Kneejerk Reaction Knocks Out Cyclicals

 | Sep 19, 2011 | 10:57 AM EDT  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:




The butchery of the cyclicals and the oils always takes your breath away. It's a pattern that shows you there is nothing underneath, nothing whatsoever, when analysts make calls that earnings for 2012 are too high -- see Caterpillar (CAT) and Schlumberger (SLB) -- and the dollar is strong, the commodities are weak, and Europe is, as usual, falling apart.

The kneejerk way these can fall is so out of synch with what can and is happening that you can see why this market keeps having money coming out of it, as a Bloomberg survey showed this morning. (Most out since the dark days of Lehman.)

I get the Caterpillars of the world. People think China isn't done tightening, and there is nothing new in the U.S., so it is possible that numbers are too high. But the Schlumberger oil-is-no-good call? This one is surprising, if only because the commodity oil has done nothing for ages. Brent crude is barely down, and oil is keyed off of that, not West Texas Intermediate. I have not been able to find a single budget for oil companies going down next year, and most are going up.

No matter, this is all about recession again. The off-on-off recession call with strong dollar/weak commodities/down Europe is going to plague this group until we get an end to the tightenings in the emerging markets and some turn in the U.S.

Until then, fundamentals are not as bad as macro, but analysts are bowing to the macro because they can't take the pain.

Columnist Conversations

Ugly end to a challenging week as stocks post around three percent declines for the opening month of 2015. Oil...
I have scaled further into a TLT short - scaling all the way up to $138.35 this morning. And I have scaled int...
Market slightly down despite the boost Amazon (AMZN) is giving the NASDAQ. Biotech also continues to be a stro...
There are a number of interesting technical signals on the weekly and daily Berkshire Hathaway (BRK/B) charts....



Columnist Tweets


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.