McDonald's (MCD) is a classic example of the new market we are in. If a company fits the bill of an upside surprise - a real one not a phony beat, more on that in a moment - then what happens is that its stock simply cannot be stopped because valuation parameters no longer matter.
This pattern is now ingrained in the market because there simply isn't enough stock for sale for the stock to do anything but zoom. It will be a big part of my speech to kick off the Boot Camp this Saturday.
Of course the flipside is true, too: when a company misses there simply are no buyers whatsoever at no matter what price. You have to wait until you see the selling dry up and a dividend have some cushion value to end the pain.
Take a look at Verizon (VZ) versus AT&T (T) . Verizon's stock ran for several days off a better than expected quarter. But T just kept going down and down and down until it yielded an astounding 6%, which, apparently, is some sort of floor in this new market.
But then look at Visa (V) . The stock is resting now but, like McDonald's, I think it is just stalled until new buyers come in.
McDonald's had the misfortune of reporting its last quarter right before the big VIX selloff. The quarter was good but not perfect like this one.
Now we have a market that over-rewards winners and over-punishes losers.
That's what's happening and it is a pattern that has become ingrained and seems to almost accelerate at this point in the earnings season.
Is it healthy?
Does it matter?
Yes, because these days you roll the dice when you buy and that makes it all self-fulfilling, that things are thin as it is, and this just makes things even thinner as there are not enough players to service the buy or the sell side.
Join Jim Cramer May 5 for TheStreet's Boot Camp for Investors
- An exclusive market update from Jim.
- A keynote interview between Jim and PayPal CEO Dan Schulman.
- Break-out panels with top market experts like Tony Dwyer, chief market strategist at Canaccord Genuity; Mike Hanson, senior vice president of research at Fisher Investments; and Peter Hug, global trading director with Kitco Metals.
- Roundtable discussions with TheStreet's Carley Garner, Stephen "Sarge" Guilfoyle, Bob Lang and other columnists.
Where: The Convene Center, 117 W. 46th St., New York
When: Saturday, May 5, 8:55 a.m.-2:45 p.m.