What a bipolar market the last few years, especially from a Macro perspective. Even recently, with the Fed rate hike talks putting everybody in a tizzy, calling for the end. I see normalization, price stabilization and a firm broadening of the market in the near term.
Longer-term, we will no doubt see some of the market distortions from low rates and algorithmic trading normalize, which will yield volatility and uncertainty once again. This really is no different than the ebb and flow that we've seen in the market for, I don't know ... forever?
As I have been saying for the last three weeks, since I started as a contributor to Real Money, there is a transition afoot. Folks, hiking rates one or eight times is really not that big a deal. If you are that concerned, sell your utilities and buy your favorite banks. Let it go. It's back to the business of investing.
Housing is on firm footing. There are the usual winners and losers in technology and healthcare. Expectations in the cyclical pockets of the market, like industrials, energy and consumer discretionary, are proceeding normally, and in due course.
Against this backdrop, the machines are potentially changing their rhythm. The patterns that have exhausted us over the last two or three years could very well be changing, as the macro picture changes. Some stocks are breaking out; some old ones, some new ones, but all for the right reasons. Other stocks are going down, again, for the proper reasons.
This is a good market for alpha generation. Also a good market for accumulating super high quality stocks cheaply. Look at John Deere and Company (DE). Why not take a peek at JPMorgan Chase (JPM). Both could proceed like Exxon Mobil (XOM) as we look forward.