We know that the big guns, investors like Icahn, Soros, Druckenmiller, El-Erian and Gundlach all hate this market. It's so easy to hate. The economic backdrop seems phony: the Fed can wipe away the gains in a heartbeat, oil controls the tape, rates are so low that they artificially drive capital into equities, and the global drive to negative rates could frighten anyone.
But here's the thing: while the market always feels like it is about to roll over, the widening breadth is staggering, with new groups gaining strength seemingly out of nowhere.
Sure, the regular winners are, as usual, after a weekend of studying the charts, totally on target. There isn't a utility or higher yielding real estate investment trust that isn't at or near its 52-week-high. Add Dividend Stock Advisor portfolio holding AT&T (T) now to the list, with Verizon (VZ) less than two points shy from joining it.
Yes, it's easy to argue that these particular moves are all the Fed's doing. But that doesn't mean you can't own one. It doesn't mean you can't take the wins to the bank.
I know that nobody wants to own a stock that can go down when a Federal Reserve president or governor says that it's time to raise rates. This game of chicken has played out for years now and the winners have been those who have bet against the Fed pop-offs. I think that stays the same, because the data stays weak.
But now, let's look at the widening sectors.
Ever since the presidential attacks on pharma, that group's been in the doghouse; but they sprung the medical device companies, and it's almost hysterically funny how they go up in unison: Bard (BCR), Becton Dickinson (BDX), Boston Scientific (BSX), Intuitive Surgical (ISRG), Stryker (SYK).
The dental supply companies are comically loved: Dentsply-Sirona (XRAY), Patterson Companies (PDCO) and Schein (HSIC) have basically split the worldwide market, a slap-happy oligopoly if there ever was one. But now there are two new winners in the segment : Quest Diagnostic (DGX) and Laboratory Corp of America (LH).
I am willing to wager they are joining the bullish cohort because of the destruction of Theranos. Elisabeth Holmes' easy-to-use, drop-of-blood model was meant to permanently disrupt Lab and Quest, and they became like brick & mortar bookstores in the age of Growth Seeker portfolio holding Amazon.com (AMZN), Barnes & Noble (BKS) and Borders. Sorry.
In their sane, clockwork fashion, the defense stocks won't quit, despite the myriad downgrades that the analysts give you. L-3 Communications (LLL), Northrop Grumman (NOC), Raytheon (RTN) and Action Alerts PLUS charity portfolio holding Lockheed Martin (LMT) have over-run so many price targets that it's hard to believe anyone is still even backing them.
With both presidential candidates likely to spend more on the military than Obama at the same time the rest of the world is re-arming, I still can't come up with a bear thesis for this group, but I am astonished that LLL, out of nowhere, has become its leader.
Nobody's going to sell an insurer in an era where the other financials -- namely all banks -- can never get past government regulation and capital calls. So it's Aon (AON), and Chubb (CB) and Marsh &McLennan (MMC) and Travelers (TRV). Nothing new there. Week after week of up. In fact, the only poorly performing one is AIG (AIG), and that's got people worried about possible long-term care exposure. The other faux financials continue their reign: chiefly, Equifax (EFX) and Fiserv (FISV), but now they are being joined by MasterCard (MA), Visa (V) and Discover (DFS), which had been struggling of late. No more.
The consumer packaged goods stocks don't ever want to stop. It's tough to figure how General Mills (GIS), Kellogg (K) and Hershey (HYS) can remain on top when they don't have earnings momentum to speak of and only General Mills, through its Annie's acquisition, is, of the three, really attempting to be natural and organic. Of course, these are really just takeover candidates, as is Church & Dwight (CHD). Meanwhile, people love Clorox (CLX) so much and it isn't just Burt's Bees, it is the core product. You want to short International Flavors and Fragrances (IFF) or McCormick (MKC), I say be my guest. You will lose.
There are the usual individual winners that everyone loves. UnitedHealth (UNH) remains the one big health maintenance insurer that is free to drop out of unprofitable Affordable Care Act insurance exchanges because unlike Aetna (AET), Cigna (CI), Humana (HUM) and Anthem (ANTM), it isn't trying to merge, so it won't earn the wrath of government regulators.
