Bizarro World Continues

 | Jul 30, 2014 | 11:11 AM EDT
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The bizarro world continues.

The companies doing the best today? Those with earnings that won't take a tumble if the economy falters. The ones doing the worst? Companies that do better in a stronger economy.

Welcome to the crazy world of the stock market, where what the Fed does allegedly determines everything. When you see Gross Domestic Product growth this hot (plus-4%), you know the Fed is going to have to tighten, maybe much more severely than you thought it would. So people sell the cyclicals and buy the biotechs, and the fast -growing, hot eco-system companies like (CRM) can concur.

Yes, they have to pound every industrial again because the market's view is any increase in rates wrecks an already fragile economy that isn't nearly as good as the GDP number looks, especially with the slowdown in Europe that is coming if we get an escalation of tensions in Ukraine.

And we have to pay any price for Celgene (CELG) because it doesn't matter what happens in Ukraine or with the Fed. That's how one of my absolute favorites, Edwards Lifesciences (EW), could be up 10% on a beat and raise, but WellPoint (WLP) could go down because that company depends on employment growth, which will be hurt by higher interest rates.

In Get Rich Carefully, I discuss the idea that in the short-term computers are now doing everything. There are programs that spit out what to do in these circumstances, and they quickly overwhelm the market, as you see today.

But then the programs die down after the Fed and you pick up the pieces of what should be bought but was sent down by the game plan that the big boys use, and you buy the rubble.

Nevertheless, you are instantly right if you buy Gilead (GILD) and instantly wrong if you buy United Technologies (UTX), and all that matters in this market is the instant.

Sadly, the machines cannot be beaten on any given day. They are too smart and too fast. But once the destruction and elation run their course, the real opportunities begin.

We just aren't there yet.

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volatility is quite low here, and we could see some downsides here in the short term. ...



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