Overall Lame, But Market Still Likes Good News

I can’t help but feel that the market feels like it’s going down when all it’s done is gone up. That’s probably a sign that it will go higher but nonetheless, it’s important to go past how we feel and look at what is actually happening.

Dividend payers tech – CSCO and INTC were off more than 1% while IBM and MSFT were flat. APPL held up.

Dividend payers non tech – WMT slapped down ~2.45%, JNJ flattish, MO flat

MLPs (AMLP) – flat

Bonds – TIPs (TIP) slightly up by 0.57% and long bonds (TLT) up 1.26%

The market still likes good growth – check out these exciting stocks from today:

FIRE – Sourcefire exploded up about 26% on good earnings and now a 200+ trailing PE according to Yahoo Finance

HSTM – Healthstream exploded up ~30% on good earnings with a trailing PE of 86 according to Yahoo Finance

MA – Mastercard, which also benefits from money printing by the way, up 1.82% continuing a breakout and a continued strong move that has lasted over 12 months.

Fuel-related commodities – oil (USO +0.02%), home heating oil (UHN +1.28%), and gasoline (UGA +0.63%)  are moving higher. All three have broken out of chart patterns heading north – this is not good for consumers in the US by the way.

If Stocks Are Rising it Must Be an Uptrend!

Despite higher fuel costs, the market still likes good news, as evidenced by the the sampling of stocks with earnings out mentioned above – if the market were failing, good news would not be greeted so well. So the clues say we have buyers for this market and the trend is still up.

for mortgage refinancers, rates moved up strongly yesterday but with strength today in the long bond, rates – moving inversely – moved down. I don’t think anyone knows what will happen and with so much interference by governments in the economy, it doesn’t make sense to make predictions. One thing that is happening consistently, despite some creative commentary, is central bank economic manipulation. With ultra low interest rates, European buying of bad govt bonds, and Federal Reserve manipulation of the long end of the rate curve, we can be sure that paper money will decline and real assets will become more valuable – in terms of paper money at least.

Speaking of real assets – money commodities gold and silver – gold was up today and silver flat. Gold stocks were up strongly around 2%. The main thing holding back gold stocks, generically, could be that the market thought that gold prices would fall and hence gold stock profits. If we truly saw the global govt “hand” in the Greek mini rescue, then I think market participants are more convinced gold will stay higher and therefore, future profit estimates for gold companies will be revised up and their prices will likely follow. This is a thesis Bill Fleckenstein has held and it makes sense to me. Stocks based on the price of something that can’t be estimated easily (gold) are likely to be wild performers – and they are!

Watch your risk but ride those winners! And remember, it’s Lent, a time for sacrifice. If your trading has been bad, go offer to help someone else, take the focus off yourself then come back and do your research. You’re likely to be much refreshed and relaxed. God bless…

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

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

 

  • Qingling

    The fact that Dow is only flirting with 13,000 and can’t break through indicates some “confidence” level investors have on the market. With all the money printing, all the money thrown into green energy projects, we didn’t see the predicted job creation, and not enough money got into consumer’s pockets to support their spending. Now, we have the drama for oil, another pinch to consumers, I feel the market is due for a correction.

    • I agree- I think the market needs a “flash crash” to weed out some of the current worried crop of stock holders. But I can see a rally after a 6-10% correction (or 8-12% flash crash – the shorter the deeper and narrower). Today the market tried to fall but the “buy the dip’ crowd is right on it – after indices barely fall 1% – tells me there are some EAGER people trying to buy (perhaps after missing the run up of the last 8 weeks).
      Thanks for commenting!