We Endure Another Top Call
Equities start the day slightly higher as we endure another top call. So the market Gods, in their infinite wisdom, decided to dump Ali Baba and the 40 syndicate runners in our laps last Friday and now the entire world thinks the top is in. Again. The past two sessions have seen a subtle change in sentiment that appears to be reverberating thru the investing world. Case in point: I was speaking with a good client of mine the other day and he described himself as a “fully invested bear”. I pondered that last night while consuming my store bought frozen pizza and came to the conclusion that his descriptor was probably accurate for a majority of the professional investing world. I really haven’t run across a pure 100% “the world is awesome” bullish money manager in months. Most of the people out there are worried about how far we’ve come so when they see a huge IPO like $BABA they get worried about exuberance. Then they put their hands in their pockets and the market leaks lower for a few days. But you know what? You know what’s worked this year? Patience. You know what hasn’t? Chasing. So I don’t blame them or anyone for watching the market come off its highs. Anyway, that’s how I see it right now, we are enduring another bout of “the top is in” fever and it won’t subside until we get one of those massive snapback days. Did it happen today? Let’s find out.
After the open it sure didn’t look like we would. The first hour was a nonstop sell-a-thon down to 1,978 and it looked like we’d have our 4th down day in a row. Would you believe me if I told you the S&P hasn’t had 4 consecutive down days in 2014? It’s true. Which is odd because 4 down days doesn’t seem like that big of a deal. The market managed to reverse itself after New Home sales printed the highest # since 2008 and as the morning ended we were back in the green (Head over to this link if you care about New Home sales or just wanna see some fancy charts). BBRY ended flat today after announcing a phone that looks like big Triscuit. Wow. I didn’t realize the “I love looking at spreadsheets on my phone” crowd was so profitable. Wait….maybe it’s a junior banker phone! Hey junior bankers, ready to work on spreadsheets in the bathroom? Of course you are!! What did well today? BBBY / VRTX / ALXN / HAS / GPRO / and AGN. Losers were mainly energy names like DO / NRG / RRC / and SWN. By lunch we sat on 1,991, a measly 1% from the closing all-time highs (man these corrections are so steep).
The afternoon was rudely interrupted by an AAPL iOS update that seemed to render everyone’s phones useless so that was pretty much all people talked about. So lemme get this straight, Apple’s new invention bends and doesn’t make phone calls? Sounds like my daughters Gumby doll and that only cost me $1.99. Oh AAPL, say it ain’t so. We closed at 1,998 managing to avoid that dreaded 4th down day. So yea, our 3 day pullback evaporated before I had a chance to get all worried and tell you why every stock is a sell. Actually there is something that makes me want to short every name in the US. It’s the fact that Mike “the situation” made $8.9mm and didn’t pay taxes on it. $8.9mm for that Jersey Shore drivel? What is wrong with this country?
Final Score: Dow +91bps, S&P500 +79bps, Nasdaq +105bps, Rus2k +86bps.
- Succinct Summation off the Day’s Events: AAPL bricked a bunch of people’s phones. Stocks bounced from a 3 day selloff because they were oversold. Lots of New Homes traded so be prepared for bidding wars to return.
- The Daily Mail ran an article on El Erian today and you should definitely read it. Why did he leave PIMCO? Check out this stomach punch: He said: 'About a year ago, I asked my daughter several times to do something—brush her teeth, I think it was—with no success. I reminded her that it was not so long ago that she would have immediately responded, and I wouldn’t have had to ask her multiple times; she would have known from my tone of voice that I was serious. 'She asked me to wait a minute, went to her room and came back with a piece of paper. It was a list that she had compiled of her important events and activities that I had missed due to work commitments. Talk about a wake-up call.
- I don’t ever include articles in my recap that have anything to do with politics at all. It’s my rule #2 (rule #1 is to try and be original as much as possible). But this one by David Brooks strikes just the right tone of “hey, things aren’t that bad, relax” The scope of the problems we face are way below historic averages. We face nothing like the slavery fights of the 1860s, the brutality of child labor and industrialization of the 1880s, or a civilization-threatening crisis like World War I, the Great Depression, World War II or the Cold War. Even next to the 1970s — which witnessed Watergate, stagflation, social decay and rising crime — we are living in a golden age
- Great thoughts on recent price action here Over the past 2 years, there has been nothing wrong with being cautious at times, however, it hasn’t paid to get too negative on the market. It seems like every time some warning signs appear, sentiment gets extremely negative and a magical bid appears to prop the market up. Of course, one of these days this won’t happen and it will catch many off guard. I’m not saying this will happen now, but always keep an open mind.
- 6 things to look for around a market top.
- Honestly, that bathroom is amazing.
- Now that’s some serious inflation (see what I did there? I’m on fire)
- Headline of the decade. DECADE I SAY.
- You know what, this thing really does a good job around market swings. I’m not ashamed to say I look at it a lot.
- 23 Maps and Charts that will shock you. I like #6
Tonight we’re gonna end with a look at triple backflips on a Motorcycle. Stuff of legends here.
Have a good night