iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
23,536 Blog Posts

Back in the Saddle – Let’s Crash this Fucker into the Rocks

I just got back from Williamsburg, VA — a wonderful small town next door to the waterpark that I was tortured in. The hot and oppressive heat beaming down on me whilst waiting on a long line climbing up many stairs with TWO busted ACLs is what a man, such as myself, might consider to be hell. I bore through it and never complained — because only pussies complain and I will have you know — I bore through it.

While away these past two days, I made money in the market — about 27bps total. I am mostly cash and 10% short $TZA. I see @ElonMusk sold his fucking $BTC for Space X after close — crushing the souls of shitcoiners everywhere. Listen to me, this is a buying opportunity. Musk selling $373m in $BTC means less than nothing — definitely not a reason to sell.

But I am not here to talk about that. I am here to discuss the specter of stocks lampooning into the fucking floorboards tomorrow en route to a full fledged cataclysm on Monday. I will, once again, be out of pocket tomorrow afternoon — as I am driving my son to college. I do not expect much tomorrow — but it can happen. All we need is for bonds to tank again and next thing you know we’re getting margin calls.

That’s right Charlie — there is significant damage to equites right now to the point of margin calls becoming a problem. How much leverage is in the system now? How about $700 billion pal?

BOTTOM LINE: Best case scenario markets tumble again tomorrow, mainly affecting FANG stocks. Thus far, the tera cap Robber Barons have all but escaped the horrors of August. We want that to change and fast. If we can get the big stocks down 7-10% in a day — then we can preside over a wholesale liquidation of the stock exchange, whereby these little 2% movers you’re so angered by would be like having an up day in comparison to what you’re going to see — 20-40% daily drops until it’s dead. You forgot the pain of downward liquidations and how it felt inside the hot fires, burning furiously out of malice. You’ve been tricked into comfort, became gay, and now God himself is going to strike you down threadbare and blow you the fuck out clean.

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MEAN REVERSION BOUNCE LOOMS OR IS THIS TIME IS DIFFERENT?

Before I delve into my unimportant life, I’d like to convey the fact that our mean reversion oversold signal was activated today, which is a rare event. It wasn’t oour 12mo dated algorithm, which is now super rare, but the 3mo. The way these mean reversion signals work is as follows.

Stocklabs grades all stocks by fundamentals and technicals, producing an aggregate score. This score is then transposed against price action for the $SPY over a 10 day holding period and from that we get data. The details of producing the scores are way above your pay grade, including treasuries, currencies, stocks, and commodities. Explaining them to you in a blog would be on par with teaching trigonometry to a gorilla. Just know, I’ve made fortunes by trading off these signals since 2008.

I will admit, there are occasions when the oversold flops and during those times there are seminal moments or pivots in the markets that distinguish them. The hallmarks of them are when we get “clusters” of OS signals over consecutive days. Since this is day 1 of the signal, it’s too early to know if “this time is different.” We can easily acknowledge the spike in rates and how that is causing people to panic.

Here is the data for the oversold signal.

 

The last OS was on 6/23/23


The backtest data is flawless over 10 trading days, poor over 1. Backtest period is 1 yr.


Aside from important things like western finance, House Fly visited the entirely trivial JAMESTOWNE today, which is basically a scam recreated in 1994 to fool tourists into believing something old exists there. I hobbled along at a slow pace and enjoyed whatever sites I could. When I was younger, in my 20s,  I’d get very excited over visiting places, really geeked out over the smallest things. I was truly alive and with verve, my entire life ahead of me. Now these days, I’m entirely black pilled, have a month old beard, and generally don’t give a fuck about any of it. These things happen of course — life wears you down and then breaks you into pieces and then, somehow, you drop dead.

Sorry to get all morbid, especially for the 20 something year old punks reading this. I really do wish you well and hope you can enjoy life the way I once did, stupidly cavorting throughout the planet in search of sport and truth.

