This Rally Isn’t As Strong as You Think

Breadth is at only 68% and all of the economically sensitive sectors, like airlines, semis, and cruise ships, that have been hit by fears are not participating, at least not to the degree you’d expect on a +750 day. More importantly, and I cannot stress this enough, the 10yr bond is not rising in yield, now 1.08%, down 5bps.

The net result is a feverish rally in DIVIDEND STOCKS. You know, the sort of nonsense you’d never look at: CLX, ED, PG, and KMB. While the markets look fantastic on a superficial level, underneath the surface ZEN is down for the day.

The trade is simple, stay small and bet against this rally on an intra-day level. Should it hold, close out the trades and get long shit that didn’t rally today. Often times the real move is the day after the initial burst, as the wall of worry crushes in the helmets of weak shorts caving into obscurity.

The tell was in the bonds. The 10yr down a staggering 6bps to 1.06%. Smart money seeking refuge. Lots of new coronavirus headlines means down we go.

Over in Italy, the FTSE MID is off another 3%+, adding on top of their -5.5% on Friday.

Virus stocks are running like a son of a bitch. I am long just one now, BIOC aka The Bio Cock.

Fluid morning. I would not be surprised to see +1,000 or down 1,000. Sometimes the Fed gets in pre-markets. Time will tell.

Climb the wall of worry. I dare you. It’s greasy and very slippery. The Fed did nothing so far, and Asian stocks are off and running — led comically by the Chinese +3%. Oil is up, gold too. Everything looks great but yields, once again sinking. If not for bonds, I’d argue this looks good for an oversold bounce.

But you’re gonna want to take a look at those fucking bonds, believe me. If you don’t, this market is liable to reverse lower and kill you all.

Nasdaq futures are +65. The second US death due to Coronavirus was reported. All is well.

NOTE: You’re gonna want to use the StockLabs newswire tomorrow, believe me. This feature will not be free later on, instead bundled into the data platform.

Gun to the head, I’d say we rally sometime the coming week. However, I also believe the “WE MUST RETEST THE LOWS FAGS” will be out in hard-core fashion, forcing people into accepting the absurd notion that markets can never trade higher without first retesting the lows. Said lows, in my opinion, are 5-10% lower from here.

As of now, betting markets are calling for a -500 point drop in futures tonight. Let’s see how that holds up.

In my meantime, I’ve been building a buy list of stocks based upon the notion of “what if everything goes back to normal”, which is an entirely cogent premise.

Below are some stocks that require being around fellow humans that have been smashed due to coronavirus. Maybe worth a look for a bounce soon.

Stock, 2 week returns
CHDN -24%
AAL -35%
RCL -31%
SIX -36%
PLAY -31%
HA -26%
MGM -24%
AAPL -18%
DIS -17%
LOW -17%
NKE -15%
COST -13%
SBUX -13%
CVS -18%
TGT -13%
UBER -16%
MAR -16%
STZ -17%
CMG -18%
BBY -18%
MTCH -17%
BURL -13%
ULTA -14%
WYNN -19%
JWN -14%
DNKN -13%
MTN -15%
H -14%
LYV -18%

I’m sure there will be more. In a sell off like this, sometimes it gets confusing on what to buy. Since this virus started the main difference in human behavior has been congregating amongst each other. No one wants to get infected. Ergo, they’re avoiding public places, thus affecting consumerism trends. But like drug addicts, humans cannot help themselves and will eventually return to doing all of the things they were doing before. Therefore, the best stocks to play on the bounce aren’t banks or semis, but stocks like SIX, H and LYV.

Famous for his financial crisis doom-casting, Dr. Roubini, NYU Stern, is out again and talking extra greasy about the global economy. If you want to watch the video, feel free. The short recap goes as follows.

• Chinese GDP to be RAPED this quarter to -2%.
• Doing math, if you’re so inclined, a V shaped recovery puts Chinese GDP at around 4% for the year.
• In a non V shaped recovery, Roubini says math places Chinese GDP at 2.5% for the year.
• Moreover, with oil plunging lower and the incredulous and absurd increase in corporate debt, fueled by avarice and greed to execute share buybacks, he declares there can be a leveraged loan and CLO crisis should crude hit $40.
• He also told a German newspaper that global equities could ‘tank’ as much as 30-40% in 2020.

