The destruction of the cyclicals proceeds apace, and, frankly, it is pretty breathtaking. Cummins (CMI), Caterpillar (CAT), Deere (DE), National Oilwell Varco (NOV), the gigantic 2008 tragedies, all unprotected by dividends, just can't get their footings and are all down 20% or more despite delivering and beating their numbers.
One can only imagine what will happen to them once they miss numbers, and I say "once they miss" because typically you cannot have these declines without telegraphing actual earnings misses.
It gets worse if you look at Freeport-McMoRan Copper & Gold (FCX), one of the best miners out there, now down 41%. Similar to the others, this decline is in a total straight line. It now yields 3.2%, which could begin to break the fall, but I can't bet on that.
But here we go with an up day, and we begin to think, Hmm, maybe the valuations have become too ridiculous; maybe you just have to hold your nose and buy.
For me, as someone who just concluded a conference call with Stephanie Link and members of Action Alerts PLUS, I say that the positive bias today is all well and good if there is something going on in Europe and it just the bounce that suckers in people otherwise. Who is to say that all of the cyclicals won't go the way of Freeport, down more than 40%?
I don't think they will, which is why we stay long Cummins and Alcoa (AA) and the like. But until I see something more substantive about Greece and European banks, I am going to presume that this is just the resumption of the markup rally we had last week and nothing more.