• 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
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • 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

Rev's Forum: Business as Usual Following Fed Decision

The market is repeating a cycle we have seen many times in recent years.
By JAMES "REV SHARK" DEPORRE
Sep 23, 2016 | 07:21 AM EDT
Stocks quotes in this article: TWTR, FB, GOOGL, AAPL, ACIA, LITE, OCLR, WB

"The foolish man wonders at the unusual, but the wise man at the usual."

--Ralph Waldo Emerson

After a two-day celebration of a dovish Fed, the indices look ready to rest. Weakness in oil and mediocre PMI reports in Europe are providing some convenient excuses for profit-taking. Facebook (FB) is dipping on news that it providing misleading data on video viewing and Twitter (TWTR) is being hit on a downgrade.

Overall, the market is simply repeating the cycle we have seen many times in recent years. Investors celebrate dovish central bankers but then they grow a little worried when they continue to see the weak economic news that kept the bankers from hiking rates.

Typically, the market is forgiving of the weak economic news because it is so addicted to low interest rates, but you can't help but to wonder when this dynamic is going to shift. The bears were thinking that it was going to happen on this last meeting but they were wrong once again.

The market is back to very familiar territory. Big-cap technology names, including Amazon AMZN, Alphabet (GOOGL) and Apple (AAPL) , are driving the Nasdaq while speculative interest in small-caps, energy and mining is driving the Russell 2000. The S&P 500 and Dow industrials are lagging in part due to financials that need a steeper yield curve.

Action like we've had this past week tends to be more about market timing than stock picking. When central bankers drive the indices, stocks move in tandem and there is less opportunity to outperform by focusing on individual names. Once we move beyond the focus on macro matters, we should be able to find an edge again picking stocks rather than timing the market.

When the market was in the long trading ranges in July and August, we had some excellent stock picking. Names such as Acacia Communication (ACIA) , Lumentum Holding (LITE) , Oclaro (OCLR) and Weibo (WB) ran up as the market did nothing. Traders were looking for opportunities in individual stocks because they couldn't make much money trying to time the indices.

It shifted back to a macro-timing market when it finally broke out of the long trading range and the focus turned to what the central bankers would do. Even though the market was very strong yesterday, there wasn't much excitement because the focus was still on indices rather than individual stocks.

With the Fed on hold for at least a month, I'm looking for more trading-range action and a greater focus on stock picking. We are due for a rest and still have negative seasonality to deal, but this market has proven it has excellent underlying support.

Don't allow yourself to be sucked into the market-timing trap again. The anticipatory bears failed miserably again into the Fed news. One of these days this market will correct, but rather than try to guess when, stay focused on the price action. When it changes, then so will we.

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, Rev Shark was long FB and ACIA, although positions may change at any time.

TAGS: Investing | U.S. Equity | Markets | Stocks

More from Investing

S&P Loses Some Shine on Coinbase IPO

James "Rev Shark" DePorre
Apr 14, 2021 4:23 PM EDT

The initial public offering turned out to be a bit of a dud, but that may be what the market needs.

Amgen Looks Ready for an Upside Breakout

Bruce Kamich
Apr 14, 2021 2:45 PM EDT

Traders could go long at current levels risking below $240 for now.

Coinbase's Market Cap Is Too Huge for Competitors to Ignore It Any Longer

Timothy Collins
Apr 14, 2021 2:23 PM EDT

Yes, COIN is only one company, one stock, but it's a mountain of emotion right now.

Here's How I'd Treat Regeneron

Bruce Kamich
Apr 14, 2021 2:10 PM EDT

It looks like it's time to go long Regeneron, as the charts have improved.

3 Names I'm Adding Today

James "Rev Shark" DePorre
Apr 14, 2021 1:34 PM EDT

Small-caps look like they may be near the end of a two-month-long correction.

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

  • 02:42 PM EDT PAUL PRICE

    Wednesday on Real Money Pro

    Make this stock a 'part' of your portfolio.
  • 04:44 PM EDT PAUL PRICE

    Pretty Incredible + Hard to Believe

  • 11:18 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    The 5 Pillars of Exceptional Trading
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 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