Fed Up With The Fed

Well yesterday was fun wasn't it? For a second there in the morning I could have been caught cursing at my computer screen.  After watching the ridiculous skyward move after Bernanke started speaking I actually felt myself begin to capitulate on the short side.  I just couldn't take it anymore, the irrational exuberance that is.  I had to ignore my computer screen for a bit.  By the time I came back, lo and behold the market was actually trading off a bit.  There was hope after all.  I am so fed up with the Fed and the way they are manipulating this market.

I actually tweeted yesterday that I wouldn't be surprised if we would be up today, if not significantly.  Who knows if it is just another one-off event?  No one REALLY knows what Bernanke is going to do but himself (actually I don't even think he really knows either).  Everyone will continue to postulate theories about why he will or won't continue with QE.  I am still in the camp that he will not taper QE anytime this year.  The market may get a slight pullback (2-4%) before the Fed's next meeting, just in time for Bernanke to have a more dovish speech to send the markets to new highs.  It is interesting to see how the Nikkei reacted to Bernanke's speech along with the FOMC minutes, it was down over 7% last night.

So what do the bears have going for them?  Nothing really.  Besides a slight break of an upward channel since the beginning of May.  Longer term trends are still upwards as we reach support levels.  It is going to take more than a one off event like yesterday, or even a down move today to spur any more panic selling.  So after his speech does this mean bad is good, good is bad, and horrible is great (depending on who you think actually controls the markets of course)?  

Yesterday reminded me of an experiment that I had read about before.  A guy is in a somewhat crowded area outside of a building and decides to stand in line behind a random door.  Within minutes, people start lining up behind him, not even knowing what was inside the door or why they were waiting in line.  Before he knew it, a line had formed around the block behind him.  The moral of the story is that people tend to do things even when they don't know why they are doing it.  The shoot first and ask questions later type of mentality.

Hopefully this will be the return to an actual market.  We are due for one.

As I write this the markets have bounced pretty significantly off the lows with the DIA only trading off by about 0.2% and SPY trading off 0.5%.  The VXX tits is up marginally.  Looks to be a hold your nose and BTFD type of day.

Playing With Fire

I'm playing with fire today.  I shorted more of this overpriced and overbought market via DXD.  Of course I know that the Fed is speaking again tomorrow and I will probably get my nuts ripped off again but I just couldn't resist.  Of course I know that it is Tuesday, which means buy programs are initiated.  But I still have ammo in my arsenal and I will fight to the death to defend this position.  

The people who love this market are the people who are naive and do not know what a real market looks like.  My grandchildren will be asking me one day about what it was like when the markets actually went down on the year.  And I will pull up old charts and blow the dust off of them to show them what red looks like.

I had a chance to catch a little of the AAPL hearings this afternoon.  I couldn't help but laugh my ass off at these idiots in Congress trying to take on Tim Cook and Peter Oppenheimer.  What is funny is that Congress is the one trying to berate AAPL for not paying their "fair share" of taxes.  If anyone has the right to NOT complain about AAPL being smarter than the tax system it is you Congress.  They are the ones who wrote the damn thing.  Plus, add to the fact all of the jobs and money that they have already brought to the US.  I seriously thought this was such a joke and I hope that everyone also agreed that Congress looked like a bunch of idiots today, which really isn't any different than any other day.

Long AAPL, DXD

Short Congress

Stripper Market

This is a stripper market.  No top in sight.  Or topless if you must.  If you think this is the top I highly recommend you check out this site: www.isthisthetop.com

AAPL has been making a gut wrenching move since Tuesday.  Of course I pay the most attention to it because now it is my biggest holding in my portfolio.  It is funny to watch this thing trade like a penny stock instead of a megacap.  After hitting 418 and change this morning within the first 20 min it then proceeded to rally $20 off of the lows in about 2 hours.  This is a wet dream for every HFT.  There is a battle currently taking place around the 50DMA at 435.  There is also an inverse head and shoulders pattern forming very nicely.  But since everyone sees it who knows if it will actually happen.    

