DICHOTOMY

You may be looking at your odious visage in the mirror right now wondering how you got tricked and fooled into longing the semiconductors at RECOURD highs, ignoring the pleas of Le Fly, castigating him for his dire warnings of imminent collapse.

We now preside over ruins, the $SMH is OFF by 21% from the highs, officially entering a bear market. At the same time, we have seen rotation and dichotomy occur, specifically inside the Russell 2000 index, a forlorn collection of vagabond and vagrant stocks propelled higher by the indefatigable notion that stocks will not, cannot, trade lower no matter what. If the large one’s can’t go up, we’ll jimmy the small one’s to take their stead.

This presents an interesting arbitrage: long $SQQQ / long $TNA, a barbell if you will to SHORT big tech and all of the gays inside of it and LONG the smalls and the chads residing inside of it.

Also, we are seeing SECULAR stocks go up, the type of names Grandpa used to like: $PM, $KO, and Big Pharma.

But you can also view this tape as OVERTLY pro Trump, especially following the “White Dudes for Harris” cringe fest that took place online yesterday, whereby homosexual SOYJACKS like Mark Hammill cried on the internet begging you the whites to vote for the Jamaican/Indian. No Sir, we are with Darth Vader and we are going to annihilate everything you stand for and we will NOT VOTE for the Jamaican, or anyone else for that matter.

Instead, we will ebb into radical right wing politics and hope the kindling catches on and spreads rapidly, taking with it whatever form of government this pretends to be, bringing forth a new era of peace and prosperity built upon the bedrock of laws and the foundations of man and woman and child, the core tenets that is antithetical to the catamites residing in DC and other western capitols today.

There are many ways to view this tape. For example, $AMD is going to fucking zero, maybe even lower.

Nothing is redeemable about this chart

In case you’re wondering what’s happening, here is what the fucking happening with $AMD. Shares are down 14% for July because fuck you. The last time it fell like this was 2015, when to collapsed by 19%. It did not rally in August or September, but collapsed again and again until finally rebounding by 23% in October.

Can you make till October?

I think not. The lot of you will be bankrupted several times over by then. Even still and knowing this, I am 125% leveraged long into tomorrow because why the fuck not and who can really stop me? I am flat for July and I do not like being flat, so I am taking a gambit onto the long side since that’s the direction where stocks tends to go most. It’s as simple as that.

Sure we might crescendo into August I might lose another 3% because of my gambit, but that’s life. You can’t always play it safe and there are times when risk is needed, otherwise you live out your lives like eunuchs literally never fucking, walking around with stupid thoughts in your head, writing letters to your mother.

I was busy at the dealership this morning, getting tricked and fooled left and right into egregious costs. I traded a little, so far a little bad. But in my defense we have an inverse relationship today to last week, with the NASDAQ up 0.6% v the $IWM hard collapsing lower down 1.6%. I am presently just waiting around for something interesting to happen, which is code for making some money.

Breadth is at 31% and we have ZERO up sectors and very few industries up. The semis are in fact FLAT, and that’a annoying.

With the month winding down I am basically FLAT for July and I hate that too. In all, I haven’t been enjoying myself in these markets the past few months and really hope things get much more exciting so I can partake in wealth creation and leave behind this era of mundane mediocrity.

The last time the NASDAQ dared to trade lower during July was in 2007 and that was for a meager 0.17%. Let’s be honest here, out of all the years to trade lower 2024 isn’t exactly unique in its malevolence and the recent pullback, although enjoyable, isn’t exactly worthy of further downside. The valuations are wantonly absurd, but for markets to begin the phase of correction, a motive to trade lower other than common sense might be needed. I am not suggesting all is well and good. However, it’s worth reminding the retarded reader that markets have gone straight the fuck up since 2009.

$QQQ Returns for July

On this blog I used to delve into various other topics outside of finance and there was a time when I only talked about geopolitical events and that made me miserable because the stated goal of iBankCoin had always been to discuss finance. I am happiest when focusing on my craft and the things I do best. I was thinking about creating another site to focus on various non finance related subjects, in particular geopolitical events. I’m always up to penning another 15,000 words per week and wouldn’t be against it. Let me know if you have an interest in that sort of content.

Into the week ahead, we should expect an acceleration in the Israeli/Hezbollah conflict, but none of that will affect stocks. Many of the evils of the world we hate actually encourage higher share prices, from crazed immigration policies to war. This world we are in is filled with sticks and carrots and we get to eat the carrots while doling out the sticks. Since 2000, the US has spent over $36t in welfare and entitlements and roughly $22t in defense and war. When you think about that the first thing comes to mind is “what if that money was spent differently?” But this form of spending is funneled exactly into the hands of the people favored and in charge, who possess agency over the narratives of Pax Americana, which is to create a bombastic pluralistic society of feckless men and women meandering aimlessly in the economic zones created for them in search of dopamine fixes, most readily achieved through materialism and degeneracy.

