The bulls need the healthcares, the financials and the transports to go higher here if there is going to be a breakout. Even though the Nasdaq is doing well and the industrials are hanging in and the retailers are insanely positive, without two of those three key groups going higher then this move will be stillborn.
Why do we need more than just the NASDAQ? Because a narrow market is a market that's very hard to trust. If you only have a couple of leaders and they get too far out front then they are going to find themselves reversing at some point and you will regret that you were along for the ride.
Just this morning I was thinking with the oils showing tremendous weakness there had to be a possibility that the airlines will finally come roaring back to life. You have to be thinking that these stocks are cheap.
Oh they are cheap alright but nobody is biting.
Then there are the rails. I can't believe the reversals in this group. Just a few days ago Union Pacific's (UNP) stock hit $148. But now, after a tremendous investor day and the announcement that the company was going to increase its leverage to buyback even more stock than its been, and its been buying back stock hand over fist, nobody cares and the stock is at $41.
Then there are the cruise line stocks. A week ago Carnival's (CCL) Arnold Donald told an encouraging tale about how even though his stock was down a half dozen points from its high, bookings and pricing were very strong. This morning Morgan Stanley said pricing is weak going forward. The stock's down 4%.
How about the banks? Citigroup (C) is almost at its tangible book value and the company is buying back 7% of its shares. Goldman (GS) reported a strong quarter - yes, a strong quarter - and its stock is down an astounding 48 points from its high. I think it will announce a big buyback after it gets its CCAR grade - which comes at the end of the month and I think it will be a good one.
But no one cares. Not one whit. We own it for the charitable trust and want to hold off until it has found some footing.
Healthcare? Bedraggled group. I thought the biotechs looked good yesterday and that they could be at the vanguard of some sort of positive activity.
At least not yet.
So we wait to see if there are some signs of stability away from tech before we feel compelled to buy and instead we are doing mild trims to have cash ready if and when the movement fails because of lack of breadth.