 

 

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OFF TO RICHMOND

I’m about to get the hell out of here and sojourn up to Richmond, at which point I’ll delimber and prepare for a battle, tomorrow, at Battlefield Waterpark. Perhaps I’ll visit Jamestown or Williamsburg and pretend. It’s always fun doing that.

The market isn’t particularly interesting anyway, offering non explosive moves, plodding lower lazily. Early going we have a small rally — but I won’t be fooled into it. I have 5% TZA, 7% BTC positions and the rest cash, about flat for the morning. I don’t feeeeeel like I’ll miss much and really do like cavorting around Richmond. If you see a man limping due to an ACL tear, just know that I don’t want to talk to you and may or may not be fully armed. I will not, however, be taking my weapon to the waterpark, as I intend to float lazily in the lazy river without fear of being attacked.

While I’m away, remember the market is trying to trick you. Try to avoid being fooled.

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DO OR DIE FOR STOCKS

The IWM is down 5% for August and the bears are really feeling themselves now, asserting their opinions in an oppressive way unto the poor bulls. You see the blood streaming almost everywhere and you can sense this is a moment that will either demoralize the bears for the balance of 2023 or perhaps turn the tide against the bulls and bury them where they stand.

Markets pulled back 1-1.2% today. This is a garden varietal pullback — but one which has been persistent for all of August. I managed to limit my losses to 45bps, suffering greater losses in longer term accounts. I closed hedged and in larger capped stocks — afraid to take on too much risk because of the 9%+ hole I dug for myself in the month.

Tomorrow I depart for Richmond and then the following day towards BUSCH FUCKING GARDENS to not enjoy my time and to not like any of the rides there. I view rides as a god damned stupid waste of time; but do not tell Mrs. Fly that because she loves them and thinks they’re ‘super awesome and amazing.’

BOTTOM LINE: Fear tactics aside, this market is being directed entirely by the treasury yields. Should they come in tomorrow — then stocks will rally and vice versa. There is a palpable fear that inflation is going to be renewed and that money will become even tighter — laying waste to anyone without millions in cash ready to spend.

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THESE STOCKS ARE NOW IN A BEAR FUCKING MARKET ###

We often trade in stocks we’d never want to own long term — because “one more trade” or “just a little bit more.” And then they blow the fuck out and we get caught inside of them — on par with being in a piece of shit car just before it combusts.

Whilst the bellwethers of this market remain intact, we are seeing SEVERE drawdowns amidst plenty of trader favorites — mostly due to terrible earnings.

Here are some 2 week returns that are designed to scare you.

HE (MAUI RELATED) -57%, NVEI -53%, UPST -51%, QS -47%, TGTX- 45%, SE -37%, SAGE -39%, LMND -38%, DOCS -36%, SYM -35%, OPEN -32%, PLUG -31%, IEP -31%, SDGR -30%.

And for some larger capped catastrophes.

PYPL -21%, FTNT -24%, SQ -27%, PLTR -22%, DDOG -24%, NIO -23%, RIVN -24%, RBLX -24%, PAYC -21%, U -22%.

Bro, it’s fucking over. Can’t you see the writing all over the wall — the blood of the bull painted on it? You cannot withstand this sort of barrage without ramifications coming due. I will tell you this now — people hate this market. They view it as artificial and want it to die. I will also tell you that the fundamentals of the economy are extremely tenuous and any substantial pullback in equities will in fact ruin the recovery.

There is a great price to pay for the sins of a nation of grabblers, mountebanks, and grifters. Whether it happens now or later, one thing is for certain — a reckoning is coming.

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Garden Varietal COURRECTION; Great Happenings Loom

Before we get too excited — let’s measure ourselves and not become too erect around the specter of a true market calamity. Last night the state of Georgia, renowned for lynchings, decided to prosecute Trump for election interference. I do not care whatsoever about Trump “having his day in court” or the “merits of the charges.” This is a show trial and show trials aren’t about justice, but to exact revenge. People have done far worse and nothing came from it. Anyone with an IQ north of 85 understands the hypocrisy here. But this isn’t why I’m interested in the state of Georgia. Last night the former general counsel of the FBI said, due to the laws of Georgia, that Trump may be held WITHOUT BAIL. They will arrest him and dress him in an orange jumpsuit and toss him into prison and then tell you Trump is out of the race for President — and there is nothing you can do about it.

