Today's market decline was brutal and broad based.
More early tomorrow morning on my strategy.
Thanks for reading my Diary and enjoy the evening.
Be safe.

ARK's (ARKK) Cathie Woods admits her call for $12 oil was asinine.

* An oversold Nasdaq and exceptionally strong fundamentals lead me to this large-cap name this week - for a trade

I am a net buyer, unemotionally, today of equities during the initial morning weakness and the subsequent swoon. 

I repurchased Mr. Softee - Microsoft (MSFT) - today based on: 

* The degree to which the Nasdaq is oversold - just look at the 14 day and 7 day RSI! 

14 Day Nasdaq RSI

7 Day Nasdaq RSI

Source: Peter Boockvar

* Arguably, MSFT has the most sold fundamentals of any large-cap in the technology space.

* In a world full of uncertainties, quality is likely to pay off - MSFT personifies (high) quality.

I have taken an initial and small investment position in FedEx (FDX) ($206.54).

More to come.

Here is the market breadth, heat map and biggest movers as of 12:38 pm:

Market Breadth

View Chart »View in New Window »

Heat Map

View Chart »View in New Window »

Biggest Movers

View Chart »View in New Window »

Markets continue somewhat fickle and jittery, reacting to everything from Ukraine and its influences such as oil price, etc.

The trading community is extremely nervous and continues to look at the swings in the yield in the ten-year and VIX. They are at levels that if we had a very heavy selloff, you could be looking for bottoming action . As it stands, however, it feels like they want to retest the recent low and maybe make a lower low.

Traders will watch if heavy selling occurs. Is there support at 4200 in the S&P? You will recall the recent low in the S&P was 4114. It is quite a spell away.

So, expect the nervousness to continue and it is all about headlines. I would keep an eye out for headlines about the Polish MiGs and whether it becomes an option again and looks like it might come off.

Keep your seatbelt fastened and stay safe.

Arthur

I have added to my small Live Nation (LYV) investment at $105.22.

Here are some of my (partial) short covers this morning: 

* (DNA) $3.42

* (LSPD) $21.30

* (CVNA) $103.60

* (BLI) $6.04

* (SBUX) $86.76

* (SNBR) $64.45

* (RBLX) $42.25

* (ROKU) $116.01

I will be unavailable between 3-5 pm as I am meeting with a company for research purposes.

Bank and auto stocks were touted as perfect value plays in the business media over the last six months. 

Sweeping the ideas under the carpet, we have not heard much in the last 2-3 weeks. 

However, like the bank stocks, the auto stocks have now also moved into my buy levels. 

I am long (F) and (GM) at $16.63 and $41.57, respectively.

A couple of techs moved into my buy level - Alphabet (GOOGL) and Amazon (AMZN) .

Bought them both at $2555 and $2820, respectively.

Covering some more of my (CCL) $1.43 and (RCL) $65.18 shorts into the continued schmeissing of cruise lines.

Also, another one in my buy level... new position in Goldman Sachs (GS)  at $323.68 just now.

Hedgeye on cannabis, confirming my analysis of likely near term fundamental weakness in revenues, profits and cash flow - seen below: 

Mar 02, 2022 ' 01:15 PM EST DOUG KASS

The Fundamental Cannabis Read Worsens

Cantor Fitzgerald on Green Thumb, which confirms my expectation of an eroding fundamental view - rising competition, sales weakness and margin degradation - expressed this morning, placing the near term stock performance very dependent on the perception of federal cannabis legislation:

Lets go to the tapes.  

Bottom Line

Cannabis stocks look like "dead money" over the near term but have a lot of longer term appeal on a reward vs. risk basis.

Traders woke up to more than a few things hanging over their head Friday morning. There had been overnight reports that Russian armor had shelled a nuclear reactor, in fact, the largest nuclear reactor in Europe and found the initial follow up reports indicated that the shelling had set fire to one of the reactors themselves and there were fears of major meltdowns, including at least one from the Ukrainian President himself.

