Early Going, Tricked

Tesla is up sharply post earnings, after the company reported a much larger than expected FCF beat and pitched the idea of the company not being an auto company but a robotic AI play. On the news, shares of $UBER are sharply lower, since Tesla is focusing on ROBOTAXIS. I don’t see how this adversely affects $UBER but the stock is lower and so the fuck am I.

We are seeing a very odd rotation out of secular/risk off names and mildly into high beta, but not quite. We are vacillating here, churning up fools like me and spitting them out like sunflower seeds. I am hammered lower 118bps and wit each move I make, I exacerbate the situation.

Presently, both my longs and shorts have moved against me in unison, as the Gods punish me for sport. If I sold everything right now, they’d all trade up, long and shorts together. All of the things I rotated into this morning is down more than 1.5%, whilst the secular stuff I sold is slightly higher. Clearly the move was premature and now I pay for the sins in spades.

I just moved to 57% cash and sold the losers from the morning, which is likely to now spike the market due to my 18% short position in the inverses. I’ve endured these pangs before and will endure them again. The market is an unforgiving bitch when wrong and if I was smart I’d get real small real fast and try to avoid thinking I could make it all back today because clearly I haven’t the slightest fucking clue about this tape right now.

Some of my peers are obsessed with their returns on a day to day basis. My view is: life is long and many things can happen. What might appear to be a gift today is an albatross tomorrow. I used to compare myself to others, benchmarks like the $QQQ and become morose when underperforming. But once you’ve achieved an unshakable confidence in your abilities fully knowing that on a long enough time frame things will spill your way – the only benchmark you have to measure against is time.

Today I made only 59bps, giving up 40bps in gains from an intraday peak. My longer term accounts, which are static, were higher by 1.5%. On the surface, this is miserable performance. But on a longer time horizon, my trading is +0.4% for April, compared to down 5.5% for my strategic and +13.5% for 2024 vs +4.5%.

Today could’ve been a +5% day for me had I concluded yesterday this was going to happen. I could’ve placed my entire account in $TNA and bask in my riches today. But that would be poor form and decorum, an unsustainable trading method that will undoubtedly lead to ruin.

Everyone has their methods and we are teeming with strong opinions about the future. But one thing about trading which is universal and not up for debate is position sizing portfolio volatility. I’ve said it a million times and I’ll say it once more for sincerity: position sizes should not be more than 5 to 7% for pros and for amateurs 3%. Overall portfolio beta should not be greater than 2 and more often, even for aggressive trading, be more than 1.5x.

Into tomorrow, I am 6% cash, 5% hedged via $LABD and the rest long, looking for a bit more in this bounce.

It’s very pathetic that us humans allow you bears to still be free amongst civilized folk. You have been messing things up for some time now and it’s not fair for the rest of us that you exist, freely. Might I propose we send you back to whence you came or perhaps hold you in a zoo so that you can shit all over the place and be amongst like minded bears?

The marker rout has ended. Anyone pretending the bears will make a miraculous comeback are deluded and should be sent to the zoo as well.

There is in fact ZERO chance stocks will trade down this week. With the breakout clean and picking up steam, you should expect nothing less than exuberance into the close.

As much as it pains me to admit it, markets are breaking out again. Barring this post timing an exact top in markets, it appears to me, an expert eye, markets are readying to bust loose to the upside again.

Many of you zealots are already in and might be taking profits here and that’s fine. But I was waiting for an 80% up day with breakouts across multiple sectors and here we are. I’m 80% deployed with 20% reserved for an afternoon dip.

God willing tricks are not played on me and my visions are accurate. If not, I’ll figure it out one way or another.

The waters were very warm today, very warm indeed. The proletariat took to markets with fingers crossed hoping for the best possible outcome. Stocks traded up but didn’t finish pleasantly pinned to the highs, but instead well off them.

Indecision is in the air, but the proles remained all in, leveraged at 150% of their portfolios because they feel, all things considered, that they deserve more. They are inherently good people and good people deserve to win.

WRONG.

Only the strong survive and only those disciplined with flourish. One does not drink booze because he feels like it or eats cake because it might taste good or buy stocks because he wants more money. One does things in accordance to a grander plan, thinking differently, behaving with decorum.

I closed up just 7bps, 60% cash, longs of the defensive nature with a small hedge.

See you catamites tomorrow .

Which way does the market move next? We have our bounce today, with NASDAQs higher by 200. All of the cool stocks are participating, as well as the low beta varietal. We have vertical movements in cryptos and all of the retards who were panicked last week are out and about today with their finest outerwear, proclaiming the bull to be back.

The $SMH, which is my tell, is higher by 2.16%. I’d be arrogant and condescending if I told you exactly what would happen tomorrow, forecasting one way or another. But I want to remind you that recency bias is a flaw when thinking about the bigger picture and that large frame of work is harangued by geopolitical issues, and high interest rates. The $SMH is down 9.5% for April and I want you to place yourselves into the shoes of those tricked and fooled, down 9.5% in $SMH after buying the top. Those folks are now hoping and praying about this rally to continue tomorrow. There is zero chance they’ll sell today, because of hope. If that hope is shattered tomorrow, the market will be routed.