How about that?

All of these events lead any onlooker to believe this is a fucking ticking time bomb that poses a risk to equanimity in the nation. Not that it really matters, in regards to the markets. When the BLM fools were monkeying around all we saw was fires and bloodshed and anarchy — yet markets enjoyed it. I suppose if we had an uprising in the country, on par with the anger brought out by the fucking COVID-19 policies, markets would ignore it and go up anyway.

Early this morning I fled most of my stocks and took a TZA hedge and because of this — I am only down 34bps. Even so, I am not pleased with losing a little bit of money. I am trying to figure out which way we move next — up or down. The NASDAQ -100 isn’t much and oil down 2% after the big run up it had might be a head fake. We do have bond yields up again and that portends a much more severe economic imposition than, let’s say, an armed conflict between the state of Florida and Georgian state troopers attempting to arrest Trump at his golf resort.

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CAVED INTO THE DARK SIDE

These are the slow summer days of trendless chop — like watching thick molasses spill off a dusty picnic table in the yard. There is nothing going on — not even a collapse. Ergo, and this goes without saying, I have henceforth caved in and allocated 75% to the long side — no hedges.

I have no right doing this — already down 8.8% for August — but I did so nonetheless. Who can stop me?

In my head, I can sneak out of these positions for a quick gain and then swing back around with a full chest and bury the market with my shorts. My imagination runs wild with thoughts like this. Some people dream about winning the lottery to buy stuff — become degenerate swindlers and homosexuals. In spite of the fact that I do not play the lotto — as it is the sandbox for morons — but if I did I’d take all of the winnings to conduct the most hostile takeovers known to mankind.

I’d takeover — fire everyone, then totally ruin the business for sport. I’d do this over and over until I’ve had my fun. Don’t judge me — these are simply idle dreams of a person in a boring tape and in a slump.

Later on this week, Mrs. Fly thought it’d be nice to drive over to a water park — for “the kids.” I fully expect to completely tear my ACL there if under the advice of my wife, which is why I’ll be floating about in the lazy river all afternoon. It’s a stupid thing and all, water parks, bathing in filth and cavorting with the plebs. Alas a parent must make sacrifices for their children and if I didn’t place myself in discomfort for their benefit of joy — what’s the god damned point of having kids. Even so, I do not consider myself to be a great parent — judging by their woke dispositions. However, I still have hope — just like winning the lottery without playing the lotto.

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Is this a Bullish Set Up?

Take a look here, as I drew a line on a chart of the IWM to confirm my bias. You might not like the market today — but according to my line — this is the exact trough of stocks.


IWM Chrystal balls

Pardon me for interjecting — but this is what peak technical analysis looks like. I am quite literally predicting the future based off a straight line made with a ruler. Should this line not hold, well then, we would’ve “broken support” and then we’d have to draw another line in order to find a “next level of support.” In theory, I can keep doing this forever until proven right, at which point I could then remind everyone about how right I was and to entrust in my expertise, in regards to predicting the future.

It would BEHOOVE anyone to actually look at valuations or read 10-ks — because the charts know all. As a point in fact, the sum total of human intelligence as we know it is reflected in the YTD performance of the SPY. To say otherwise would be to defy all logic and reason.

I will tell you, during periods when markets go down and everyone is in the dumps — those are “buying opportunities” — at times the very best “once in a life time chances” to get in at low prices. We all know the Fed has our backs and BIDENOMICS will produce records amount of jobs and wealth,a plethora if you will. We also are grateful to our corporate overlords for producing such a fine society of money producing gambits.