That spooked equity futures, but by the time Wall Street traders had wandered in for their first or second cup of coffee, it turned out that the fire was subdued and that the main fire, in fact, had not been in a reactor, but in a training area. Nevertheless, the idea of shelling nuclear reactors, particularly the largest in Europe, left traders a little edgy and that is the way the market began on Friday. It continued somewhat nervous throughout the morning and began to get a growing bit of concern as we moved into the afternoon. When no major developments occurred, they began to cool down a little bit and there was minor short covering in the final 40 minutes of trading that took the edge off some of the losses.

As we have repeated time and again, the study of markets in history from people like the Hirschs' at the Stock Market Almanac showed that Fridays tend to be days of an upward bias despite the proclaimed logic of the lots of people that traders would be nervous about going into the weekend and, it is the shorts that are most nervous. After all, remember that if you are long a stock, all you can lose is the amount of money you invested. If you are short a stock, you can lose an infinite amount. If you sold a stock at 10 and fabulous news the equivalent of winning a lottery came out on the stock over the weekend, that stock could go to a 100 or 300 or more. So, with unlimited losses, the shorts are clearly the most nervous of traders.

Anyway, we think the late day trim was simply the traditional nervous short covering by anxious people going into a weekend. What was of real concern to traders was, once again, the signs of almost frantic flight to safety in the likes we rarely see and then add into that, further spike in the VIX - the volatility index - which got up above 34 and that prompted a lot of floor talk about extreme fear and the bottoming process. After the close Friday, some of the traders voiced concern about the tone developing around the Russian incursion. There were moves by legislators and others to actually move formal criminal warfare charges against Putin and several of the higher Russian authorities. There were even calls by some in government for the possible assassination of Putin by some of his inner group.

What concerned the traders was that quickly narrows, if not shuts, the area for negotiations. If you are about to move across the bargaining table with someone who wants to charge you with war crimes and/or prompt your assassination by friends, your likelihood to bargain diminishes rather quickly. So, the concern is that putting sanctions and other things might encourage Putin to come to the table, but the folks on this side have got to leave him room to save face. Just as a street kid is smart enough to know that you don't have a fistfight where you seem to have the upper hand turn particularly awful since it can turn to a different kind of a more lethal fight. One would hope that the leaders on all sides are smart enough to leave some room for negotiation and not demand an unconditional surrender, which is tough to get anyone to the table with.

Overnight, equity trading futures are down rather sharply and more importantly there was another spectacular flight to safety. I haven't been able to check it out, but I believe the yield on the ten-year got down to the 1.65% area, and, of course, almost all of that anxiety is about Ukraine and what may be about to happen there. Obviously, Biden and others don't want to provide a no fly zone in Ukraine despite what President Zelensky has virtually begged for. They think that is too directly confrontational with Russia, but there appears to be a somewhat complicated plan as an alternative. The U.S. cannot send very sophisticated fighter planes to Ukraine because they have nobody onsite to train the Ukrainian pilots. So, the proposal, if I understand it correctly, will be for the U.S. to donate topline brand new fighter planes to Poland and Poland in exchange will give the Ukraine some of there MIG fighters, which they had when they were members of the Warsaw pact. I am led to believe the Ukrainians know how to fly the MIGs.

So, if the plan goes through, that may step up activity in and around Ukraine. Ukrainian pilots attacking that 40 mile column could certainly put Putin in a rather bad mood. Hang on and let's see what is going on. There are also reports over the weekend of some thankfully unsuccessful assassination attempts on Ukrainian President Zelensky. We have not been able to confirm that, but the gossip is going around in traders circles and that too adds to the anxiety, wondering what would happen to the situation and to the markets if he were in fact assassinated or badly wounded. So, you can see why flight to safety has got everybody pretty much up in arms here.