Honeywell (HON) and Illinois Tool Works (ITW) are just loved and their diversified industrial bases makes them must-own on days of heavy program selling, as there hasn't been any real, actual selling in these for ages. Why should there be? They are doing so well.
Bristol Myers (BMY) and Johnson & Johnson (JNJ) remain the two companies revered in the drug group. Again, it makes sense. Bristol-Meyers is doing remarkable things against cancer, and Johnson& Johnson has the best pipeline and the best balance sheet of any drug company in the industry.
We know that retail is ghastly, but here we go again with endless dollars pouring into Dollar Tree (DLTR), Dollar General (DG), Ulta Salon (ULTA) and now a new one, Big Lots (BIG). A bargain is a bargain. Darden's (DRI) the only restaurant chain that's producing the similar inexpensive night out that seems palatable to most. The stock's a rocket. A lonely rocket.
Housing related stocks have struggled of late, but not Mohawk (MHK), the carpet company and Newell Rubbermaid (NWL) with Jarden (JAH) in tow has now surfaced as a winner.
But, sorry to bury the lead, there are two new and ultra- important groups that are coming to the fore, and they are no longer in the bearish playbook: tech and oil.
Now, lots of the oil stock comeback can be rolled back on a couple of weeks of higher rig counts as the $50 level is proving every bit as insurmountable as I thought it would be.
But you have to be impressed with drilling stock Helmerich & Payne (HP), or service company Halliburton (HAL) or related equipment maker Dover (DOV). And how about all of those independents that never got bids when the majors had a chance: EOG Resources (EOG), EQT (EQT), Newfield (NFX), Murphy (MUR), Cimarex (XEC), Concho (CXO), Pioneer (PXD), these are amazing moves. The 25% increase in natural gas prices recently has lit a fire under Southwestern (LUV), Range Resources (RRC) and Cabot Oil and Gas (COG). These were all left for dead not that long ago. Now, I don't know how you can beat the market without owning one of them. Just the opposite of this moment last year.
It's tech that's a shocker, just a shocker. Get a load of these semi stocks that have so much power: Nvidia (NVDA) and Broadcom (AVGO) make sense, they are the new kings. But how is the much-maligned Texas Instruments (TXN) making a comeback like this? That's extraordinary.
We know that Applied Materials (AMAT) got things cooking in this whole semi rally when it reported a terrific upside surprise and then made it all even better with that amazing buy back. AMAT's strength means good news for Lam Research (LRCX), which is merging with KLA Tencor.
But how about these parts and supply chain winners: Sanmina (SANMN), Flexitronics (FLEX), Tech Data (TECD) and Arrow (ARW). This combination is so bullish I struggle to figure out where it's all coming from, especially because Avnet (AVT) hasn't seen it.
There are some oddities within: American Tower (AMT) is finally breaking out after years of bear raids. The telcos must be spending. Synopsis (SNPS) and Citrix (CTXS) just have lovers who won't ever ring the register. But those had been the wining tech anomalies. No more. It's much bigger than that.
The broadening of this rally has serious implications. While the market's always one step away from the bearish posse, it is difficult to continue to side with the top down negativists when there is so much buying power in so many new areas of real importance.
I know that we want the household names to go higher, the big cap techs, the FANGs, the major retailers, the rails and the airlines, and, most important, the banks and the drug stocks. They are not complying, and a decline in Netflix (NFLX), which acts horribly or a point off in Disney (DIS), which doesn't act any better, seems to counter all that I have written about here. Apple (AAPL)? Yeah, Apple. Tell me what else is new, besides the developers' conference.
But that's just not the right prism. The real market's healthier, not sicker. People should start taking their marching orders from the stocks, and not the rich people who never liked the market anyway that I can ever recall, other than sporadic and episodic trysts with a handful of odd names. Their embrasures have been few and far between.
Instead, think of all of these groups and the new additions to the old and maybe, as the market drops today, as it always seems to do on Mondays, you can see yourself liking something and not just lamenting the general state of the usual pessimistic prognosticators.
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