BONUS: “They are shitcoins, including Bitcoin.”

I’ll post my shopping list on Sunday.

Gonna wrap this up. Why is this time different?

Exogenous even meets already loose Fed and global central bank policy means NO BULLETS in the chamber. Moreover, the Fed came out intraday to jawbone and markets went down anyway. They shot their load.

Behavior is being affected on a global scale, which means GDP will grind to a halt and probably go in the red.

More than that, we are seeing a wholesale collapse in all commodities and businesses are scaling back operations out of caution. While the uncertainty is present, it’s hard to buy stocks. Since we don’t know, my bias is for lower prices — even though we’re so oversold.

I look around me and see a sense of entitlement everywhere. Advisors screaming to their clients to hold stocks — mainly because their fees depend on it. We normalized $1.5t market caps and everyone thought it could last forever. Borrow billions to do share buybacks and hike dividends was the formula. Now with businesses slowing down — what’s left is the net result of grift and corporate malfeasance on a massive scale.

In the end, we get the market we deserve.

90% cash, long SOXS.

HAGW.

What say you? This time is truly different, or more of the same? If the same, this is a short here, meaning stocks go up.

Markets are barreling towards session lows after a sundry of rookie punk traders jumped in headlong into concrete pools of shit. Now they’re all selling and The Fly told them to avoid these pitfalls.

“Don’t buy on Fridays into cataclysm” is what I always tell my kids.

The fact that TLT has now outperformed the SPY on all time frames short of 5 years is something to behold.

So where do we go from here?

I sold out of the balance of my virus stocks today, for a net win — the latter sales being somewhat fucked. But I had to get out in order to wipe the slate clean.

IBIO +132%
OPGN +83%
VIVO +18%
(AEMD -15%)
(AIM -25%)
DYNT – wash
(LLIT -6.4%)
(MARK -16%)
(TEDU -19%)

Wrapping up my virus themed trades, here were the results.

NNVC +32% NNVC +319% CODX +28% CODX +61.4% VIR +25.9% INO +50% AHPI +48% NVAX +11% NVAX +28.9% APT +29.3% LAKE +17.5% LAKE +25.2% AEMD +14% LLIT +15.5% BIMI +33% DAO +14.3% NNVC +63% COCP +44% APT +48% APT +28% MRNA +14% AHPI +52% AHPI 28% CODX +37% CODX +30% LAKE +10% DAO +5.2% NVAX +15.6% NNVC +31% VXRT +95.7% TNXP +121%

Can’t complain — best trading spree of my life. Is it done? Never says never. One thing is for certain, we’re deeply oversold and the market is begging for a reason to rally. We probably get something on Sunday night from the Fed. Truth is, this is all unprecedented and I do not know what to expect next, other than to suggest you trade small.

95% cash now.

Cannon sized dick moves today, from down 1000 to up Nasdaq to now down 700. I didn’t do anything because I saw WTI down 5% and not budging and the 10yr still under 1.2%, off by 15bps. Plus it’s a Friday and before lunch and anything can happen. NO THANKS.

I did get a serious bout of FOMO and really wanted to get long — but I walked away.

In other news, we launched The Stocklabs news wire for you good folks, free from charge. Enjoy it with my compliments. We are working furiously, tech located in the middle of Germany — big German men typing hard into the computer to complete the project with the utmost efficiency. You know the Germans always make good stuff (extra Sham-wow).

To recap, no interest in buying here yet and go check out the SL news wire.

We’re down about 1,000 Dow points again, third time this week. The 10yr bond is down a staggering 12bps to 1.17%. We are in a world of pain here, as markets cannot catch a bottom. The words coming out of Washington mean nothing to people being liquidated for leaning heavily long. The easy money fueled by debt is being unwound very violently now and respite is what is needed.

Will the Fed be able to deliver again?

Will the coronavirus cessate a little or pause? These questions will be answered soon. Until then, the fucking casino is on full tilt — fucking people for their coin.

My trading account is 65% cash.

My closed trades for today so far.

IBIO +132%
OPGN +83%
VIVO +18%
(AEMD -15%)

See pal, that’s who I am. All of the smart people who signed up to Exodus got those picks. Did you? Did you?

Back to work.