Ghost-Town Sectors Are Hopping

 | Mar 05, 2014 | 8:03 AM EST  | Comments
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Sometimes these moves really do take your breath away.

Yesterday we had rallies in a couple of segments that were nothing short of stupendous. The first is in regular pharma, specifically the central-casting, don't-worry-be-happy stock of Bristol-Myers (BMY). You know I love Bristol-Myers, but how the heck was that stock up 5% in one session? And why wasn't it even noticed? What was that about? I think it had so do with the fact that Bristol-Myers is beginning to trade like a biotech stock. In fact, yesterday it beat the performance of most biotech stocks as it laid out its lung cancer plans at a Cowen analyst meeting. I didn't find anything that revelatory, yet that's really the point. It didn't need to in order to jump 5%. When you re-rate a stock from traditional pharma to biotech, as BMY is being re-rated, you are going to get these kinds of moves.

Meanwhile, Johnson & Johnson (JNJ) was no slouch either. Aand believe me, it's been one. Yesterday it rallied on a new heart device as well as some good chatter about a schizophrenia drug in a European health magazine. Again, this is not the stuff of a 2% increase, but you got it yesterday. That made it worth owning after all.

Meanwhile, Merck (MRK) just keeps rallying and Pfizer's (PFE) on the move, again with no real reasons. Sure, for the last 10 points Merck's been breaking up. Pfizer is doing new tricks with old anti-cholesterol dogs. Still, nothing happened that merited these moves. Believe me.

This is an odd move into the non-cyclicals and it's been going on now for a week as it appears that some people are making gigantic slowdown bets, hence the moves in the non-drugs like Kellogg (K), General Mills (GIS), Hershey (HSY) and Kimberley-Clark (KMB) that you typically do not get in a single day, especially with the first two, given their subpar quarters. It's almost as if there's this gigantic the-world-is-slowing ETF that a bunch of gunners piled into to get instant exposure to the group and turned the individual stocks into a one-day juggernaut.

But does that make any sense at all when you consider that yesterday's other red-hot group was the airlines? Forget a possible slowdown. This group should have been killed by the weather and by higher jet fuel prices and by the not-so-hot numbers reported by United Continental (UAL). Nope. Momentary pause and then another leap forward! My three favorites, Delta (DAL), American (AAL) and Spirit (SAVE) all hit 52-week highs yesterday. Do you know how amazing that is? These are airlines that have lost thousands of flights to the weather and just keep delivering.

I know from Twitter @JimCramer that people continue to have one foot out the door in the group. I reiterate that, while they are certainly more elevated than when I started pushing them, they are not expensive. The best, American, is selling for 9x earnings. Everyone's loath to give these a price-to-earnings multiple of any decent size, but that will change when the cash piles up and the dividends and buybacks get humongous for Delta and American. That's what happens when there is no competition. Plus, travel continues to boom. TripAdvisor (TRIP) was the biggest percentage gainer in the S&P yesterday. Of course Priceline.com (PCLN), a momentum monster, roared higher. It always seems to on these big up days.

Speaking of places that are rallying where there aren't supposed to be rallies, how about the endless rallies in these remaining tobacco stocks -- Reynolds (RAI), Lorillard (LO), Vector Group (VGR) since the year began? Yesterday was just another day where they went up on both takeover chatter and e-cigarette developments. They aren't growing like weeds, as we see with these pot drugs, but the runs are pretty stunning from these once-sleepy stocks.

Finally, the brokerage stocks seem to have been anointed as if we are both going to see more money into their coffers and higher short-term rates. We haven't really seen either yet, but Schwab (SCHW), eTrade (ETFC) and Invesco (IVZ) are all on the run. Is the individual investor really back? The stocks said yes on Tuesday, in keeping with the all-time highs we're hitting on many indices.

These are phenomenal moves for stocks that aren't supposed to have them. They are one of the reasons why the bears just keep being overrun. They are a sign of raw power, power that's based on earnings, on multiple expansion and on a sense of optimism that, at least for yesterday, certainly panned out.

Random musings: My friend Eric Oberg has penned the single-best, most-honest piece about Bitcoin and you have to read it to understand why Warren Buffett's going to be right when he says it might not exist a dozen years from now. Eric, late of Goldman Sachs, has done fabulous work before on financial engineering gone bad. This is his best!

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