 from the beginning?

Stay tuned for tomorrow’s episode in Fly fucking with his trading account in the bear market of 2019.

I ended the day happy to be long, feeling okay about something driven by emotions and not logic. Now I feel like shit, after Apple warned about their business sucking cocks. We already knew it — but now the box has been opened and we can all see the cat is, in fact, dead.

Here is part of Tim Cocks letter to shareholders. Happy fucking New Year.

To Apple investors:

Today we are revising our guidance for Apple’s fiscal 2019 first quarter, which ended on December 29. We now expect the following:
Revenue of approximately $84 billion
Gross margin of approximately 38 percent
Operating expenses of approximately $8.7 billion
Other income/(expense) of approximately $550 million
Tax rate of approximately 16.5 percent before discrete items

We expect the number of shares used in computing diluted EPS to be approximately 4.77 billion.
Based on these estimates, our revenue will be lower than our original guidance for the quarter, with other items remaining broadly in line with our guidance.

While it will be a number of weeks before we complete and report our final results, we wanted to get some preliminary information to you now. Our final results may differ somewhat from these preliminary estimates.
When we discussed our Q1 guidance with you about 60 days ago, we knew the first quarter would be impacted by both macroeconomic and Apple-specific factors. Based on our best estimates of how these would play out, we predicted that we would report slight revenue growth year-over-year for the quarter. As you may recall, we discussed four factors:
First, we knew the different timing of our iPhone launches would affect our year-over-year compares. Our top models, iPhone XS and iPhone XS Max, shipped in Q4’18—placing the channel fill and early sales in that quarter, whereas last year iPhone X shipped in Q1’18, placing the channel fill and early sales in the December quarter. We knew this would create a difficult compare for Q1’19, and this played out broadly in line with our expectations.

Second, we knew the strong US dollar would create foreign exchange headwinds and forecasted this would reduce our revenue growth by about 200 basis points as compared to the previous year. This also played out broadly in line with our expectations.

Third, we knew we had an unprecedented number of new products to ramp during the quarter and predicted that supply constraints would gate our sales of certain products during Q1. Again, this also played out broadly in line with our expectations. Sales of Apple Watch Series 4 and iPad Pro were constrained much or all of the quarter. AirPods and MacBook Air were also constrained.

Fourth, we expected economic weakness in some emerging markets. This turned out to have a significantly greater impact than we had projected.

In addition, these and other factors resulted in fewer iPhone upgrades than we had anticipated.
These last two points have led us to reduce our revenue guidance. I’d like to go a bit deeper on both.

Emerging Market Challenges

While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China. In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad.
China’s economy began to slow in the second half of 2018. The government-reported GDP growth during the September quarter was the second lowest in the last 25 years. We believe the economic environment in China has been further impacted by rising trade tensions with the United States. As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well, with traffic to our retail stores and our channel partners in China declining as the quarter progressed. And market data has shown that the contraction in Greater China’s smartphone market has been particularly sharp.

Despite these challenges, we believe that our business in China has a bright future. The iOS developer community in China is among the most innovative, creative and vibrant in the world. Our products enjoy a strong following among customers, with a very high level of engagement and satisfaction. Our results in China include a new record for Services revenue, and our installed base of devices grew over the last year. We are proud to participate in the Chinese marketplace.

iPhone

Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall to our guidance and for much more than our entire year-over-year revenue decline. In fact, categories outside of iPhone (Services, Mac, iPad, Wearables/Home/Accessories) combined to grow almost 19 percent year-over-year.
While Greater China and other emerging markets accounted for the vast majority of the year-over-year iPhone revenue decline, in some developed markets, iPhone upgrades also were not as strong as we thought they would be. While macroeconomic challenges in some markets were a key contributor to this trend, we believe there are other factors broadly impacting our iPhone performance, including consumers adapting to a world with fewer carrier subsidies, US dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements.

