In the last few days, there have been several themes in my inbox that I would like to share with you.
One theme is from the folks who have been steadfastly bullish, believing no correction was on the horizon; it seems on Friday even they thought we'd gone far enough. Perhaps it was the poor breadth (more on that below).
Another theme has been that we've never seen this before. Of course we have. Off the top of my head, I can simply cite the rally off the October 1999 low. Forget Nasdaq, where all the action was; the S&P 500 rallied 20% in two and a half months. We haven't seen that now, have we? In fact, that was more extreme than what we have now.
And finally, there seems to be an obsession with the rise in Boeing's (BA) stock. It is up 30% in three months and it seems to be all anyone wants to focus on. When I report to them that we saw more extremes in 1999, they tell me that we didn't see that from 100-year-old companies that were not small, high-growth technology stocks.
Well, I don't know about that. IBM IBM rallied 65% in three months back in the spring of 1999. And we must all admit IBM (IBM) is not now nor was it then a small, high-growth, newfangled tech stock.
Perhaps the obsession over Boeing is that, as the highest-priced Dow stock, it manages to single handedly push the Dow around, since the Dow is based on price not market cap. But Caterpillar (CAT) is up 30% in the same timeframe. Amazon (AMZN) is up 35%. And old-fashioned brick and mortar retailer Target (TGT) is up a similar amount. Even Costco (COST) , which was going to die, you might recall, when Amazon (AMZN) bought Whole Foods, is up 30% in a few months.
And some big old lumbering oil services stocks like Halliburton HAL and Schlumberger SLB are up 25%+ since mid-December; that's even one month shorter.
In other words, Boeing is not alone. There are plenty of "old economy" stocks that have been around forever, which are not in typical high growth businesses, that are up just about as much as Boeing. If Boeing traded in the $20s or $40s, maybe it wouldn't feel so extreme. Boeing's Friday rally was the equivalent of a $40 stock being up a buck. Would folks fuss over that? I doubt it.
Friday was another odd day in the market, in that breadth was pretty pathetic (after having been terrific on Thursday). In the past several days, the S&P 500 is up 38 points and breadth has gained +160 issues.
Yet, Thursday's great breadth produced the same number of stocks at new highs (just shy of 300) as we've been seeing. Friday's poor breadth produced nearly 400 new highs.
The VIX was again higher on Friday as well; it once again climbed over 10. I still think it will go up, but clearly, while that has been correct, an accompanying pullback in the major indexes has been wrong.