The oil prices are also flying higher amid reports that the U.S. may stop buying crude oil from Russia. Take these numbers with a grain of salt, but I believe that we buy something like 9% of our oil from Russia, which is not overwhelming but the Russian sales to the U.S. are their largest sales, so it is an important source of income for them. Those are two items potentially on the front burner that have traders behaving anxiously. So, if as it seems, it is not just events in Ukraine but possible events in Ukraine. It means maybe you should have General George S. Patton and, even James Bond on your Investment Committee to figure out what is going on.

There are also unsubstantiated rumors that Putin and his troops may have their own timeframe and, if they don't take over what they want in the Ukraine in the next five weeks, weather and supply may change. Again, take all of that with a grain of salt you can carry around in a wheelbarrow, but that is how traders are talking going into markets and that, of course, makes markets extraordinarily edgy. We will obviously keep an eye on the newsticker and see what is going to show up.

Certainly, Ukraine remains center stage. Let's see what happens when as or if Polish fighter plane exchange takes place and how close they can get to some signs from Putin that he will possibly negotiate. At around 4:00 a.m. New York time, the Dow futures were discounting a -600 opening or so. Since now, as dawn hits Manhattan, they are looking at a possible -200 opening. A lot of that appears to have been based on unconfirmed reports of ceasefire proposals with the humanitarian backdrop. Cynics believe it is just a timeout to move your troops around a bit. Remember the rumormongers.

So, we will keep an eye on the yield on the ten-year and the VIX to see how high the anxiety levels really are. Traders will also keep an eye on the assumed support level around 4200 in the S&P. For now, keep you seatbelt firmly fastened and try to stay safe and be wary of the rumormongers. This is just a delightful time for them.

It is not easy waking up and finding something of value to write right now. We see the heartbreaking and destructive images on tv and feel helpless. We know the economic sanctions are our only tool and while hopefully effective, the rest of the world suffers from it too from the spike in vital commodity prices. Global consumer spending is going to slow dramatically in response to much higher prices relative to wages. At least in the US, anyone who traveled outside this weekend in the burbs likely saw more than $4 per gallon gasoline for the 1st time since July 2008. The cost of eating for those least able to afford it is going to be painful, especially in those emerging markets that import most of their needs.

Consumers of energy in Europe are going to feel intense pain with the price of natural gas spiking by another 26% today and which are up 256% over the past 2 weeks. The cost of doing business for everyone is only going higher at the same time the demand for things is likely going to retreat. How is a business that relies on nickel going to deal with the 35% spike today? What does a semi company do if Ukraine can't ship the neon gas they need? Many auto makers and electronic makers need palladium and can South Africa produce enough to offset the 30% of the world's needs that comes from Russia?

To this last point on South Africa, the question from here with commodity prices, particularly those most impacted like crude, natural gas, wheat, palladium, nickel, fertilizer, etc... is the fungibility of them. We know they are fungible but to what extent can others fill the supply gap of Russia and Ukraine. Russia will still produce what they can but we know their customer base has shrunk dramatically. I'm sure they'll find buyers but it won't be any of our friends and can we thus find other producers to buy from? Ukraine is likely now unable to produce anywhere close to what they were and even if they could, there are no shipping lanes to get it out.

AAA Gasoline Avg Gallon

European Natural Gas

What I haven't see yet though is any reduction in S&P 500 earnings estimates but that is to come. Here is a chart of how they've trended this year and it's only gone up.

S&P 500 2022 Earnings Estimates

You've heard me preach the virtues of gold and silver many times and what is occurring now is not just are they protection from inflation and currency debasement, but people are realizing that it is no one's liability. In other words, the weaponization of finance is here after Trudeau in Canada froze bank accounts without any due process and after the freeze on many Russian assets overseas, particularly those of their central bank, no asset is really safe from government expropriation. Gold is not subject to the counter party risk of someone else. I expect the demand for it because of this to only go higher, and particularly from global central banks and others. It touched $2000 overnight.

With respect to the economic data, the only thing that matters now are those that capture what's been going on post invasion so I'm not going to bother discussing anything pre this morning. The March Sentix Investor Confidence Index in Europe plunged to -7 from +16.6 and they said rather painfully but succinctly, "The economy is the euro zone is slumping dramatically due to the war in Ukraine."