This is not a prediction, just a scenario that can play out based off previous experiences.

Should be rally tomorrow, a short squeeze might ensue, as all of the fence sitters dive back in.

At the present, I am up just 9bps and in 100% cash. I had losses of 40bps at the open and recovered those and decided to stop aside into the final hour. I am contemplating barreling into risk or low beta for tomorrow and will try to make up my mind over the next 30 mins.

This morning’s bounce is brought to you by Iranian generals who decided not to attack Israel. The result: lower gold/silver and oil/higher stocks.

However wonderful it might look, I’m hesitant to jump into the fray before 12pm. Lots of reversals occur in the morning, especially when lots of traders needed this respite to avoid blowing out. I would expect profit takers to overpower zealots in the morning. It’s very possible this bounce will continue and perhaps produce 3-5% upside. But I want to wait in some old man stocks and cash for a few hours.

I closed out my leveraged plays and my $SQQQ hedge and although tempted to long heavily — I am waiting a few hours.

Many of you are surprised over the recent events and ponder for the future. Have you already forgotten 2022 and the suffering it brought to investors? It was a year that was supposed to kick off the beginning of the next great depression, only saved in 2023 by a stasis in Ukraine and reduction in inflation, causing people to go insane for shares of $NVDA.

But now we see the elite we permit to rule us have no idea what they’re doing, wasting and squandering away 250 years of American excellence for nations that 99% of people here couldn’t give a flying fuck about.

Markets were never supposed to come back in 2023 but they did and now we are here, seemingly at a crossroads. It’s worth noting, stocks are not supposed to fall in April. The $SMH is down 11.5% for the month and only 3 month’s in recent history did investors absorb such a vicious blow: 2022, 2004, and 2002.

What worries me about this tape is the possibility of a 2022 redux, which would include an absolute collapse in all asset classes, including $BTC. Right now there isn’t any fear in the tape. Most traders are confident that prices will go up, predicated on what I do not know. For the past 6 months people were fixed on the FOMC lowering rates. Well, that isn’t going to happen.

So in this high rate environment, the following are chief concerns.

How the fuck are companies going to refinance their debt and now lay off workers at these high rates?
Normies cannot afford homes at 8.5% with prices at record highs.
Commercial RE is basically ridiculous.
Consumer spending will be affected; the math doesn’t lie.

We’ve had a good run and 2022 was the geopolitical and monetary policy warning of what could happen. Nothing has improved, other than inflation coming down from 10%. But it’s still elevated and the cost of money is at recent highs. I will keep an open mind for being wrong, but I think the possibility of a bear market for the remainder of the year should be considered, especially since stocks aren’t even down that much from their highs. In other words, you still have time to save yourselves.

Everything loved by the market was flung into bonfires and burned alive this week. Losses in notable names for the week.

$NVDA DOWN 13%
$ARM DOWN 31%
$MSTR DOWN 20%
$SMCI DOWN 21%
$TSLA DOWN 14%

On the upside

$UAL +23%
$UNH +14%
$ELV +7%
$GIS +6%
$PM +5%

For the month, the $IWM is down 8% and the $SMH has been fucking hammered into dust for 11.4%. But as bad as the market has been, we are not even close to bottoming, algorithmically, and without panic there will not be a capitulation sell off that can place in a hard bottom.

For the session, I was perfectly calibrated, finishing up 47bps. My longer term accounts didn’t fare too well and that is always expected when markets get routed. You can have two approaches, maybe 3. You can be tactical and beat markets, which I’ve proven possible since blogging live in 2007. Or, you can associate yourselves with the prevailing trends and trade with markets, which isn’t the worst thing in the world since markets generally trade up. However, in those periods of duress and calamity, you might, sometimes, wished you were just a little bit like Le Fly.

Here is my full portfolio into the weekend, 20% cash.

Good day,

I warned you of an impending rotation out from high beta stocks into low. I even elucidated my thinking by showing you my portfolio yesterday, something I used to do regularly here back in the day but now is reserved only for the confines of Stocklabs. At any rate, I think it’s fair to say this rotation is not only underway, but in full force and ceremony.

Although tempting to fish into the polluted water where you transcribe your days, I endeavor to survive the fires and beyond and buy cheaply, whenever possible. If you believe Israel’s attack on Iran last night was the final salvo in this endless war, wait until what’s next.  Whether you are a bull or a bear I think everyone can acknowledge that things aren’t exactly right and there are fissures and cracks in the edifice, which may of course give way and cause a real capitulatory collapse. This drip drop decline isn’t really injurious to professional managers. Wait until VIX is at 50 and they’re screaming from the rooftops for Powell to save them.

We aren’t there yet.

In summary, I am long consumer staples/olde man stocks.