Strap on Some Armor

 | Oct 02, 2013 | 1:25 PM EDT
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Here's what drives people crazy about this market. Of the articles you've read in the last 24 hours, how many started with the premise of how poorly the financials of the financials are going to be when we see them next month? Was it two? Three? Five?

The combination of the net-interest-margin pressure, the big fines, the mortgage-market sluggishness and the government shutdown have all coalesced to make people feel that the banks are going to be the worst performers when we get to earnings season.

Yet, this morning, what group is first to turn into the ugliness? The financials. What leads? JPMorgan Chase (JPM) -- the one with the biggest upcoming fine, and one that may even see the fine process delayed by the shutdown in Washington.

So you say to yourself: How in heck am I supposed to buy the financials with nothing, nothing whatsoever, to hang my hat on? It's like buying the close Tuesday. That was obviously so wrong, yet it was done in a meaningful and robust and confident way, not unlike how the turn transpired in JPMorgan.

These day-to-day moves -- not even random moves, but against-the-grain moves -- make it so we can't even entertain the idea of where to go each day on a sector basis.

It's almost as if we have to take the other side of the trade any time anything lifts its head.

We see things like this constantly. This morning, Remax (RMAX) and Burlington Coat Factory (BURL) come public. What are the two most challenged groups in this stock market? It's the real-estate-related plays and the retailing stocks. They are just miserable. Even today, VF Corp (VFC) is down badly and Realogy (RLGY) a real dog of late, is getting no traction.

So what happens? These two go to immense premiums. Just like that. As if by clockwork. Who does these silly things? Who bids up stocks in segments that are doing poorly? Are they the same people who buy JPMorgan?

Sure, I can come up with rationalizations for these moves. Interest rates have come back down, so Remax can make sense. Burlington Coat is more Ross Stores (ROST) and TJX (TJX) than it is Macy's (M) or Target (TGT).

Still, those are hair-splitting decisions.

They simply make very little sense -- and in that tape, we are supposed to wander in and buy stocks? How about just saying this? "I will wait on a price basis to buy my stocks and I will not chase relational and correlative moves. They just hurt me."

That's what I am advocating you do.

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