I will mention a big positive this morning and that is another reminder today that Covid is essentially over in being a major factor in our lives as more mask mandates end today, particularly in many school systems, particularly NY and NJ. I wish I could see today the looks on kids faces when they can look at each other without half their face covered. We now just need to get rid of the ones for those kids under the age of 5. I'm sure Friday's big upside surprise in the jobs report had a lot to do with the flaming out of omicron.

As most are aware I have been negative - and sporadically short - the large money center banks over the last 2-3 months. 

Here was my short thesis, The Period of Bank Outperformance May Now Be Coming to an End, from mid -January.

Prices have now dropped down to my buy levels - I hope to have a new Levels up tomorrow - and I am taking trading long rentals in (BAC) $39.57, (WFC) $47.60, and (JPM) $130.93... but not (C) !

* Sold (QQQ) rental at $337.72 and covered my (QQQ) short puts.

* Sold (IWM) rental at $198.91.

* Sold half of my (MSFT) at $288.05.

* A man who tries to carry a cat home by it's tail will learn a lesson that can be learned in no other way

* For months I have been vehemently warning about the risks associated with trading and investing in speculative gewgaws pushed by many

* The drop in speculative stock values over the three to nine months has been historic and painful

"Speculation is the most dangerous when it looks easiest."

- Warren Buffett

24 Years of My Real Money Pro Diary

For more than two decades my Diary has been committed to contributing hard-hitting, logically reasoned, analytically thorough and, at times, unpopular and outside of consensus analysis and commentary. My primary objective is to make the column value-added, informative and fun to read. Importantly, I try to deliver my messages and views in a style and format that is combined with pop culture and humor - and, hopefully, in an honest, transparent and self-deprecating way.

My columns, especially my opening missives, are often integrated with references from comedians, philosophers, poets, lyricists, etc., and include parodies and metaphors to slam home my views. I do this in an attempt to differentiate my output from the typically dry and commonplace commentary on the economy, individual companies and investment themes.

Having been the son of an extremely hip and complex jazz musician - Dr. Saul Kass - and having produced some rock and roll concerts, I have been especially drawn to music and their lyrics, and I often integrate the message of a song's lyrics with an investment theme.

Here is my latest rendition of Don McLean's "American Pie" - "The Day The Nasdaq Died."

Have some fun with it!

The Day The Nasdaq (and Speculation) Died

A long, long time ago
I can still remember
How the Nasdaq used to make me smile.

And I now know what investors do at any chance
Is to get themselves a margin loan in advance
And maybe add some more Peloton to the pile

But r/wallstreetbets recommendations made me shiver

With every tweet that David Portnoy delivered
As the gewgaw bubble was growing on the market's doorstep
The traders couldn't keep from taking one more step

I can't remember if I cried

When I read about Chamath Palihapitia's latest SPAC demise
But you could lose your capital and your pride
The day the Nasdaq died

So bye-bye, to your piece of the pie
Investors poured their money into Cathie Wood's ARK funds
Now their equity account's dry

It's less than three months from an all-time high
Singin', Could we go back where we were last July?
Could we go back where we were last July?

Did you buy stocks you never heard of
Like Carvana at $300 or above
If the anonymous fools on Twitter told you so?

Now do you still believe in buying weekly call options with Robinhood?

Were you in the last SPAC or IPO?
And will you continue to ignore the lack of free cash flow?

Well, I know that you were margined, too
'Cause you always take an intermediate-term view
Even your Stratton Oakmont broker shut you down
No more buying power could be found

The traders never worried on the whole way up
Buying Virgin Galactic Holdings from the back of a pickup truck
But I knew some week they will all run out of luck
The day the Nasdaq died

I started singin',
Bye-bye to your piece of the pie
Investors poured their money into Cathie Wood's ARK funds
Now their equity account's dry

It's less than three months from an all-time high
And singin', Could we go back where we were last July?

Could we go back where we were last July?

