It's not that nobody fears the Fed or the employment numbers. That's silly.
It's that they see some stocks doing well that they know they can get on board and just hope that the number takes them down to buy more.
Take Dividend Stock Advisor portfolio holding AbbVie (ABBV), Action Alerts PLUS charity portfolio holding Allergan (AGN), Pfizer (PFE), Bristol-Myers (BMY) and Johnson & Johnson (JNJ). The strength in all of these stocks is pretty insane. AbbVie broke out yesterday when the company announced a $3.8 billion accelerated buyback. There was a time when that would be a drop in the hat and mean absolutely nothing. This is a $105 billion company.
Not this time. The darned thing just launched. When I looked at it, the news and the chart -- which was the most perfect reverse head and shoulders I have come across -- it took my breath away. The thing seemed so palpably obvious, with only the complacent bears fighting it.
I was hoping that JNJ might do something bold and when it shelled out $3 billion for Vogue International, a hair care company, I said to myself, "I like that, it is expanding in an area in the CVS Health (CVS)/Walgreen's (WBA) space where Procter & Gamble (PG) is weak, even as I like PG, too, given all the room it has for improvement."
But, "would others like it"? I asked myself. Too prosaic? Too uneventful. Too non-blockbuster?
Nah, the market lapped it up. This even though JNJ has huge exposure to a strong dollar, which is what we will get if the Fed tightens. That fear seemed to dissipate yesterday.
Bristol Myers has barely had a down day since March, so I can understand why that one keeps climbing as the quarter was strong, as was the case with Pfizer with its sharply better-than-expected numbers.
Neither moves big. But they move. And if you own one, you suddenly seem like you are surfing a wave free of sellers.
Allergan? Let's see. Not only did it report a huge quarter, not only did it get a new shareholder in Carl Icahn, but it is also literally in there, buying back stock every day. Yesterday was the first day it got back up to the initial rebound from the Pfizer walk-away before disastrously selling down to $200.
Here's what all of these stocks have in common: you can't seem to find any sellers up here.
The hope I think for many portfolio managers is that we get the "wrong" number, whatever that is, and they can buy more of these stocks lower, because the only sellers seem to be in the S&P 500 futures pit -- spillover arbitrage -- not in the actual common stocks.
Which brings me to two natural questions: 1) where did all the sellers go? and 2) are the buyers literally buying because they expect the Fed to throw us into a recession?
I think it's not an absence of fear at play. It's an absence of sellers, coupled with fears of a slowdown no matter what the employment number might be.