Bottom line: Nasdaq futures are -1.6%. I know spreadsheetFAGS are punching numbers in now, suggesting that even at $11.00 for 2019, AAPL is cheap. That’s not how this works. This is slope that is slippery and it might be the first of a series of earnings revisions. The downside to AAPL, in my estimation, is 50% EPS cuts and a price target of $110, based off a 16 multiple. Let’s not forgive this company for borrowing $115b to buy back shares either. One can only hope markets ignore this and rally anyways. I’d have a very hard time believing it will be possible, due to the notion that Apple is only the tip of the iceberg here, in what should be expected to be a dreadful Q1.

The greater a person’s ignorance, the more he or she thinks they know what to do. If you understand that you’ve been on the receiving end of a decades long bull market and all of your achievements are ordinary, you will then begin to humble yourself and accept the idea that maybe there’s more for you to learn.

Today I ventured out on a limb, play the long side. I did it with size and never thought twice about it.

The turn in WTI did it for me and the lift in oil stocks cemented my belief that 2019 will begin with a bullish flavor. Perhaps we drop later on and there are numerous concerns in the high yield market to pay attention to. But for the love of Christ, we’re down 20% over the past 3 months and even during the worst of 2008 did we have to endure a seemingly uninterrupted hemorrhaging of selling of this magnitude. It only got really bad after Lehman went bust and mortgage bonds were 20 cents bid.

Take a deep breath and enjoy the ride, FUCKED FACE. Markets glitched out last month and will soon recover.

How do I know this?

It was willed during the recent rituals at my local Grande Druid lodge.

Top ideas: BRZU, TNA, CLF, SLCA, HUBS. Basically, I’m fucking long.

It is a country filled with homeless thieves and whores. However, I like it now and would live there, if only for a few weeks until I was drunk enough to hop on a jet back home.

Notice the white candles here and how they’ve preceded a large move in the past? I believe we’re setting up for a similar move higher now.

I bought BRZU. Cash is now just 10%.

This could end up blowing up in my face. But there comes a time along the narrow corridors of risk when one must take it. I’ve been stupefied in cash, discouraged by the violent and severe downside action the past few months. Thanks to my trading prowess, I escaped the death-knell and have come out the other end of a -20% decline relatively unscathed. This morning I keenly and swiftly closed out my DRIP trade and reversed action into GUSH. The subsequent result was a booked profit of 11% in an hour. Annualized, I will be the wealthiest man in America inside of 1 short year. No ladies, Le Fly is not available. Nice try.

I AM BETTING FOR THE MARKET TO RALLY HO NOW and with verve. I am long TNA because small caps should sashay into the FAGBOX this month, an 8% feat from present values. Such a move would place TNA at $60.

I know it’s difficult for you to accept these words, especially since you’ve dedicated yourselves towards the destruction of markets. Ease up and fall back young pea. Markets do not flow with ebbing a bit. Everything occurs in moderation, the subtleties of grandeur are never apparent to those living in the moment. Those stepping back and looking at the nonsense from afar are sometimes able to see what others cannot. I see what they cannot — because they’re ideologues — weak men made from poor genetic code.

We rally from here and the great whores of Wall Street will suck us off and when they’re done, suckle some more.

Top picks: TNA, SLCA, DRV, CC, CLF, NUGT.

Listen to me.

Oil is lighting shorts on fire. Oil stocks have bottomed. HYG is flat and will go green. Utes and REITs are getting REKT. I’m still long DRV.

Listen to me.

We are on the cusp of a furious rally.

I bought the following, in addition to an earlier purchase of GUSH in the $7.50s.

OSTK, CLF, CC, HUBS and SLCA.

My cash is down to 15%, which will be used if we get going from here.

UPDATE: I booked gain in GUSH, 11% 1 hr return.

I made my allocations for the quant, God damn it. It’s a defensive portfolio, bookended by GLD and TLT. I also switched from DRIP to GUSH in my trading account — booking a small profit in DRIP. Reason being: large directional upside move in crude.

Am I now, all of a sudden, bullish on crude?

