You do wonder, at times, if the work is worth doing. You look over the charts this weekend and you see every single industrial trading in lockstep, whether it be Honeywell (HON) or United Technologies (UTX) , or Eaton (ETN) or Parker-Hannifin (PH) or Deere (DE) .
You see all of the airline stocks going higher then cratering and now coming in back to life.
Every single medical equipment stocks, whether it be Baxter (BAX) or Abbott (ABT) or Bard (BCR) or Hologix (HOLX) or Intuitive Surgical (ISRG) or Stryker (SYK) or Zimmer (ZBH) are all on the upswing.
The semiconductor equipment stocks -- KLA-Tencor (KLAC) , Applied Materials (AMAT) , Lam Research (LRCX) -- are the strongest in show.
The parts companies that are in the Apple (AAPL) Iphone 8 -- Broadcom (AVGO) , Skyworks (SWKS) , Qorvo (QRVO) , Cypress Semi (CY) -- are all so strong.
(One has to wonder how his NXP Semiconductor (NXPI) would have been if it hadn't sold out for what now looks like too little to Qualcomm (QCOM) ).
The drug stocks with yields, Merck (MRK) , Pfizer (PFE) , Bristol-Myers (BMY) , Johnson & Johnson (JNJ) , and Eli Lilly (LLY) all seemed to be hanging in.
The broad-line retailers, with the exception of Amazon (AMZN) and Walmart (WMT) -- perhaps the two that do best in a border tax, Amazon because it passes on costs and Walmart because it has the biggest balance sheet -- are all in some sort of protracted decline. The strip mall retailers, Action Alerts PLUS charity portfolio holding TJX (TJX) , Ross (ROST) and Burlington (BURL) all look like gainers.
The insurers are still strong, reacting to higher short-term rates, and the major banks and the regionals are almost as strong. Perhaps they are more sensitive to the whole yield curve, even as I would contend that perhaps these should be reversed.
Yes, there are one-offs: Hasbro (HAS) is strong, Mattel (MAT) is weak. Hershey's (HSY) breaking out, but most food companies' stocks look like they aren't going anywhere but lower.
And the real estate investment trusts involved in retail look worst in show.
I think that this pattern isn't unusual as we head into earnings; we have nothing to distinguish the stocks at the moment. In fact, this is when the ETFs are ascendant and CEOs have to be aghast in private that nothing they can do can break them away from the pack. Alternatively, some must be gushing that their stocks are going up without anything necessarily ascribed to them, except for the sector they are involved in.
Now, we know that we are in the era when index managers are ascendant, although we saw the first article this weekend talking about how individual stock pickers are back. I guess they have to write these stories on both sides, because of the random assignment process that showed, right before the end of the quarter, that index funds were doing well and then after the quarter that some individual managers did well.
But what should be done here, if you are a hedge fund manager, is finding the differences among the companies in the sector and buy the best and short the worst. This seems like a fertile time, given the tight clustering of stock performance, even as the individual component companies can't all be doing as well as each other.
Is it worth it? Only if you are hedge fund. To me, though, it is a reminder that the sector homogenization, aided by the ETFs, has made it so it's very difficult to ferret out the best for the home gamer. In many ways, truly, given how much work you have to put it, the sectorization just doesn't make it worth it.