It’s all very blackpilling to think this is the best we can do, the best Olympics ceremony that can be created, the best Presidential candidates we can produce. Some will naively focus on the characters produced, whether it be Trump or Harris, and conjure up excuses to vote for or against them, whilst also knowing neither of them truly represent them, nor care about their wants and needs. Generation after generation we seek change and at times hoped for it and crossed party lines to vote for it and was still let down. And then you realize that liberals vs conservatives isn’t the issue and that the DNC v the RNC most certainly isn’t the issue and you’ve been focused on the wrong topics all along.

It is often said “democracy is on the line” as if this form of government, which is very old and haggard, is something to cherish. What exactly has democracy done for anyone lately? Are the needs and wishes of the people across western nations being fulfilled by a form of government so easily corrupted that it literally induced and forced millions of its own people to take poisonous vaccines to fight against the flu, or encourage them to support the indiscriminate killing of people in the Middle East for the explicit benefit of Israel, and not America?

The only acceptable form of American politics is nationalistic, which may embody some of the liberal principles that made the west so desirable and free. But we are not free men now and we do not speak truthfully about our problems and all of our elected officials are criminals, working against us and for the glory of anyone but us and it is no longer acceptable and it is considered to be hateful to those of us who still care.

The small cap Russell jumped 1.6% and the Nasdaq was higher by “just” 0.87%. The action intraday was rife with big fucking red candles that went nowhere. If you were trading you had to be fast, otherwise your gains went POOF.

I have a full portfolio with an $SQQQ hedge at 11% and $TNA long at 5%, which is designed to do two things:

1. Potentially profit from the recent arb in between small and large caps.
2. Reduce potential losses by 50% once the $TNA is removed.

The way the math works out, for you retarded pavement apes who have no brains, each 5% position in $SQQQ is akin to reducing risk or gains in a portfolio with a beta of 1 by approximately 25%. What this means in layman’s terms is that to “get flat” you’d need a 20% position in $SQQQ, anything more than that would present a net bearish position. This is a worthwhile endeavor for those who do not seek to sell their positions but want to protect their accounts.

Most of you bumbling retards likely have portfolio betas of 2, so you’d need a lot more $SQQQ, which has a negative beta of around 3 to 3.5. One thing to consider is the beta is a lagging metric and not real time. Sometimes $CLX can behave like a beta of 2 whilst only being 0.38 overall. To ascertain an intraday score you’d need a high frequency data feed to calculate the covariance and variance; but you can rough sheet it by simply logging the returns of your portfolio crossed against the $SPY, perhaps even on an hourly basis.

I’m definitely talking to myself here with theorems best discussed amongst industry professionals, not amongst the canaille third estate catamites.

Have a good weekend.

Today’s core PCE numbers came in a little hotter and the Super Core PCE rose for a 50th straight month; nevertheless, we are now pricing in a 90% chance of a September rate cut. This is just the way things are now and if you’re against rate cuts you’re probably insane or dependent upon incoming generating instruments.

The Dow is up over 600 today, mostly due to $MMM soaring 17%. Aside from that, it’s a rather mundane listless rally day, with both the Nasdaq and Russell up around 0.8%. There is relative weakness, once again in BIG TECH: $AAPL, $GOOGL, $TSLA all lower for the day. As for the semis, the index is up but the core tenant $NVDA is only higher by 0.30%. I hate to allude to the possibility; but given the horrific pin action of recent late days, we could always give back all of the gains in the NASDAQ and not be surprised by the outcome.

I think it’s important to note that markets are typically robust during the summer and earnings haven’t been a reason to sell. The impetus for the recent rout in tech was based on overvaluation. Things got too good for too long and they needed to moderate. Has the selling ended and we can now sail smoothly in the most contentious election to date?

Probably not.

We have a problem and they’re trying to steal our shares. I started off the session about flat and dipped down to down 50bps at the lows. Then markets flushed out and bottomed. The subsequent rally enabled me to rebalance my portfolio, tailoring it for a Trump win in November. And then I got greedy and took at $SOXL trade near session highs. Shortly thereafter, pandemonium broke loose and markets cracked lower.

It wasn’t long until I was down a staggering 5% on the position, which comprised of 5% of overall assets. I took the L and moved on and began to hedge. I leaned in heavily into $SQQQ because fuck the Nasdaq. Traders were in disbelief by late afternoon because all of their gains had been absconded with. At session highs I had gains of 130bps and instead closed the session almost exactly flat. Juxtaposed against some of the more aggressive allocations, I am happy to have escaped with my scalp.

Into the bell, I closed out the $SQQQ and took a 5% floater in $UVIX, in the event this collapse blossoms into catastrophe.

