CPI AS EXPECTED: MARKETS COLLAPSE

Good morning

The CPI came in as expected, 6.5%, which led to an initial spike in futures — especially after Fed’s Harker said they’d pause after hiking to 5%. Presently, they guiding rates to match inflation, so the expectation is for the CPI to moderate further during 2023.

Markets don’t seem to give a flying fuck. The NASDAQ has reversed lower, now off by 112.

What’s important to note is the disappointment in the faces of the permanent bulls, truly priceless.

As for me, I bulked up on SOXS, then SQQQ to hedge against pain and quickly closed them out. I’m now hedgeless and not in Seattle, up 34bps for the day.

My algo account is +4%, all in short via SQQQ predicated on the overbought signal that has typically led to sharp reversals lower.

My sense is for moderate pain here, with a potential for a rout. I will be monitoring the market closely and will hedge again if it looks like we are heading for another leg lower.

Everyone is having fun but me. I chose to be a bastard bear, always with the hedges — missing out on all the fun. It seems, and this is just my FOMO speaking, everything about this market is perfect. Oil and gas are moderate, materials soaring, stocks soaring, and rates are going down.

The CPI numbers loom and it’s clear to me there will be no pivot, not now not ever. Nevertheless, we want to believe. I want to believe in American appled pie, a period in time when the trannies are gone and we have nothing but baseball and cracker jacks. It also seems I have golden aged thinking caused by FOMO. Ergo, I have a very bullish position heading into tomorrow.

I made just 32bps today, mostly because I am a GIGANTIC FAGGOT who likes to miss out on rallies. Nevertheless, I will get my act together and start trading great again, as I always do and customary of a man in my position and stature.

The ball of the bears are now inside of a vise being squeezed tight. The idea of a rally sprang upon them like a Jack in the Box armed with a dagger and now with the market busting loose from every single aspect of asset class — it would seem appropriate to position into stocks heavily bear’d up in order to kill them.

I traded out of UPST for a 5.5% gain — but that one is still good. In addition to my normal holdings, I took half positions in a number of heavily shorted stocks, truly hated names, for the absurdity of the rally to come.

It seems, and this is most unfortunate to me, the bear case is dwindling fast. I have all but given away my gains in 2023 in inverse triple fuck you you’re dead ETFs in a valid attempt to stop America. But I have failed with that venture and must come to grips with the idea of trannies trading inside of heavily shorted stocks and winning and then said trannies heading on over to the Wall Street bull statue to cut its balls off and make it one of their own.

Nothing stops it. There were bids all day long and sellers were quickly disposed of and incinerated inside crematorias.

I will have you know — I gained 1.07% today, whilst being skinned alive in yet another wayward sojourn into hedging. I closed out my SOXS with 30 mins to go — but then reapplied some SQQQ at the bell.

I will tell you this only between me and you: I am spiritually very bearish. But my senses point to higher prices and I can feeeeeeeel the momentum building and the panic amidst the bears — FOMO accumulating and the bulls renvigored with viagra pills ready to fuck.

I only hedged out of sentiment and will likely lose money on it first thing this morning. As a point in fact, I am likely to continue hedging and losing for the balance of the year, or even for as long as I live!

Hedging will commence until the blood is flowing heavily through the streets. And it will be then and then only shall I be satiated and happy to set my focus on other things, aside from the complete destruction of the stock exchange.

This are just the candid thoughts of one man.

Crypto miners are +30% for the year thus far. Tech and healthcare sectors are +6% — with all others up in the range of 3-5%. The only down parts of the market are in oil and gas — which is burdened by an unusually warm winter — as NATO applies weather weapons to the environ to deal with the gas shortages.

We all wait, EAGERLY, for a reversal — since it is known that stocks “belong” lower. But we’re not getting that and if I might suggest, boldly even, to avoid a net short position whilst this rally takes place.

The Russell is only +3 for the month, NASDAQ +2%. The indices are lagging due to large capped tech underperforming.

Inside Stocklabs, we are fantastically overbought. In the past, during bull markets, OB meant up. In the bear, OB was down. Am I to believe this is a new bull market or is this just another ruse and will fall flat and go back lower.

It should be noted, the hardest hit stocks of 2022, stocks down 35% or more, have not rallied in 2023. They are, on the whole, down 1.1% YTD — much of the losses found in SAAS.

Perhaps this blog will serve as some sort of good luck charm, a contrarian indicator if you will, and send stocks packing and swimming lower without a vest. But it appears to me, a mere expert professional in the arts of investment management, that the market wants to go higher.

We have a softening in oil/gas and a strengthening in tech, biotech, even cryptos. There is a upwards bias thus far in 2023 and you cannot deny it. I cannot deny it.

That being said, we are reminded of previous bull runs and how they all fell face flat into the mud. There is a discernible difference, however, and it lies simply in the new calendar year. Gone is the anxiety of high paid hedge fund managers who got buried in 2022, eager to avoid mistakes. With a clean slate, investors are more apt to apply risk — especially when markets are seemingly bullish.

Even though we are bullish, we in the most royal of terms must remain vigilant and be available to sell short at a drop of a hat.

I’m presently +45bps, down 45bps from session highs with a small SOXS hedge — however willing and eager to increase it at the first sign of danger.

In a controversial move, I unhedged myself into the close and kept a rather large SOXL position — due to the rug being pulled from it late in the day based off the Apple is gonna DOMP AVGO by 2025 rumors.

FUCK OFF.

I spent the day BEARING WITNESS to my +160bps worth of gains withering away down to 1 bps. I tried my best to stem the fucking tide, against a 100% long only portfolio. I traded to and fro, 7 for 8 in trades to the good — but could not offset the FUCKING FUCKERY of this GOTU stock I held for a 15% intra day COLLAPSE.

Some might say this market is primed, ripened even, for absolute collapse. I will take the other side of that trade, if just for a day or two, and suggest tomorrow will gap higher — effectively ripping the skin off the faces of all of the people inside Stocklabs who are SHORT and talking mean to me. FUCK YOU AND FUCK OFF.

Today’s Chicaney

With regards to the overbought signal inside Stocklabs today, I bought a second tranche of SQQQ in my algo dedicated account for the purposes of trading the OB signal by selling short stocks. I am now +1.2% on the SQQQ position and will sell it in exactly 5 trading days.

All in all, it was a dispiriting day for those of us long, evil even. Having a book filled with longs and just seeing it get rocked all day was depressing and at times — a bit too much to bear. Nevertheless, I remain steadfast in the enteral belief that I will trade great again and I will, at some point, rip the lips off of those who sully me and that I will have my revenge of a rapish quality.

The pain trade is DOWN gentlemen, always down. With the vast majority of Americans invested via retirement and discretionary accounts, the pain trade is almost always DOWN, except for rare occasions when the gloom is so infectious and caustic — the move higher comes as a surprise.

Here we are again, gingerly trodding higher amidst deleterious economic circumstances. Ordinary plebs are having their septic tanks explode on them, shitted lawns, all the while Lawrence Summers vacations in the Caribbean informing said pleb that his job is about to be lost in order to preserve the FOMC mandate.

YOU WILL BE FIRED IN ORDER TO PRESERVE THE FEDERAL RESERVE MANDATE pic.twitter.com/BkDPzQzTs6

— The_Real_Fly (@The_Real_Fly) January 9, 2023

All market professionals understand stocks belong lower. Those of us unburdened with the shackles of having to manage it for others, collect exorbitant fees, trading from wine cellars, really just want the whole thing to burn down — sometimes because others might’ve retired from managing OPM in 2017.

But will it?

The answer is YES! The market will, at some point, crash and burn — and it’ll make for a great spectacle. However endearing the thought might be, as of now, sadly, we are trending up.

Zero complaints if you’re a permanent bull. Everything you like to see is happening. Stocks are happy and fat. Bears crucified and their bodies displayed for all future potential bears to see as a warning.

I closed out my trading account this morning, as is customary for me at the start of a new week, +152bps in spite of a monstrous 8.8% loss in my SOXS hedge. I would’ve been up 3% this morning if it weren’t for that small misfortune.

I can and will allay my hedging losses on the fact that the market has stunk to high heavens for the better part of the past 12 months. Even though we are rallying and all seems to be going well for Pax Americana, it is clear to me that the market is overbought and also it’s clear to me that stocks are vulnerable to a weak economic backdrop.

Nevertheless, price action is king and right now the prices are going up.

I’ll re allocate a 100% long book after 12pm today, using the Stocklabs weekly quant.

Let me just say, I cannot believe it’s 2023. The time flies and not in a very graceful way.

Here’s my take on week 1 of 2023.

It was rot up until Friday, typical of the sort of market we’ve endured for more than a year. The big leaders were in China: BABA +22%, PDD +17%, fucking BEKE +27%.

Airlines +11%
Gold +10%
Copper +8.9%
Aluminum +8%
Foreign banks +7%

Interesting divergence between copper and other materials and oil. For a long time they traded in sync; but recent weakness in oil and gas has caused a divergence — with oils lagging and stocks like FCX, X, and CLF surging.

On the issue of gold: I believe it has filled the void the SHITCOINERS left behind with their disaster. Is gold done going higher? If this is a legit breakout — hardly. Here are seasonal returns in January for AEM.

From 2014 to 2017, gold socks commenced sizable breakouts in January, much more than the current +10% gains.

Interestingly, there is a tight correlation with gold and rates. As you can see below, as TLT goes — so does AEM.

I’d argue TLT is way ahead of itself here, with limited upside potential. Who are we kidding — inflation isn’t dead and the Fed are not going to slash rates just to save some fucking retards leveraged long NFLX.

Regarding the FAANGT block of stocks — middling — with outperformance in META/NFLX and woeful underperformance in TSLA — as monsters like Bill Miller sell it short.

If I didn’t have a brain and only glanced at the price action of stocks for the first week of January, I’d like it. Lots of industries jimmied higher, from retail to tech. The high growth cash burners DID NOT bode as well as real companies like WYNN (+13%) — which is a good thing. If we start next week strong again, I might just get out of my own way and stop hedging.

There is, however, an overbought signal inside Stocklabs now on our long dated mean reversion algorithm — which is foreboding. In the past, the OS was a buy and the OB was a buy — because stocks always went up. But over the past year of bear, the OB was most definitely a sell signal — solidifying my thesis to be true that a bear market would in fact be actionable with the often ignored OB during bull runs.

My confidence level on any signal, including my own, is always met with suspicion. I don’t view this as some sort of holy grail, but instead a guide to the past and what might be in the future. But like Ebenezer Scrooge once found out, the future can be altered based upon some good deeds. Should we get some news that is BAD next week, we might very well continue to rally — because we’re at the point in the cycle where bad news is now viewed as good for stocks.

NEVERTHELESS, I activated my algo account, which has been dormant since October, to sell short stocks via SQQQ. God willing, I will be entreated with gains early next week — betting on the misfortune of others — snatching their gold chains and making them mine.