China’s Premier Li Keqiang. Photographer: Tomohiro Ohsumi/Bloomberg
Clinton, O’Malley, Sanders, Warren, the bond market (government, corporate and high yield), Reits, Utilities, Rails, Airlines, Truckers, Autos, Energy, Oil & Gas, Steel, Copper, Aluminum, Coal, Disk Drives, Food, Drugs, Beverages, Tobacco, Household Products, Housing, Retailers-(discounters, home improvement, drug stores, department stores, supermarkets), Emerging markets, Efa, Russia, Brazil, Taiwan (there are others), hotels, industrials, certain Semis like MU,TXN,TSM,INTC, Gold, Silver, Gaming…all these areas are bearish or remain bearish. The first four are bearish because they are socialists…but they are only socialists with our money. With their money, they are nothing but capitalists. Remember, socialism is not even in business if not for all the money coming from capitalism.
Speaking of that, it was quite interesting hanging with a bunch of Republican candidates in Orlando this past week. Say and think what you want but their message was one of hard work, opportunity, success and greatness while the Dem side keeps telling everyone you need them because everything is rigged against them. And back to the market:
While the major indices continue to run in place, just look at how many areas are in various phases of bearishness. This continues to be not the type of action one wants to see with major indices nominally off their highs. It just continues to tell us that underneath the surface leaves a lot to be desired and any decent amount of selling from here could lead the market into a good correction…which is way overdue anyhow. There remains 2-3% room until VERY IMPORTANT SUPPORT is taken out. If that never happens, markets get a chance to repair. A break…and you will be hearing from us. Keep in mind, if this was happening before 2007, we would all but guarantee markets were getting close to breaking down but that has become folly as central banks continue to take the markets over as we head into the tens of trillions of printed money.
As far as the fake employment number and the Fed…we remain amazed as to why so many get in a lather over suspect numbers as well as whether a maniacal central bank is going to raise rates from 0% to a whopping 1/4%. Does anyone really believe that would matter? We would love to believe this economy is ready to roll but one must remember, every data point, every stat is off of the easiest monetary policy since the history of time. It is our opinion that if and when rates normalize, there is no way things will stand on their own two feet. We hope we are wrong.
Lastly, looking at the good side:
We love the action in the banking group. This includes, money center, regionals and S&Ls. As we have told you, as short rates stay at 0% and long rates tick higher, perception is that margins will expand…thus the recent move. We also like the action in the investment banks and brokers as GS,MS,SCHW,ETFC and AMTD continue with a good relative bid. This whole area is vital to the health of the market.
Managed care…as there is a rumored buyout every day.
Semiconductors…but not all. Again, a couple of recent buyouts helped things along.
Chinese ADRs again starting to rip. One Chinese market is up 100% in the past year while the economy heads south, but there is no bubble.
Biotechs…but not all. Quite a few biotechs are breaking down while quite a few “NO SALES” biotechs continue to do well.
Restaurants…but not all.
We are not making any of this up. We are stunned and amazed how the major indices hold up with so many areas in yuck land while so few areas remain strong. But until support gets taken out…
And finally, Mets still in first even with the whole team injured!