You can't help it. You can't help but think of the two Super Bowls out here, the one that has the underdog Eagles against the perennially favored Patriots, and then there are the bulls vs. the bears and it's the latter that's taken people by surprise.
That's because the averages are masking some incredible story lines where a couple of perennially winning stocks, Apple (AAPL) and Alphabet (GOOGL) , have been transformed into underdogs-losing ones, and Amazon.com (AMZN) has become New England and Jeff Bezos is now Brady's doppelganger.
Of course it's not just that. Let's face it. We have a lot of newbie fans in this market, those who only know good times. They have discovered bad times rather quickly and its so out of character with the market of the last year that it seems almost baffling to think that stocks can plummet and not come back in a given session.
So let's go over the new narratives and try to piece them together so you understand that it isn't the end of the world but it is time for investors to recognize peril not just profits.
Let's start with a much needed jolt of what we call macro because the macro is what sets the table, regardless of the relatives who show up at the meal.
This morning we got a hot employment number, one that shows strong job creation and a modest rise in wages. Even as recently as a few months ago we would cheer this robust set of figures as proof that the Fed has handled things well by being patient with rate increases so as not to upset the economy.
Now, though, we have come back far enough and fast enough that we now fret the global synchronized economy and our somewhat modest role in it vs. the world's economic resurgence.
In other words, we have passed the point where good news is good news and are now where it is moderately bad news as it translates into a bond market selloff that's jarring in itself.
Should we really care? I think there is enough slack in the economy and rates remain low enough that there should be no real threat to the bulls. But on days like today it sure doesn't feel this way. Still, I want you to know that the gyrations of the fixed income market have turned into a real headwind that can trump all but the best corporate news and exacerbate any blemish on the earnings scoreboard.
Which brings us to last night's earnings and how the macro and the companies themselves created an image the equities aren't so easy after all.
Let's start a remarkable admission: the stock of Apple, so used to being a steamroller, has taken on a distinctly underdog coloration. Near universal downbeat research about the future of the world's largest company had thought to immunize Apple's stock from any hard fall.
And when the company announced its best quarter ever but complied with the story line that numbers going forward are too high -- even as it's clear that the company's performing fantastically vs. almost any worldwide operation -- the stock got hammered.
Now I am sticking by my theory that you should own the stock not trade it but I remain a believer that the stock's due for a pullback and that's exactly what's happening.
Justified? We must never forget that estimate cuts and boosts are the most important determinants of stock direction and Apple's trajectory is true to the thesis no matter how superior the products, how big the installed base or how amazing it is that the average selling price jumped $100 per phone.
You want further evidence of the importance of estimates? Alphabet reported a monster number that nevertheless wasn't monster enough, and then gave you a "rest on their laurels" forecast that combined to bring the stock back to earth and then some.
What to do? Same as Apple. Let it come down to where it is so cheap that you can't avoid buying what remains a remarkable 20% grower.
Neither company, with hoards of cash, played their hands on their return of capital, either, a real damper.
And there's the Pats, excuse me there's Amazon, and here there's just a trifecta of goodness, amazing retail sales -- think Prime, incredibly robust ad business, out of nowhere, and a dominant web services business that's still unassailable, seemingly no matter what competitors Alphabet and Microsoft's (MSFT) Azure do.
It's always terrific to talk about how a company's going to reward its shareholders by returning cash to them. But what do investors really want? How about a company that has so many growth initiatives that it needs every penny to continue to make them dominant. I heard more talk about Alexa sales in the last 24 hours than about the iPhone X which really did much better than expected.
Unlike my let them fall admonition for the first two As, Amazon needs to be bought here. When there's only one pure growth story out there money will pour into it from even the best legacy stocks, including Apple, Alphabet and even Facebook (FB) .
But let's back up to the macro for a moment. I have to tell you that the relentless wave of futures selling related to a belief that interest rates are, at last, competitive with stocks, that it might not even matter if Apple or Alphabet had simply been very good. The very good got hit today.
It's really a shame that these three companies reported on the same night. There wasn't enough time to opine about the actual valuations of these companies --very cheap for the ones that went down, uber expensive for the one that went up.
And if you really want to know the nitty gritty, this Friday has always been about Exxon (XOM) and Chevron (CVX) , the two oil giants that have defined the industry. Again confusion reigns and there was stock mutiny from stern to bow as Chevron reported as positive a number as Exxon was negative and yet their stocks both got clobbered in unison.
It was just that kind of day.
So what do you do? I think that we had become unrealistic about getting through the earnings gauntlet unscathed, as unrealistic as believing that stocks have two directions: higher and super higher.
That means, to me, that if you are all in, if you haven't taken any profits, that's an harbinger for pain.
But if you have figured out that there's two sides to the equation and that you need some cash to be ready for bargains that await us, you will do just fine.
It is amazing, after all the talk about tax reform and repatriation and help from Washington that the best performing stock belongs to the one company where Washington seems like a useless appendage: Amazon. It's really incredible that I have to be critical of Alphabet with all of the expensive irons in the fire, or that I have to defend Apple, which makes the greatest consumer product of all time.
But the defense really isn't about the companies or their wares, it's of their stocks and, for the moment, there's an undisputed winner among the FANGS: Amazon.
Would you mind, for a moment, though if I showed faith in the other teams: they aren't losers no matter what the final score in the stock market now or on the field Sunday.