Into the final hour of trade, I expect the aforementioned trendline to hold, especially since there’s “so much money sitting on the sidelines.” If we do not hold, well then, it’s possible the trend would-be broken and then we’d have to create a new line of support.

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ENJOYING THE CHOP?

The big news today is CLF bidding for X, in spite of X telling them to fuck off. I mean, really, who the fuck does CLF think they are bidding for United States Steel? Nevertheless, BOTH stocks are up, which is rare. I’m betting another bidder steps into the fray, perhaps NUE.

I’m down 27bps in very light trading, attempting to not blow myself out for the session.

We tanked early and have gone straight up since the open — but it’s still dreck. The market breadth is at 43% and every sector is down. Nevertheless, people want to believe and they’ll chase this fucker right into a mushroom cloud.

The NASDAQ is up early 90. Weakness is more prevalent in the smaller caps. The market is trading with a close correlation to treasury yields. If the market is going to do anything constructive — we need those fucking treasury yields to come back to below 4% on the 10yr, otherwise we’re all gonna keep seeing phantoms behind every bend.

I’m going to keep cash between 40-60% cash until I get my act together, no matter how convincing my inner conscious is in trying to convince me that all is well and my trading rhythm is back.

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THE BEAR CASE FOR STOCKS

You can search far and wide for a looming economic disaster in the US and you’d be hard pressed to find a potential flash point. For a while, earlier in the year, we were entreated to a wonderful regional banking collapse — fueled by ‘cash sorting’ — which is a modern bank run by motivated customers to place their dollars where they can receive the highest risk free rate of return. People left Schwab in droves in favor of T-Bills. This, potentially, is still a major concern and I have hopes that this black flower can blossom this fall and collapse the system.

But that aside, inflation is abating. Unemployment is low. Housing starts are in the tank — but this isn’t causing a housing collapse — indicated by the very low delinquency rates. Consumer confidence is milquetoast, in the 70s, on par with an indifferent Pax Americana. National and private debt are fucking soaring to RECOURD HIGHS — but no one seems to care. No one cares because of the boy who cried wolf analogy. People have heard these tales before, about how this debt was going to blow up the banking sector — but alas we are still here sending Ukraine $24b per month.

So what can change this scenario?

The answer is simple: kill the stock market.

Everything about this house of cards is predicated on confidence. This confidence, like in all ponzis, is reliant upon status quo and the positive wealth status of those participating in the scheme. Bernie Maddoff (RIP) would never have gotten caught if not for the wonderful collapse of 2008.

Over the past 2 weeks, aka a fortnight for you British homosexuals, stocks have started to reel. Names like NVDA, ABNB, SHOP, PYPL, PANW, VALE, and 988 others are down more than 10% aka “a correction”.

Other names have underwent a much more severe pullback.

GNRC -27%, SEDG -27%, ZI -25%, IEP -24%, SMCI -23%, FTNT -22%.

I know exactly what you’re thinking. “Who gives a fuck about those bench warmers?” Get those B-listers the fuck out of my face!”

When is the real collapse gonna happen?

Two week returns for America’s best:

AAPL -9%, MSFT -3%, GOOGL +0.14%, AMZN +4.7%, NVDA -11%, BRK +2.6%, META -3%, TSLA -5%, JPM -1%

Clearly if you’re super bearish and betting heavily for downside pin action — you are mentally addled. The fucking VIX is less than 15, oil is soaring, and the leadership stocks are yawning at this minor pullback.

HOWEVER, there is still hope for you ursine piece of shits. September literally looms and before you know it — Junior at the trading turret is told to fuck off — as the real money managers come back from their cocaine fueled sojourns. Those fuckers are going to sell shit the fuck down, as is customary in almost every September — which is the worst month for stocks historically.


Data by Stocklabs

Bottom line: we are weakening, but the economic backdrop is stable. Let’s hope that the stock market can crack lower, which will then create a cascading effect that will rip through the economy and cause a terminal decline. If not, we can always buy stocks and make money off the scam.

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