Now for more than 13 years we've been on our own

And moss grows fat on a rollin' stone
But that's not how its always gonna' be

This year as SPACs, blank check firms and direct listings sang for the king and queen
In suits they borrowed made of green
And with voices that didn't come from you and me

Oh, and just as the pandemic was turning 'round
PayPal slapped speculators down
The courtroom was adjourned
A guilty verdict was returned

And when the SEC and FINRA were falling asleep
Warren Buffett's cash pile kept on rising in his Omaha park
While Novogratz sang dirges and dogecoin came out of the dark
The day the Nasdaq and speculation died

(Refrain)

Helter-skelter in the upcoming summer swelter
The bulls flew off into their fallout shelter
The Dow was at 33,000 but falling fast

And in the business media the "talking heads" landed foul on the grass
Though Belski and Kostin were still trying for a forward pass
With Tom Lee on the sidelines in a cast

CNBC's air was filled with the Bull's sweet perfume
But the Nasdaq wasn't playing their marching tune
The gamblers all got up to dance
Oh, but they never got the chance!

'Cause caution began to dominate the field
As the long bond climbed more than 100 basis points in yield
Was price discovery ever really repealed?
The day the Nasdaq died?

(Refrain)

Oh, with investment strategies and products all in one place
Bill Miller was somehow lost in space
Too old and with no time to start again

So come on; Fed be nimble, Fed raise again!
Is Chairman Powell still chanting a loose policy amen?
'Cause more cowbell and QE is the market's only friend

Oh, as we watched the speculative stocks fall
Too many will receive a margin call
No broker born in hell
Could break that bear market's spell

And as the futures dropped into the night
To douse the sacrificial light
I saw Boockvar and Rosenberg laughing with delight
The day the Nasdaq died.

(Refrain)

Well I met with Fast Money traders long Facebook, Snowflake, Coinbase and General Motors from January
And I asked them to explain their views
But they just frowned and turned away

The Halftime traders marched towards JP Morgan's store
Where they made their fortune years before
But the brokerage demanded to see the cash before they could play

And on my Bloomberg, the ticker streamed - the Perma Bullsweeped and the Perma Bears dreamed.
But not a bullish word was spoken
The SPACs and IPOs all were broken

And the three ARK ETFs the traders acquired last
ARKX, ARKG and ARKQ
Couldn't catch a bid and faded fast
The day the Nasdaq died

And they were singing (sing it for me now!),
So bye-bye to your piece of the pie
Investors poured their money into a broken market
Now their equity account's dry (everybody!)

It's less than three months from an all-time high
Singin', Could we go back where we were last July?
Could we go back where we were last July?

Bye-bye to your piece of the pie
Investors poured their money into a broken market
Now their equity account's dry

It's less than three months from an all-time high
And singin', Could we go back where we were last July?
Could we go back where we were last July?

* TINA ("there is no alternative") is dateless - but her popular cousin CITA ("cash is the alternative") is enjoying the prom 

As I have previously written, the market's averages have been lying to investors - as the Indexes are disguising serious damage that began late last summer in which numerous individual securities have performed poorly. The chart below illustrates this condition:

I continue to be cautious based of multiple factors. 

Valuations remain inflated, domestic/global growth is rapidly slowing while inflation is likely to remain elevated (read:"slugflation"), supply chain dislocations are lingering, the Federal Reserve is pivoting towards much tighter policy, interest rates are rising and geopolitical risk exists on three continents. 

I am of the view that we are in an opportunistic trading and not investing (buy and hold) market - reminding us of investment manager Seth Klarman's glorious story he relates in his book, Margin of Safety:

"There is the old story about the market craze in sardine trading when the sardines disappeared from their traditional waters in Monterey, California. The commodity traders bid them up and the price of a can of sardines soared. One day a buyer decided to treat himself to an expensive meal and actually opened a can and started eating. He immediately became ill and told the seller the sardines were no good. The seller said, 'You don't understand. These are not eating sardines, they are trading sardines.'"

