We've got roving bear and bull markets all over the place and they have come to define what happens every day including today.
That's a big change from my previous view of this market where I had held that there are roving bull markets and when stocks weren't in bull mode, they rested.
No, I am not saying that the market's become too treacherous for most people to handle.
I am saying that there are some incredible declines that must be addressed because they are so glaring and, at times, so nasty, particularly when they occur intraday.
Let's tick down the bull markets and the bear markets in today's session starting with oil and gas. Few groups have been worse performers than this sector. When it comes to energy we have a big problem in this country. Much of the new oil that we are finding is in the Permian Basin in West Texas and the oil is basically landlocked. Not enough pipe to take it to the Gulf where it can be refined or shipped overseas. Consequently it trades at a big discount to the world price.
Today, though, oil roared, with the world price touching $80. At that price oil that comes even at a substantial discount can make producers a lot of money, so the group's on fire. The move is violent with some stocks like Diamondback Energy (FANG) and EOG Resources (EOG) up $4. That's total bull market behavior from a group in bear market mode. Now you could argue that one day does not a bull make. I would come back and say that so many people aren't in this group and it is so contrary that someone, some analyst will try to call a bottom tomorrow. If that happens I think you have a move that can take the group up substantially, even if it turns out that the move was somehow related to the storm in the Southeast or a suddenly weaker dollar. My favorite? We have been telling club members of Action Alerts PLUS that BP (BP) is the cheapest and fastest growing of the majors with a yield of 5.65%.
Next bull group? The soft goods stocks. Here's one that's' been ever so quietly building, perhaps because there is a weak dollar, perhaps because of a thirst for yield or maybe the stocks have been in a bear market for so long that people like their valuations. The stock of Kraft Heinz (KHC) yields 4% and there's always the possibility that the company finds a business to buy or a way to split the company into something that creates value. Meanwhile you can have a cheese steak wiz wit, which means give me one with Cheese Whiz and with onions, which is how you order at Geno's and, yes, Cheese Whiz is made by Kraft Heinz.
Meanwhile, Procter & Gamble (PG) and Kimberly-Clark (KMB) have been biding time, paying about a dividend that amounts to about a 3.5% yield. The bond market's not going to give you that kind of return any time soon and it does feel like we are at a moment when their price increases announced last month are sticking. I think that's a very bullish sign.
Final bull market? The telcos, that's right, Verizon (VZ) , AT&T (T) , CenturyLink (CTL) , Sprint (S) and T-Mobile US (TMUS) are all moving up smartly. Here the bullishness isn't just based on yield. Sure AT&T's got a 5.98% yield, and CenturyLink sports an amazing and increasingly safer than I thought 9.45% yield. But the T-Mobile and Sprint move smacks of somebody knowing something about how the federal government is going to handle that combination. I actually like all of these stocks and have been especially aggressive on Verizon and, most important, T-Mobile. Perhaps the move signals that the Sprint and T-Mobile merger will allow the cutthroat pricing to end? They are still worth owning.
Now how about the roving bear markets. Let's start with the hideous action in the semiconductors. This morning Goldman Sachs (GS) lowered the boom on Micron (MU) , the gigantic commodity semiconductor company that makes Drams and Flash. These are the building blocks of many of the devices you use every day. The stock peaked at $62 at the end of May and it's now at $41. That's the definition of a bear market. The companies that make the equipment you need to make semiconductors are in horrendous bear market mode. Lam Research (LRCX) , a terrific company and frequent guest on "Mad Money", has now fallen from $234 to $149 with no sign of bottoming, even as it now yield almost 3%. I am just waiting for more downgrades. Same with Applied Materials (AMAT) , with a stock that was at $62 not that long ago and touched $37 today. That's just a total mauling.
The only unscathed chip maker? AMD CEO. Last night we had Lisa Su on, and the CEO traced out a long-term view of the company's plans to excel in gaming, data center and PC semis. The stock is so hot that you might want it to cool a bit before jumping in. But I am a huge believer in Su and her company. Might as well mention that the stock of Apple (AAPL) got hit, as it had run up in advance of the launch of new phones and when they were displayed we, predictably, saw a decline. Nothing new there.
Next bear market? Social media. Today we had a couple of incredibly negative notes about Snap (SNAP) , basically saying that its business is slowing rather dramatically. That reflected poorly on Facebook (FB) which is still battling its own demons and on Twitter (TWTR) with a stock that is reeling from the suggestion that a huge number of its users simply don't exist. I know it is a small cohort but it is important. Lately I have been hearing half-hearted defenses of Facebook and I do believe that the $218 to $161 move smacks of bear market behavior, but we actually sold some for the trust the other day because we do not want to give up a big gain and see the stock trade down to the March low of $149.
The taint of the bear spilled over to Alphabet (GOOGL) , which I think is just stupid but if Congress wants Alphabet in the same breath as Facebook and Twitter when it wants to investigate social media it is only fair that the bear gores the owners of You Tube, too.
If you want to see what a textbook bear market looks like, consider the emerging markets with the Hang Seng from Hong Kong, down 21%, Russian, down 20%, Greece, off 29%, the Shanghai index of mostly larger capitalization stocks is off 26%, and the Shenzhen, with smaller cap stocks is off 31%. We battled around the notion of contagion on Halftime and whether the group is investable. I have historically steered clear but Josh Brown thinks that a dose of emerging market exposure's a good thing for most investors. I say steer clear of this bear market for now because it is all about politics, not business and nothing's all that predictable right now about what's happening, given that we had an intraday spike on hopes of still one more trade delegation attempt to solve the China-U.S. trade war.
The final bear market? The incredibly ugly action in the regional banks. SunTrust (STI) , Comerica (CMA) , PNC (PNC) , Regions Financial (RF) , you name it. Why? We keep hearing that loan growth has slowed which is amazing given that small business optimism is off the charts. My old friend Stephanie Link told me on Halftime with Scott Wapner that there's too much competition including from non-banks, think outfits like Square (SQ) that are increasingly giving small businesses loans against their receivables. This move, I think, has legs and I predict downgrades tomorrow.
Now, remember these bulls and bears seem to change on a dime but if you are caught in the jaws of the bear you are going to get hurt real bad. All I can say is that September brings out the bear in the market and it's roving right now, searching how to take your money away. I say stay diversified and stay the course, there's nothing here that's going to change things longer term, we just need to get through this treacherous month to see what the last quarter brings us.
(BP, Goldman Sachs, Apple, Facebook and Alphabet are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells BP, GS, AAPL, FB or GOOGL? Learn more now.)