We wrote this traveling from airport to airport yesterday. We added a few things this morning.
After a nauseating week, a little relief because of 3 things occurring late in the week.
The all-important biotechs were slammed down to the 50 day where a rumored buyout in the group stanched the group’s bleeding. It will be vital the 50 day holds going forward as this is the #1 risk group. (This morning, ASPX being bought by TEVA for $101 cash…or $3.2 billion…total sales for ASPX…as John Vernon said in Animal House…0.0!)
The all-important semiconductor group was also slammed all the way down near the 200 day when another rumored buyout in the semiconductors stanched the group’s bleeding. We will find out soon whether Intel buys Altera. Intel moved up nicely on the rumor even though they would be the acquirer. The huge move in the semis happened late in the day on Friday.
And more importantly, in a carefully worded speech, Janet Yellen just happened to throw in the word “accomodative” when it comes to Fed policy. She added the words “for some time!” Does that sound like a central bank that is ready to do anything? Again, not only do we believe there will be no rate hike, but these maniacal people will embark on QE4 on any blip to the downside. (This morning, China said the magic words:” Growth has fallen too much and the central bank has room to act.”) Combine Yellen and this morning’s yapping out of China and we have another gap to the upside.)
Notwithstanding this morning’s gap to the upside:
NYSE 10 months of no gains
Dow middle of range going back to November.
S&P the same
NASDAQ and NDX sitting on the 50 day
Small and mid caps still have the relative bid
The Transports weakened so much, the group is back down to the all-important 200 day…where it better hold. This is happening while oil prices remain in a bear market.
It remains a very split tape where:
On the bear side: Energy, oil&gas, steel, copper, aluminum, coal, ,gold, silver,gaming, disk drives, credit cards,rails, utilities, reits, food, drugs, beverages, tobacco, household products with the semis smacked hard.
Big financials are back to range bound with a few acting very poorly…BAC comes to mind.
On the good side:
Biotechs held 50 day to the penny (ibb,bbh,bib)
Retail- home improvement, department stores, discount, restaurants,auto parts,cruise lines continue to act well.
Housing stocks definitely emerging now with a few names moving into new high ground.
Managed care and miscellaneous Health care are still in good shape.
End of quarter shenanigans next 2 days and earning’s season straight ahead.
With Yellen and now China doing the happy dance of easy money, we get a strong gap to the upside. You should have it in your minds that this will never end until the markets actually stop them. Every correction is met with easy money words and if necessary, more easy money action. We are up to approximately $13-14 trillion of printed money with more coming. Markets have not just loved the money printing, they have lived by and off the money printing. Despite the troubles in Europe and their crashing currency, their markets are soaring. There is a method to their madness. And now we are seeing buyouts of companies with no sales at gargantuan prices…but there is no bubble.