The equity markets continued the steady upward trend in October’s third week, with the S&P adding 0.6% on top of last week’s 0.9% gain. The market had a plethora of earnings reports and forecasts to digest this week, and that tends to lead to repositioning between and within sectors rather than to the sort of broad movement that can follow significant economic news. In general, it looks like most of the market leaders are beating earnings expectations, but then again they were already expected to beat expectations. The result is that the trends that have been in place for months continue unperturbed, and crowded trades like AAPL and AMZN are getting even more crowded. The action is positive overall, which is bad for the bears, but that positive action has been decidedly muted, and so the bulls are complaining as well. I think we are looking at two possibilities. First, the financials get over themselves and firm up. This huge segment of the market has not participated in the September-October rally due to headline, legal and regulatory risk. If some of that skepticism abates or is discounted, the financials could give the market its next leg up and allow overheated consumer technology stocks to take a breather. That’s the bull case. The bear case is one I’ve already made: this is a Nifty Fifty market in which the stellar performance of a handful of big names is concealing pervasive economic rot. If these crowded trades, many of which I’ve mentioned, so much as correct, the weight of that otherwise-healthy pullback will pancake the whole rotten structure. This is the problem you have when assets are aggressively overbought and they become dislocated from underlying economic conditions. They are going up on momentum, and if they peak and fall, that same momentum functions like a wrecking ball when it hits the rest of the market. This happened in 2000-2002 and it can happen again if a handoff from consumer technology doesn’t occur. That is the bear case.
I can say definitively that the midterm election is crap and has nothing to do with anything. Garbage market pundits will connect whatever happens in the elections to whatever happens in the markets, and they will act like the connection is an obvious one that they predicted. Let me reiterate this: they will react as though their genius was validated NO MATTER WHAT HAPPENS. This is because they are pandering idiots. If you never truly assess, you never need to reassess. I can’t watch CNBC anymore because they’re drifting more and more into Fox News territory, in which they run insane right-wing talking points as headlines and insist they’re being objective because they put a question mark after the headline. Something like “Obama healthcare plan a disaster?” Will someone please call permanent bullshit on this kind of thing? Then they have a so-called debate about an insane talking point that didn’t merit discussion in the first place. The “debate” topic isn’t really that at all—it’s an accusation, and whoever is arguing to refute the accusation has to function like a defense attorney, not a debater. Americans don’t like people who seem to be defensive, but that’s the role these “news” outfits assign the not-insane side. I don’t feel bad for the dope on the not-insane side of “Obama healthcare plan a disaster?” If the other guy challenges you to a duel, and he says you get a butter knife and he gets a gun, if you accept the challenge under those terms, whose fault is it really when you get shot? But I do feel bad for any viewers who haven’t figured out the con yet. Rich people don’t want to pay taxes. That’s all they want. My dad explained this to me a long time ago when he admitted he had started to vote Republican (his family was famously Democratic). He said he made a lot of money now, and he wanted to keep it. That’s the Republican slogan: I make a lot of money and I want to keep it. And I respect that, I do. I do not, however, respect anyone who is not rich yet votes for the party of the rich, because stupidity is contemptible.
Ugh. American politics are depressing. It could be worse. I could be in France, protesting in the streets about how I should be able to live half my life in retirement and have it paid for by…magic? The real reason the Germans stopped with the serial invading of France is that they realized that if you govern France, you have to govern French people. No way do you waste all your awesome tanks when that’s the payoff.
The Family Stock Index was down again this week, the second straight week of declines against a positive market backdrop. The FSX closed at 1031.82, lower by 0.7%, but well above the intraweek low around 1018. Advance/decline ratio was as tight as you can get, with 11 stocks up and 10 down, but the index itself suffered disproportionately because the laggards lagged hard. And guess who lagged the hardest?
Advancers
- Justin (WOLF) +4.8%. News school must suit him, judging by the 16% jump this month alone. I can’t confirm that, though, as Poopface is in the midst of one of his off-the-grid spells.
- Icarus (ICA) +4.0%. If we needed confirmation. As Justin goes, so goes his daemon/soul mate.
- Mario the Younger (Nintendo, JP: 7974) +3.7%. This augurs well for the 30th birthday present haul. Bought a Wii recently, which I think amounts to self-dealing, not that the market frowns on such things. The NASD, yes, the market itself, no.
- Katie (CATY) +3.5%. I think LBE3 is going to be a momma’s boy, because Katie keeps rising as we count down to December, and I keep, well, not.
Decliners
- Charlotte (BOOT) -11.3%. I asked for a little kickback last week, I know. Well, here’s the kick…
- LEE -13.2%. …but with absolutely no back. I have not had an up day since October 8th and I’ve lost more than 26% during the past two weeks. I think the fundamental story is still in place and this is just the letdown after a short squeeze. Also I feel like crap. But the $1.90-2.10 area has provided a nice base in the past, and I finished my old papers after the close yesterday (with fire, no less). I’m bound to get at least one up day out of next week, right?
Prices
Name |
10/22/10 |
Change |
Charlotte |
$14.35 |
-1.83 |
Dustin |
$46.07 |
-0.04 |
Icarus |
$10.77 |
+0.41 |
Jenny |
$14.82 |
-0.50 |
Justin |
$2.20 |
+0.10 |
Katie |
$12.87 |
+0.44 |
Lee |
$2.11 |
-0.32 |
Lisa |
$4.69 |
+0.03 |
Lucas |
$1.98 |
+0.02 |
Lulu |
$44.76 |
-1.27 |
Marcus |
$12.96 |
-0.15 |
Mario T.E. |
$11.84 |
+0.35 |
Mario T.Y. |
¥21,490 |
+760 |
Marisa |
$21.84 |
+0.07 |
Nicole B. |
$17.71 |
-0.07 |
Nicole L. |
$61.39 |
+1.21 |
Reagan |
$27.37 |
-0.67 |
Ruby |
$3.50 |
-0.26 |
Wilson |
$6.65 |
+0.14 |
Zero |
$2.18 |
+0.01 |
Zondro |
$5.22 |
-0.04 |