You know what's great about a worst-shall-be-first move like we're having now? Nobody cares about the near term. It doesn't matter.
I was thinking about this last night when I talked to Vivek Ranadive, the man behind so much of the cloud software you use. Vivek's company, Tibco (TIBX), had always been waiting in the wings until we had enough sophisticated data that could be compiled and culled, not just on the database but in the cloud, and once we got there he had the programs to mine it.
So when you go on Amazon (AMZN) and you order a book and instantly get ideas for other books that Amazon thinks you might like, you can thank Tibco for that. You go to Macy's (M) and buy a Hilfiger tie, and the last time you were there you bought Calvin Klein underwear, you might get an instant deal on that item, something that makes the place hum.
That's why Tibco sells for 35x last year's earnings. That's why the hope is that all goes so well that his company's earnings grow 17%-20% and the multiple turns out to be not that high.
But if they grow 16% because some orders didn't close or because IBM (IBM) took $10 million customers away -- unlikely, but I'm throwing it out there -- the stock will get cratered. That's why it has underperformed the group by 15%. It's the best. And the best are coming in last.
Meanwhile, are there any expectations, for real, for Micron (MU)? Does anyone even care what it reports? What matters is Micron's got Flash and it's got no expectation. Intel's (INTC) got no expectations to speak of. So that's fine, too.
And when you go away from tech, like to Fortune Brands Home & Security (FBHS), a stock I recommended last night on the heels of Masco (MAS) and Weyerhaeuser (WY), you have to ask yourself if anyone is looking for anything at all.
Bad house. Bad neighborhood.
What's really galling is that this trade is now three to four weeks old! The worst stocks have now moved while the best have retreated.
How long can it last? How long can we wait for a pullback?
How about this answer -- for as long as Europe behaves. For as long as we get more data like we got from Lennar (LEN), because when you look at the worst stocks since 2010 they have done nothing. And they seem to be owned by no one.
And the sellers? They seem to have disappeared. As heavy as Bank of America (BAC) was before the end of the year, it's that light now.
It goes on until something happens that is so awful that it makes people realize the stocks are extended.
You can see this in the action in two stocks of companies that are just plain bad: Whirlpool (WHR) and Sears (SHLD). These are the ultimate housing plays. They are terrible but if the tide rises they are presumed to be beneficiaries even though one is being eviscerated by raw costs and competition and the other is the worst executor out there. They work because they have done nothing.
So, the worst-remains-first trade continues to work. The Tibcos, up for three years straight, struggle.
And stocks continue to break out that broke down every time they hit these levels.