It’s important to note the level of the volatility index is above $17. This has been suppressed by the Federal Reserve since 2009; but every so often it lights up amidst panic and fear. We could be diving back into fear soon, since losses amidst the hedge fund favorites are mounting. It should not amuse you to learn shares of $AMD are lower by 23%, $ASML 19%, $MU 18% and $LRCX 17% all within a fortnight. At this juncture in the rut, we are teetering and it can go either way. It would be reasonable to assume we bounce from here and live to fight another day. But it’s always tenuous at the crossroads and it quite literally can go either way, small selloffs begetting larger one’s transmorphing into routs, leading to disaster. I have traded catastrophes my entire adult life, having been born and bred into the fires, accustomed to its heat and unaffected by their aura. It is the single best thing that I can do, trading into the fires and profiting from them and coming out the other end a champion.

History will repeat itself again.

As I write this the semis are getting hit again, so it sort of negates what I was going to allude to. But I will furnish my thoughts on this tape overall.

This is a classic capitulation rally, whereby the sellers tripped over themselves this morning to get the fuck out only to have their shares sopped up by Citadel and Blackrock, sending stocks right back the fuck higher. But I also think it’s important to note which stocks are rallying the most. Sure the semis rallied 3% off the lows, now down 1.5% off the highs. But the entire day there was robust strength in specific areas of the economy:

Banks, especially regionals.
Industrials
Small caps, or domestic oriented companies
Transports (airlines, truckers)

In regards to the truckers, a 5% intraday move is completely atypical and points to a broader trend that should be reinforced. The market is pricing in a Trump win.

How do I know this? I am wicked smart, that’s how. I went back to painstakingly researched which stocks did best in November of 2016. I used AI and manual search to ascertain this information and compiled a list of a few dozen stocks and there are definitive areas of the market that benefitted most: namely financials, industrials, and small caps

The NASDAQ is +0.6% now, Russell +2.3% and those Trump era stocks are +2.9% for the session.

I realize the Kamala stans reading this will be infuriated by it and ponder as to the share price action of $META and $AAPL. Believe me, not good. And I know the election isn’t set in stone; but this is what markets are saying now and it could change, so don’t give up hope!

Take a deep breadth and relax. The market had run away from itself with the semis at the vanguard of the bubble. You were warned about this and chose not to do anything about it.

Let’s first examine the root of the carnage, the semiconductor index. We are down 3% on the $SMH, now off by 15% in the past two weeks. How is the valuation now?

Let’s examine:

Industry/P/S last year/P/S this year

Semi specialty 4.45/6.11
Semi memory 3.07/3.89
Semi Equipment 4.83/4.8
Semi integrated 2.18/2.38
Semi broadline 3.79/5.92

Clearly we are still overvalued. It doesn’t help when companies like $TER disappoint and plunge lower after it had already corrected. We have a sense of dread in the tape. Just so you know, in order to get to where the price to sales were last year, we’d need to drop about another 25 to 30% from today’s prices.

Is all lost, can we recover?

Yes, and of course. Today’s action is what I call a ‘flush out’ or capitulation. It started nice and then panic occurred and all hell broke loose. We went from up to down nearly 300 NASDAQs in an hour, likely due to margin selling. This is what happens when the bulls get hooked. This is also what happens when you’re over concentrated in one sector.

Treasuries are rallying because safety, which is good for the economy. The lower the rates the better. We are down 7bps to 4.22% now. It’s also worth noting the small caps are UP, indicative of several things, chiefly that Trump will win the election. The larger cap tech and globalists stocks are down heavily, while the regional banks are +1.5% and the $IWM +1.3%. This is not a fluke and not by accident. This is what rotation looks like.

What’s the plan?

I have a well constructed balanced portfolio. I am flat for the session, so I will sit here and wait for stocks to run out of downside fuel and pivot higher. I do think we are OVERSOLD to the downside and we should rally off the lows. However, longer term, there is more pain ahead.

We should assume stocks will trade up, especially since that’s what they always do. Nevertheless, we might see markets take a dive soon based off the exceptional violence of this decline. It should not be discounted the the $SMH have caved lower by 15% over the past two weeks. Because of this, rotation into staples has been aggressive, with stocks like $KMB and $GIS jimmying higher.

My position is a bit depressing for me, since I nailed the open but closed out my hedge too soon and then got caught with a 10% $TNA position into the final hour; and that tanked to fucking hell and beyond. I close down 147bps, much better than had I not hedge, having booked nearly $15k in day trading gains. To be careful, I paired by $TNA position against a tripled sized (15%) $SQQQ position. This doesn’t mean I am bearish and the intent on it is to simply reduce the beta of the overall portfolio.

For example, my quant lost 4.17% today in a 100% allocated portfolio amidst the most aggressive stocks. Because I reserved 20% cash in my trading and possessed some hedges into today I was able to “lose less”, which is great but only effective if I make the full gain on the coming bounce. In other words, as painful as it is and as scary as it might be, my job is to take the hits on the way lower and position for the rally that is destined to come. The only question is, when is this fucking thing gonna go?