I would note that trading is an inherently more difficult way of delivering superior returns than buy/hold, as, by definition, trading involves more decisions than investing. The more decisions one is forced to make in the investment process, the more apt one is to make a mistake!

While I am beginning to find attractive longer term investment opportunities, I want the market to shake out and move to lower levels before I would consequentially expand my modest net long exposure.

Friday's Market Action Was Abysmal

As I tweeted late Friday and posted in the Comments Section I eliminated my (SPY) trading long rental:

When I returned to the office late Friday I found the price action (despite the 35 handle rally from the day's lows in the S&P Index) to be disquieting.

What I saw was (GM) and (F) down by -5%, (DIS) -$5 (along with broad weakness in opening plays like airlines, hotels and cruise lines), Federal Express (FDX) -4%, (AI) (a new short -5% on a Deutsche Bank downgrade and reduction in price target from $6 to $18!), (CVNA) (an old short!) -$20 (or -16%), (RBLX) -7%, Microsoft (MSFT) - $6, weakness in semiconductors ( (NVDA) and (AMD) -5%), biotech schmeissed ( (XBI) and (LABU) down big) - I could go on and on.

The past weekend's news in Ukraine (and for oil) set the stage for the substantive overnight weakness in futures (-70 S&P handles). 

Bottom Line

TINA ("there is no alternative") is dateless - but her cousin CITA ("cash is the alternative") is enjoying the prom.

I continue to be of the view that sizeable cash balances are an asset in the current setting. 

By maintaining cash reserves during the current market drawdown and by not suffering losses, we will be able to harvest exceptional investing opportunities when the price is right.

* I am very light in exposure and I am seeing some developing opportunities

* Starting small and buying on a scale lower

* These are all trading long rentals... for now!

Here are my trades in the premarket here on Monday morning:

* Advanced Micro Devices (AMD) $106.48.

* Bank of America (BAC) $39.98.

* iShares Russell 2000 ETF (IWM) $194.85.

* JPMorgan Chase (JPM) $132.22.

* Microsoft (MSFT) $284.99.

* PayPal (PYPL) $98.12.

* Invesco QQQ Trust (QQQ) $331.70.

* SDPR S&P 500 ETF (SPY) $425.48.

* Wells Fargo (WFC) $47.79.

Credit Suisse' Golub likes small-caps:

Why Small Caps Now 

Over the past year, S&P Small Caps have underperformed Large by 12.8% (2.1% vs 14.9%), despite much stronger earnings. This has left smaller names extremely undervalued relative to their larger peers. Separately, Small Caps tend to outperform when the VIX and ISM are elevated, as they are today. With respect to the VIX, Small Cap's benefiting more from a future renormalization in volatility. On the ISM, Small Caps tend to do better in periods of economic strength, a function of their superior operating leverage.

* The market (and money) never sleeps

"Workin' on our night moves
Trying to lose the awkward teenage blues
Workin' on our night moves
In the summertime
And oh the wonder
Felt the lightning
And we waited on the thunder
Waited on the thunder."

- Bob Seger, "Night Moves"

I described the importance that overnight futures trading holds for me in this column a few weeks ago. It is a guidepost to my strategy in the regular trading session:

Futures were very weak last night and this morning. It was another thing for Brent, with crude oil +$7 /barrel to $122.33!

S&P futures peaked at -17 and bottomed at -89. At 5:20 am ET we were at -68.

Nasdaq futures topped out at -76 and dropped to -312. At this writing they were at -231.

The price of crude oil (WTI) is +$8.30 to $124/barrel this morning. 

I filled up my car yesterday at $5.99/gallon.

In Europe, in order to save energy, governments are encouraging the reduction of usage with acts like turning down heating temperatures. 

Crypto is a huge energy user. 

Wouldn't it be interesting if the same governments announce restrictions on the usage in energy-intensive cryptocurrency mining?

$2000 gold:

"Justice, like beauty, is in the eye of the beholder."

- Emily Thorne 

As I have often written, there are many ways in which traders and investors look at the markets. 

Here is another example: