• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Basic Materials

The Day Ahead: A Real Head Scratcher

Recent market activity has left many at wit's end
By BRIAN SOZZI Jul 15, 2013 | 08:00 AM EDT
Stocks quotes in this article: CSX, MRTN, PKG, TXT, DHR, JCI, KSU, IBM, INTC, SNDK, AMD, HD, GS, GS, SHW, PPG

The bottom line is that water-boarding seems like an intense form of human torture. This is definitely not the proper forum to discuss whether the technique is right or wrong. But, that feeling of being subjected to something un-pleasurable lies firmly ahead this week.

Earnings season picks up, Bernanke speaks on two days and who knows what Fed model lover will appear on the stage to stoke fear or share propaganda to the markets.

Truthfully, I have zero sense on where the market is headed. The past week or so has left me at wit's end regarding the entire process of investment selection using tried and true disciplines. It all sucks as there is always this overriding concern that the aura as it pertains to the liquidity that is lifting all ships will end abruptly -- and with it bring financial pain to trading accounts across Mother Earth.

Here are my financial webshow pitches entering the week.

Title: #Overboughtnado

Tease: Sort of like #Sharknado, except it's a storm that inflicts pain on stock prices.

 One has to wonder if we are nearing short-term overbought conditions (especially considering the holes inside of JP Morgan's (JPM) and Wells Fargo's (WFC) earnings, and the bomb that was the UPS (UPS) pre-announcement). Here are three stats that scream overbought:

  • The VIX Index has declined for seven straight days, its largest stretch of losses since October 2011.
  • The S&P 500 has risen 6.8% from the June 24 bottom, the quickest pace since December 2011.
  • The financials advanced on Friday in the face of the aforementioned so-so earnings from the two industry heavyweights. This is an indication people are buying blind instead of drilling deeper into the fundamental risks. Thank you, Federal Reserve for that one.

 Title: Earnings!

Tease: They used to matter.

Quite disturbing to watch stocks rip in the face of a bellwether such as UPS laying a quarterly egg. The egg wasn't a little rotten -- oh no -- this puppy was left baking in the 95 degree sun for the past 90 days. Do any economic bellwethers even exist anymore? Moreover, the definition of economic bellwether has become tainted due to Fed policy.

Back in the Alan Greenspan days, and when I was a wee lad in financial services, it was common practice to enact positions in comparable companies/competitors based on the performance, or lack thereof, from an industry heavyweight. So much for all those years of studying; we are being retrained on the fly.

Groupings

CSX Corp. (CSX), Marten Transport (MRTN), Packaging Corp. (PKG), Textron (TXT), Danaher Corp. (DHR), Johnson Controls (JCI), Kansas City Southern (KSU): This will be where to look for confirmation of the global economic dread implied by fine folks at UPS. I am studying industrials in particular following negative pre-announcements in mid-June:. I am very curious to learn on post quarter trends and if we land similar negative stock reactions, as was the case of UPS, should guidance severely disappoint. Fed policy versus economic reality...

IBM (IBM), Intel (INTC), SanDisk (SNDK), and Advanced Micro Devices (AMD): Goldman's (GS) recent downgrade on IBM caught enough coverage to heighten awareness before the earnings report. With the Philadelphia Semiconductor Index (SOX) and Nasdaq outperforming the S&P 500 in the past month, be on lookout for selling on positive news (shouldn't the news be positive if the stocks are outperforming, or is it solely Fed crack induce). Conversely, the economy did moderate from 1Q to 2Q, the degree to which this impacted new orders/outlooks intrigues this guy's mind.

 Source: Yahoo! Finance

 Sherwin- Williams (SHW) and PPG Industries (PPG): Normally not market-moving earnings reports. Key word there is normally. These are must analyze reports to see if comments on if higher interest rates have impacted demand towards the winding down of the second quarter. If there is an indication of slowing demand, the bullishness on second derivative housing recovery names (Home Depot (HD), etc.) that has materialized will likely fade.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Sozzi had no positions in any of the stocks mentioned.

TAGS: Investing | U.S. Equity | Financial Services | Basic Materials | Consumer Discretionary | Technology | Stocks

More from Basic Materials

Commercial Metals Is Poised for an Upside Breakout

Bruce Kamich
Dec 28, 2021 11:45 AM EST

Let's review the charts and indicators.

Martin Marietta Looked Bullish Even Before Getting an Upgrade

Bruce Kamich
Dec 17, 2021 10:20 AM EST

Here's our updated trading strategy and price targets.

Masco Surges -- but Is It a Buy?

Bruce Kamich
Nov 16, 2021 1:39 PM EST

Traders and investors looking for a building products name to add to their portfolio could go long MAS around this level.

History Says Enthusiasm About Infrastructure Spending Should Be Tempered

Bret Jensen
Nov 10, 2021 8:30 AM EST

It could be a few years before construction projects that receive money from the latest federal infrastructure infusion get off the ground.

Dividend Investors Listen Up: We Are Living in a Materials World

Bob Ciura
Oct 29, 2021 11:00 AM EDT

Give your portfolio some credit and see which of these materials companies gets your interest: BHP Group, Dow Inc. or LyondellBasell.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:33 AM EDT PETER TCHIR

    Thoughts Ahead of the Fed Minutes

    Recent economic and earnings issues are convincing...
  • 02:24 PM EDT PAUL PRICE

    An Interesting Chart

    I'm betting heavily that stocks will be way up aga...
  • 10:10 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    "Market Timing for Dummies"
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login