LESSER MEN SOLD $STMP YESTERDAY

We all get lucky on trades from time to time. Yesterday was one of those days for me, getting “lucky” on a 55% jump in STMP off good earnings and resumption of contract with USPS. But what separates the men from the small girls is what to do with said gift.

Does one accept it and move on or stay for more?

It depends on the context.

See pal, STMP was $280 before things went south for them, losing the contract with the USPS — being relegated to a shell of a company. Now with the contract back in place, I see no reason to believe the stock cannot power to new highs. This conviction, this poise under fire, is what makes Le Fly a world class Master Ace Trader (M.A.T.).

While many of my minions inside of the Pelican Room in Exodus sold and gleefully skipped away with profits to eat a box of chocolates of whatever the hell they do in their spare time, Le Fly knuckled down and made the hard trade: nothing.

Sure, it’s easy to take an 80% win over a 2 day holding period. Let’s see you carry that same energy after it jumps and you’re left with the decision to hold on a day when stocks are down over 1%.

When will I sell?

Maybe over $200.

The point here is to brag and do it often and make it known to the world Le Fly is not to be trifled with. I hope I made this point abundantly clear.

The amount of Coronavirus in China surged last night, with more than 700 reported cases, 500 of which come from jail. Over in Iran, 18 sick in various cities, 4 dead. Israel even reported 1 sick. Over in S. Korea, the amount of infected patients doubled overnight. While many of you believe it’s just the flu, China has taken upon themselves to WELD citizens shut into their buildings and threatened to break their feet and teeth should they try anything silly — like venture outside.

Reminder: never visit China https://t.co/zHxAjrKyiD

— The_Real_Fly (@The_Real_Fly) February 21, 2020

WELDED INTO BUILDINGS https://t.co/qPiucb6Dfh

— The_Real_Fly (@The_Real_Fly) February 21, 2020

These new numbers, coupled with the fact that today is Friday, stocks are plunging — sending the NasCrack down by 150. Fortunately for me, I am long SOXS. I also sold BTAI today for a 6% overnight win. Pro tip: buy any stock after they announce a secondary for a quick overnight pop.

I’m 55% cash now and have been missing on a lot of trades. I am not losing money because I’ve had some really big wins, such as overnight Tesla puts +228%. Nevertheless, I too am struggling to find a thread in this market and find myself over-trading for the sake of trying to define myself here. Perhaps it’s best to trade small while markets find themselves.

For example, the 30yr bond yield is at RECORD lows, at 1.89%. The 10yr is sinking fast, down another 7bps to 1.45%. Clearly, the bond market is telling us something is wrong. Don’t listen to what the talking heads have to say. Protect yourselves from the plague, raise some cash, and hedge your longs with some shorts.

Gonna make this brief because I’m tired of seeing my self type. I had STMP heading into today from $90 and now find myself up 80% in the position. They re-struck a deal with USPS and smashed numbers. I suspect the stock is going over $200 soon. Therefore, I am not selling my shares.

All position of mine are 5% weighted.

I spent the balance of my day repositioning into new stocks, cleaning out some losers, and placing one hedge (SOXS) for a just in case scenario. I am richly up for the year and have the confidence to tell you now, unequivocally, that my style cannot be matched nor replicated. At some point during my lifetime I will attempt to create an algorithm to catch trading patterns the way I do in real life. Until then, you’re stuck with me, bragging about my wins like a teenager on this ridiculous trading blog.

I hope you’re all having as much fun as I am and I want you to keep some things in perspective, while looking at stocks trading lower. The Fed has all but eliminated the business cycle with their policies, so do not fret these sell offs. Instead, you should embrace them.

Good day.

Full disclosure, I took a position in SOXS today — because of the congestion in the SMH at $150. I don’t know for sure if we’re topping — but it’s entirely possible we trend lower for a few days from here.

On the other end, momentum stocks are rallying again. Names like SPCE and ENPH have gone green and my Bubble Basket losses cut in half. While nice, the Nasdaq is still off by 100.

For now, I remain heavily cash’d up and will hold the SOXS hedge until at least tomorrow.

Speculation was rife and outer space stocks had been the flavor of the week. Now all of that is over and the pikers from Robinhood wiped clean off this planet. There’s not reason to ever buy SPCE, especially up 300% from the lows.

The Nasdaq is off by 150, Dow 300. European stocks are off in the magnitude of 1%. Everyone is trying to figure out why, since there isn’t any new news.

How about a fucking sell off for the sake of destroying the plebs?

Momo oriented stocks have been targeted and they’re plunging, from BYND to TSLA to the aforementioned SPCE. My Bubble Basket of high valued stocks is down 2.1% and my SAAS basket -1.8%.

Heading into today I was heavily in cash, due to a spate of sales yesterday. Upon seeing some of my stocks bludgeoned today, I sold them down and raised my cash to 65%. I suspect markets will darken into the closing hours — but I can be wrong. I also suspect this is just the beginning of the sell off, so 3x inverse ETFs are on the agenda.

