Cared Little for Today’s Action

1/30/12

Did you ever wonder what the stock market would look like if there were too much involvement by government in the markets?

Well wonder no more. Here it is. Markets just wait for the next magical spell to come from (of all places) a government official. There are a few things going on right now. First off, we can exclude the first trading day of the new year – as that was basically a snap back day from excessive tax loss selling in December. The market is waiting for governments to do something. Perhaps government figures love the power (well of course they do) but this is silly. Bernanke spoke last week and gold exploded.

If we get even a temporary further resolution out of Europe, those stocks will likely pop higher along with the rest of the world. China’s fake GDP was reported at 8.9% and the world bought. But in between these announcements, we have purgatory.

The other major theme of markets in my view, is that they tend to float up absent any news. So there is an upward bias to markets. we’ve had some floating in between the good news. But no doubt in my mind that we will not get a 2003 run up unless something wonderful comes from government. In the US particularly, I don’t think a Fed-only announcement will do it. If things weaken, I wouldn’t be surprised to see a joint Fed-treasury super action, similar to 2008/09 because these clowns will reason that because it worked last time it will work this time – and who knows ¬†maybe it will but as with all repeat events, the second time around won’t be as good as the first (been there done that department – just look at Greece: recent headlines are terrible but no one cares any more).

Markets

Scanning the markets, the only thing that popped up, much to my annoyance was GTXI – a stock I owned for a trade (showed up on one of my screens last year). The hot environment for biotechs coupled with a timely Citigroup upgrade today and a more than 100% increase in their price target sent GTXI up over 50%. I had an entry point to buy back but today’s action blew way past that. Damn those analyst notes – if you own the stock you love em (especially if you’re looking for an exit) but if you want to buy, those upgrades are killer (especially if it jumps 52%!!)

Gold eased back as did silver – nothing concerning for gold longs. MLPs were a bit flat, and using AMLP as a barometer, AMLP has fallen just below its 50 day moving average. But that, along with government bonds (both TLT and TIP up nicely today), corporate bonds, munis and preferreds could stay strong in every human’s search for some yield. Uncle Ben is making sure that interest rates don’t get in the way of our goals.

Bond Replacements – Tech & Non Tech

Altria moved up after skidding for a few weeks. JNJ might be forming a breakout setup of all things, as is IBM! Why not! 4% earnings growth go get em! Microsoft might try to launch from the base on base set up while Intel and Cisco were flat. Walmart had a strong day and Verizon is trying to recover from a dip. Both Verizon and AT&T are possibly carving out a double bottom. We could see some further excitement from the dividend payers. Note: large oil and gas companies like Chevron and companies are slipping a bit.

Conclusion

Overall, I think money can be made stock by stock and perhaps the indices continue to ease up absent bad news. Income still doesn’t seem to be a bad play and there are many places globally one can earn o er 5% yield.

Remember, have your plan!

At the time of this writing, I or my clients own the following investments mentioned in this column: Gold, MO, AMLP, TIP, IBM puts

Note: this article is meant to be some helpful thoughts to share and not investment advice specific to you. Please consult your own advisor regarding investment and financial decisions. See our disclosures page