The market in general is just getting outright ridiculous.  How can 16 out of 19 days up in a row be sustainable?  Answer: It isn't.  Give it time.  Aren't we do for another European bank run or riot or depression rumor by now?  We all know the misses by all of the regional surveys such as the Philly Fed this morning are just fuel to the fire for Bernanke and it pretty much solidifies the fact that any FOMC tapering is just noise. 

The risk is to the downside obviously but the hardest trade to make imo is to be long.  That is why we keep going up.  Short squeeze after short squeeze after short squeeze culminating into an epic melt up reminiscent of 2010 right before the flash crash.  The people who are benefiting most from this market are the grandmas and grandpas getting ready to cash in on their 401Ks.  All us other plebes are sitting here wishing for lower prices because we are either tired of sitting in huge cash positions or trying to catch the top.  I am continuing to short into this market against my better judgement.  The question is if I'm better served at this point to start looking at QID instead of DXD if I think we are even closer to topping out.  I am closely watching levels in SPY for any pullback.  Markets are starting to get pretty extended above their 20DMA.  I would like to see one last ridiculous push higher of about 2% before bears start capitulating.

Enjoy the GIF below, not a bull but pretty damn close.

It's Tuesday, You Know What That Means

BUY. EVERYTHING.

It looks like we are about to record the 18th Tuesday up in a row for the DJIA.  The major averages are up about 0.6-0.7%.  Shorts continue to get crushed, especially in TSLA.  If you would have bought TSLA in May you would be up about 70% right now.  How is that for an annualized return?  Sounds pretty sexy to me.  Too bad the guy sitting next to me at work decided to short it on earnings (I may or may not have peer pressured him to make a play on it).  

The only buy setup that was on the list yesterday, SYMC, is doing pretty good today, up over 1%.  It has come time again to start looking for long setups, that I can get into and out of within a week preferably.  I don't want to be the one holding the bag when this stupid free money fueled bull market comes to an end.    

A trend that I have noticed occurring in the past month is all of the highly shorted stocks being super squeezed.  This might not be a bad play to start buying some of the biggest shorted names and then just watch exuberance consume everyone as they chase it to higher levels that no one thought was possible.  I was somewhat joking yesterday when TSLA was at low 80s yesterday saying next stop 100.  It hit 97 this morning.  A move like this will happen so fast you will literally crap your pants so wear a diaper.

Of course AAPL is trading off today with the market being up.  People need to sell their AAPL to buy everything else.  If I felt that way about it then I'm sure everyone else did as well.  It's not too hard to figure out.  This is a suckers market, make your trades quick.

Bear Castration

The bears have just been absolutely crushed the last 2 weeks.  QQQ is up almost 9% in the past 2 weeks.  I have been holding some DXD into this rise and will look to add more soon.  I have sat on this for months before price finally weakens.  But I will probably look to just trade it down to breakeven this time.  This bull market is just unstoppable.  Some of my friends at work have asked me if I was happy about the markets at all time highs.  I said no, for three reasons: 1) I'm not retiring anytime soon 2) The market hasn't offered many opportunities on the long side that excite me 3) I have begun shorting the market and watching it rise everyday is no fun.  I have already made multiple short trades this year and have been profitable.  This current short is eating into my profits.  I don't like that.

My posts about selling in May were all in good fun.  No one really knows what the market will do this month.  It's already up 2-3%, it could still end up down 5%.  Who knows?  I just wish there was an actual market to be traded.  Maybe they should ban short selling so the bears don't continue to get punished and then we might actually not go up as much since that has been fueling most of this rally anyways (see GRPN, GMCR, and TSLA today).  That and a free money policy from every nation in the world has helped this rally.  The only actual bearish catastrophic event that I can think of that could this derail this market would be easing of QE.  But we would need some more hawkish members of the Fed before that even thinks about becoming a realization.  So much for free market capitalism.  QE infinity.  Don't fight the Fed, the trend is your friend, and follow the herd mentality.  All will be well kiddos.  

Side note: Remember when everyone was worried about the debt ceiling and sequestration? Ya me neither.

Keep Calm

It is possible to over-analyze the market.  Being an engineer I have the tendency to do this.  It is just my nature.  So what I do to counteract this is to take a step back and look at what it is I am really trying to accomplish with my trading.  I've really never had the patience for the buy and hold mentality.  The only stocks that I really try and do that with currently are AAPL and GLD and spec plays.  Granted I still like to trade around core positions when opportunities present themselves.

AAPL has made a very impressive move off of the lows set a couple of weeks ago near their earnings release.  Normally I would be inclined to sell some here, but why not pick up the dividend here as well?  Since they have increased their dividend I am being paid pretty well to sit and wait on this company to come out with new products and wow investors.  Even after this latest $75 move from the low it is still $75 from being even on the year.  I am sticking by my original thesis and saying that it won't be down on the year.  I don't see how it could really be down on the year with the general markets being up 10-15%.  There could be a rotation from other names into this during the summer and second half of the year.  Tech has been picking up steam lately after underperforming the first half of this year.  

If you want a guaranteed trade for today just buy DJIA at the close.  It has been up every Tuesday on the year and has accounted for 70% of the gains in 2013.  Pretty cool knowing that you could have made 10% on the year if you only traded every Tuesday for the first 16 weeks of the year.

Stay Outta My Way

"Sell in May and go away or you will pay.  LISTEN to what I say." -Shooter McGavin

I've been saying for quite a while that we probably sell off in May.  Granted it is just the first day of the month so I don't want to get too ahead of myself.  I'll go on a limb and say that tomorrow and Friday will be down days for the DJIA marking the first consecutive 3-day drop on the year for the index.    

The ADP number that came in this morning missed (again).  The ISM number wasn't "terrible" but it wasn't good either.  I'm beginning to think the employment number on Friday won't be too big of a deal.  I feel like this is a non-event now.  Back in 2009 and 2010 coming out of the generational bottom, EVERY employment report was perused in great detail.  I remember we couldn't go a day without moving up or down 1.5-2% just based on the employment number.  Now, people just shrug it off.  Maybe it will only become an event if the unemployment number starts ticking up.

I will look to add to GLD into any weakness.  I am also eyeing some RBCN for a quick 10% hitter.  Stocks will get cheaper before next week starts.  Start looking for safety plays.  Until then just go eat some hay, make something out of clay, or just lay by the bay.  It is May.

Back to Ballin'

I guess I'm back to baller status seeing as AAPL has rip roared from the grave.  I still don't really plan on selling it anytime soon, but if I did, today seems to be a good spot after crossing above the 50 DMA.  My lowest buy at 419 so those would be the first area to trim.  I think this move caught so many off guard that were short that they have been forced to cover this last week.  The last time it crossed the 50 DMA it only sustained it for 3 days before sinking to much lower prices.  

How many economic indicators have to be completely awful for us to ever go down?  Chicago PMI this morning was awful, Dallas Fed was awful, KC Fed was awful.  They are all missing by the biggest amounts since 2009.  Bad is good, good is good, and really bad is really good.  I wish I could put together a bear case for lower prices in every asset but I can't because they are being inflated artificially by central banks around the world.

I'm not sure if the ISM manufacturing number that comes out tomorrow (assuming it prints sub 50) will be enough fuel on the fire to cause even a 5% correction in the next month or two.  Consensus is calling for 51.0 with a range of 49.5 to 53.0.  We also have unemployment numbers out on Friday.  Consensus is calling for non-farm payrolls of 153K and private payrolls of 175K with the unemployment staying level at 7.6%.  If only a central bank could loosen their monetary policy to create more jobs (queue Ben).

This market has to be pissing a lot of people off.  Because I know it's pissing me off.  How can the DJIA not go down 3 days in a row for 4 months straight?  It really blows my mind.  I will probably add to shorts via DXD at some point this week (maybe even today) depending on what Ben and the economic numbers point at.  I may be fighting the trend but the numbers never lie, and recently they haven't been good.