Crazy Breakouts

 | Feb 05, 2013 | 12:58 PM EST  | Comments
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Craziest breakouts I have seen in ages.

You have an also-ran computer software and defense company in CSC (CSC), two gaming plays in GameStop (GME) and Electronic Arts (ERTS), a high end cosmetics company in Estee Lauder and a machinery and engineering company in Eaton (ETN). How can this be? And a drugstore play that's involved in an expensive acquisition? The housing index goes up despite a group downgrade. There's actual pin action where Procter & Gamble (PG) goes up off of Clorox (CLX). People prefer the Buy recommendation on JC Penney (JCP) to the scare tactic story of the hedge bond holders freaking out about the bonds. Oh, and by the way, the Penney preferred acts fabulously, too.   

The answer, as I keep saying, is that this is a different kind of market, one that is all about trying to find unexploited niches. It's trying to find the next takeover candidates. It's trying to find upside surprises, which seem to lurk everywhere.

We used to have markets like this -- in the 1990s. People tried to find what's working and they bought it. The earnings would be fine. The businesses were  generating a lot of cash. The companies were trading like companies, not index components.

You know what? There's a reason why retail investors may be back. Politics is off the front page with our permanently-campaigning president no longer needing to campaign and the Republicans going back to some non-alien agenda. Europe takes us down for a day, but then we see merits in the decline, as we do in our banks and even Banco Santanders. Stocks that stagnate get bids. Stocks that rally get bids. Even stocks that have gigantic same-store declines don't get hammered. Pretty amazing.

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