Of course not. Don’t be ridiculous. But I am bullish on making money, irrespective of what he asset class is, no matter the case. The trade in GUSH is simple. Market rallies = GUSH goes up the most. If not, oh well.

I am still long a lot of DRV, which should hedge me just fine. I am not looking for any more longs until HYG and SRLN trade up. As it happens, I have a nice windfall in the price action of EGO today.

Like I said earlier, it’s very likely we’re about to roll over hard and barrel into 5,800 Nasdaq. The GUSH trade is merely reactionary, so don’t read too much into it — fucked face.

I’m busy this morning reshuffling my portfolio. What you need to watch is crude, crude stocks, HYG, SRLN and also IWM — because weakness in small caps have nothing to do with China.

The opening decline is severe and often times these gaps lower lead to buying. I cannot say with any degree of certainty that this dip will be bought.

In the meantime, it’s important to note we’re at the top of a downward channel.

Observe.

5,800 is in the cross-hairs.

As many of you fuckers know, 75% of my money is managed quantitatively, a method that was very pretty and beautiful during the halcyon days of when the bull market roared, but ended up being mechanized ribald in the bear. For the past 3 months of the year, all of my gains, AND MORE, have been washed from my account. The net results for 2018 was a loss of 8.6%.

Jan: +6.1%
Feb: -6.13%
March: +0.5%
April: +1.04%
May: +4.5%
June: -0.41%
July: +2.25%
August +4.4%
September -1.08%
October -10%
November +2.79%
December -10.5%

Total return for 2018: -8.6%

In comparison to what stocks did for 2018, this was in line with most investment strategies.

My trading account faired far better. Much of these gains were enjoyed during the summer months, especially during my winning streaks of 28 for 31 and 31 for 34. Net net, I had a profitable 2018 and have made adjustments to the Quant strategy to protect against further downside in the broader markets. The details of this plan, AND MORE, are in the Exodus blog now.

My methodology going forward is to be more defensive in the Quant and more aggressive with my discretionary account. I’ve been catacombed in cash for the past 3 months, placing small bets which have, more or less, resulted in marginal returns. A lot of circle jerking, if I can say so myself.

Over in my other service, The Capstone Programme, I intend to review long term portfolios for January. If interested in an annual plan, the discount code INDEUD will be effective for approximately 1 day.

Starting tomorrow, I expect markets to set a tone early on and I will attempt to position aggressively, either long or short. Market price action will be my guiding star.

You wouldn’t know it by my daily commentary, but 2018 was a dreadful year for Le Fly. Professionally, I’m fine and will always be fine. My genetic make up ensures that I thrive and continue heading higher. But life has a way of surprise raping you when you least expect it — which is why it’s called a surprise in the first place.

My best friend growing up killed himself and a very close family relative of mine was diagnosed with brain cancer. These are the two things that placed a shroud of melancholy on my year. I am grateful for my health and the people who love me — but it’s very hard to walk the black dog sometimes. I am prone to brood, often disappointed and infrequently pleased with outcomes.

Life marches on, with or without me. The things I hate the most sometimes become endearing to me, such as downward spiraling stocks and political upheaval. I’ve concluded long ago that I enjoy chaos and function best inside a razing fire.

One of my goals for 2019 is to help others manage their affairs better, specifically people from the interwebs. You rarely disappoint me and I love the banter, the back and forth between total strangers, whizzing throughout the trading day with zero fucks given. Who would’ve thought I’d give up managing money in real life for The Pelican Room, filled with drug addicts and gluttons for pain?

For this evening, as always, I’ll be at home with the family. I’ll eat a rib roast and consume wanton amounts of champagne. I don’t drink pretentious champagne, just Moet — because it’s dry and wonderful. I’ll make a lot of noise and play music loudly, and then sink into the couch and watch teevee. I’ll be dressed to the nines, clean shaven, and polished — optimistically welcoming in another year that might be filled with incomparable glory and winship — because I’m aspirational and want the best out of life.

Don’t we all?

Happy New Year’s everyone and thanks for reading.