Bottoming? Breaking out? Dead-cat bounce?
This three-day rally has been extraordinary in that it finally has become all-encompassing except for the utilities, which is fine with me because their rally was a sign of both desperation and recession.
Contrast that with some other groups.
Let's start with the rails. These stocks led us down. Literally, if you look at the charts, they have been a major force of negativity, never good given the breadth of cargo they carry.
This morning, the chief financial officer of CSX (CSX) talked about how the first quarter was going and said he expected first-quarter earnings "to decline significantly." Not only that, but the CFO said coal could decline by more than 20% in 2016. I am a huge bear on coal, but not that bearish. What a stunning decline for that most key of commodities shipped by rail.
How much is the stock down?
Wrong! It's higher, after a quick dip to the downside. That fits with the staggering 12-point gain since Union Pacific (UNP) reported a terrible quarter.
How about retail? Nordstrom (JWN) reports tomorrow, and all I can say is "wow" -- wow to the fact that this stock has been clawing its way back to where it first fell after the last quarter, a truly horrendous earnings report. That signals people are expecting that the worst won't matter. Wal-Mart (WMT) has rallied more than 10% since its last -- and disappointing -- quarter, and it is up 8% for the year. Very encouraging, and leading a retail breakout.
Here's one that's acting incredibly well since the quarter: Honeywell (HON). While it is up against resistance, it indeed is closing in on its high set last August, just a few points away. I can't stress how important that is because many industrials weren't rewarded no matter what they had been saying. Now it's just the opposite. General Electric (GE) is clawing its way back to its high from when it reported; it's less than two points away. Once left for dead, Eaton (ETN), which had a greater-than-4% accidentally high yield, is another 8% gainer after a very good quarter. Earnings are mattering again to this group.
Then consider the travel and leisure segment. Nothing seemed to move this dog of a group as it has been surrounded by gloom and aggressive short-selling. They are paying the price today with this incredible move in Priceline (PCLN), which reported a very strong number with excellent billings boding well for the future.
Some groups never really did quit, they just stalled out. Domino's (DPZ) never ceases to amaze. But neither does Panera (PNRA), which is part of the Action Alerts PLUS portfolio and has been incredible, especially since I spoke last week to the CEO, Ron Shaich, about the turnaround. You have a rare down day for McDonald's (MCD), but that's because it was the best of the group and the rest are playing catch-up.
Oil stocks are nowhere near any levels of import, except that if you participated in any of the secondary offerings of late -- namely Hess (HES), 25 million shares at $39, and Pioneer Natural (PXD), 12 million shares at $117 -- you are up huge from both, with Hess currently at $43 and Pioneer at $122. How important is this? Consider that any buyers most likely will snap up any common offered now, and remember all oil companies need capital.
Big data has been a big sore point since the Tableau Software(DATA)/LinkedIn (LNKD) debacle less than two weeks ago. But with the collaterally damaged stocks, namely Salesforce (CRM) and Adobe (ADBE), you've made 10%. Oh, and get this: the stock of Apple (AAPL), which also is part of the Action Alerts PLUS portfolio, seems to have found its footing, and I am sticking with my "own it, don't trade it" dictum as it begins to trend higher.
Don't you wish you bought the so-called horrible quarters from Time Warner (TWX) and Disney (DIS)? I don't know what to say about the latter. I said buy it at $86 and buy more lower. It complied with the former but never got lower and now it's 10% higher.
Finally, you have to love the action in the consumer packaged goods sector. Yesterday, Hormel (HRL) hit an all-time high and today it's Campbell Soup's (CPB) turn after another blockbuster quarter.
Now you could say that with the exception of the latter, these are all dead-cat bounces from an oversold position. What I say is that we had been in freefall and that's no longer the case. Now we're basing with broad sector appeal. Let's just say it's something to build on, a real change of the pain of 2016.