You Gotta Love The Stock Market of 2015

Equities start the day flat because holy cow did you see that move yesterday? Up 1.6%?  Did someone discover a new way to calculate EBITDA? You gotta love the stock market of 2015 don’t you? If you are wrong way on the market all you have to do is wait a day, maybe two, and you’ll be proven right. Glorious. So what was the 1.6% ripper zipper all about? I guess further clarity around the timing of the first rate hike? FOMC minutes in the afternoon basically said “yea Dec feels good” and we were off to the races. If I ever….EVER…see another headline that says “stocks fall on rate hike fears” I’m gonna beat the writer up on Twitter. This rate hike is baked in, it’s known, the market has accepted it and moved on. Please…PLEASE don’t tell me it’s not priced in because it is. That being said let’s move on from rate hike talk because it’s getting tiresome. The biggest thing we need to worry about is positioning. With 30 days to go positioning becomes EVEYRTHING in the market ESPECIALLY since the tape is flatrish YTD (I’m gonna set a record for most capitalized words in a recap today.  BOOM). Think about this: if you manage billions benchmarked against the S&P, and it’s flat on Nov 20, even the slightest underweight/overweight can make or break the whole enchilada. Yesterday’s move felt like people trying not to miss the best, most reliable seasonal trade of the year. What if I told you that the S&P has been positive the last 30 trading days of the year for a remarkable 12 YEARS IN A ROW (h/t @ryandetrick). That’s crazy, so how people are positioned is going to matter a LOT. Look at the most recent BAML survey…you think those people want to see us go out on the highs while sitting on the sidelines? NO WAY!!!

After the open there were two stories of note and pretty much nothing else. UNH came out and said “we’re struggling with these Obamacare exchanges” and that pretty much whacked the entire healthcare sector. All the big insurers were hit for 4,5,6% as people wondered where they go from here. Since I know absolutely nothing about the exchanges and how these insurers fare inside of them I’m going to move on because shark infested waters ahoy. The other story was the Square IPO pricing below its range and how that might affect unicorn valuations. Ok, let’s put that in English for everyone playing at home. A highly valued San Fran startup sold shares to the public, at a level below its last private funding round, so now everyone is questioning whether random pictures that explode after 10 seconds and delivery services that bring Tide and salted cashews to your door for free are really worth billions of dollars.  What gets more “that’s a bubble” calls Silicon Valley or the S&P500? I think I’d make it pick’em, maybe Silicon Valley is a slight favorite. Marc Andreesen had this awesome quote on TWTR:  “1999: Tech IPOs pricing above filing range = clear sign of a bubble! 2015: Tech IPOs pricing below filing range = clear sign of a bubble!”  Ok let’s get back to stock movers: GMCR +18% (down like 5000% in the last year), SJM +7% (raspberry will always be the best), CRM +4% (don’t fade Benioff), andEA +4% (that Star Wars game looks amazing). By the way, SJM is just incredible.  New all-time highs for a company that simply makes food everyone eats. Is it really that easy? I guess sometimes it is. Losers were all those health care stocks along with CHK, whose bonds are fracking ugly (see what I did there? Didn’t even to use caps). By lunch we were sitting on unchanged going nowhere fast. 

The final hour brought nothing new, in fact we spent the entire day trading sideways (which, frankly, is amazing the day after such a huge gain). One thing I want to point out before closing up this pizza shop is CSX which, as you know, is a transport. Look at the price action today on HUGE volume. That’s exactly the kind of thing we want to see to feel better about the health of our bull market. Transports need to start making their way higher again, it’s a must, imperative. Seeing a rail act like that is a good sign so let’s hope it continues. All micro today my friends, nothing new on the macro front to fret over. Who doesn’t love talking about rails and jelly companies? I sure do!  

Final Score:  Dow -2bps, S&P500 -11bps, Nasdaq -3bps, Rus2k -43bps.    

News Highlights:

So in Tuesday’s recap I had the craziest picture of a guy slacklining across a canyon.  Well, I found the video to go alongside it.   Holy … $#@$##@…are you kidding me?

Have a good night.