The 10yr is down 6bps to 1.51%. Something is afoot.

Big win for yours truly — thanks to a little bit of luck and good fortune.

Big earnings beat caused the stock to rampage in the after-hours. My basis is about $90, purchased the other day, which makes me a 40% winner.

I don’t mean to brag, but my balls are made of iron.

I just closed out the following trades.

SDGR +12.3%
DAO +2.5%
DAO +14.3%

They are notable for two reasons. One, the SDGR was purchased yesterday, so obviously I am pleased with the overnight success. Second, DAO was an average down, something I rarely do but when I do I am rarely wrong. I turned a loss into a net profit, which is always a good feeling.

How did I know they’d go higher?

I wish I could tell you exactly how — but I will walk you through my process, which is essentially the same process I go through before 90% of my trades.

I use this screen inside Exodus. For those who aren’t members, it searches for stocks up 2% for the day, within 1% of session high, with a technical ranking score over 3 (very bullish), and that trades more than 100k shares per day. This screen will more often than not produce the biggest movers of the day that are sticking their gains. Ergo, within 1% of session highs. For people who do not trade momo, you might find yourselves getting sick at the prospect of buying a stock already up 15% for the day at times. Also, at times, you will buy something that reverses the next day. The best thing to do with those, normally, is cut losses quickly — because the narrative of momentum had been lost.

With the case of SDGR, it was a new issue that had no price memory. Therefore, sky was the limit. I had averaged down in DAO because it had moved rapidly to the downside in a fashion that usually invokes an oversold bounces. Also, it has previously enjoyed some splendid upside momentum as a Chinese burrito running higher. There is a difference between a stock pausing before heading higher and topping out. I believed correctly it was pausing.

With markets are record highs, you will find a slew of speculative names running hot. Try to chase the ones with good volume and in a sector that is favored. Take profits quickly and never hold onto something that quickly reverses lower, intra-day. Those stocks tend to continue lower the following day, which will bury you quickly with unnecessary losses.

When Bitcoin was around $20,000, I got sucked into the asset class in classic topping out bubble fashion. I allocated some money into a sundry of ICOs, quickly made 25%, and then proceeded to get BOGGED out for 95% of my principle over the next 12 mos. I never sold — because I suppose I was frozen out of ignorance. It wasn’t a lot of money and paled in comparison to my well performing stock portfolio, so I just adsorbed the losses.

But when I look at asset classes, such as Bitcoin and Ethereum, I must admit to being intrigued. There is a devout core shareholder base in the big cryptos. Forget about the ICOs and the fucking SHITCOINS. If you’re only interested in BTC and ETH — I believe the timing from the crash until now is really interesting for people who want to accumulate over a period of time.

I’ve given up trying to time cryptos and have instead decided to buy ETH once per month for the next 12mos.

Why?

It can serve as a valuable asset class for money launderers, plus it has the added attraction of being an alternative investment at a time when real asset prices (stocks, bonds, art, real estate) are at record highs. This trickle down effect is real and even if you’re not a fan of cryptos, you have to admit that the allure of getting in to something in the early stages is interesting. Therefore, and this goes without saying, Le Fly is going to dollar cost average for the next 11 months. My first purchase of ETH was around $235. I’ll keep you appraised of my progress.

Following a long tumultous 3 weeks at House Fly, I am prepared to maneuver into this market this market with space alien magician qualities. I have taken it upon myself to cull many stale positions and have begun the process of replacing them.

The narratives present today were the following.

• Apple warned about China, but it’s backward looking so buy Apple.
• Car manufacturers are redeploying assets into China to re-start production.
• Gold and cryptos are flying high.
• Oil is still under pressure, but stable.
• The Euro is at a 3yr low vs the dollar.
• Tesla continues higher, up another 7% today. I will hit $1,000 soon.
• The coronavirus fears have subsides, in spite of the data saying the opposite.
• Bloomberg is surging in polls, a bullish candidate for the DNC

I might be missing one or two other items, but not much. Thus far, I am having a banner year, only recently hamstrung by a series of poorly timed trades. I don’t want to use my personal issues as an excuse, but they have played a factor in me getting started late and not being able to “absorb” the market the way I normally do. Nevertheless, up more than 40% for the year in my trading account isn’t something to feel bad about.

I am also extremely happy with the performance of my Quant, which continues to crush the SPY. We have low rates, accommodative Fed policy, solid earnings, and a dissipating plague. What could go wrong?

Barely anyone I know is long gold and I rarely hear traders discussing it. Yet, the idiotic metal is now at 7 year highs, once again threatening a decade long consolidation. The only way gold gets interesting, in my opinion, is over $2,000. I know, it’s ripping. Ten percent of my quant is long gold, for reasons separate from my own opinions. I think, obviously, there is price momentum, but I also believe there is price resistance at and around these levels.

One year return are terrific. Considering the rest of the basic resource space has been a disaster, at a minimum, you should replace your oil and coal and copper stocks with something gold or silver. But to buy up here for a trade, in my opinion, isn’t very high probability.