One week ago, one short week ago and this market looked like it was finally ready for the big roll over. The winners had been narrowed down to just a handful of stocks, notably FANG -- Action Alerts PLUS charity portfolio holding Facebook (FB), Growth Seeker portfolio's holding Amazon.com (AMZN), Netflix (NFLX) and Google (GOOGL), now Alphabet -- and the paucity of strong stocks signaled the bull was on its last, tired legs. Terrible back to back numbers from Macy's (M) and Nordstrom (JWN) crushed the retail sector. A disappointing outlook from Cisco (CSCO) put a damper on all of tech. Valeant's (VRX) continued decline crushed the drug valuations.
The consumer product companies were rolling over because the Fed was on the eve of raising, maybe multiple times, making their dividends seem paltry, indeed. Oil stocks were rolling over at breathtaking speed as crude plummeted back toward $40. The industrials were singed by a surprisingly strong dollar, with only Dividend Stock Advisor portfolio name General Electric (GE) showing a pulse. Worse, as the market closed we learned of the terrible terrorist action unfolding in Paris.
A week later, and it's one of the most amazing transformations I have ever seen. Typically when breadth gets this narrow it is, indeed, a sign of limited love leading to a lowered level. Not this time. This week we saw a dramatic broadening of the stocks that went higher. Think about these positives. We found out when Home Depot (HD) and Lowe's (LOW) reported terrific numbers that the consumer was spending, she just wasn't spending at the mall. Both firms told a strong story of housing demand, which sent that cohort skyward.
Oil kept going lower, but the oil stocks diverged. Instead of General Electric being the sole industrial rallying, it got company from a diverse set of names, Emerson (EMR), Honeywell (HON), 3M (MMM).
Health care, instead of rolling over, was reborn, with both old pharma and biotech on the mend. It didn't hurt that Pfizer (PFE) and Allergan (AGN) frantically are trying to tie the knot. But companies like Biogen (BIIB) and Lilly (LLY), which had been bruised badly, bounced back with alacrity.
Restaurant chains, one of many groups in a terrible bear market, came on strong, and this time it wasn't just McDonald's (MCD). Chipotle (CMG), one month after a bad quarter, showed some pep and Jack in the Box (JACK) exploded higher on excellent guidance.
Apparel, which had been such a downer because of warm weather, jumped on a monster buyback from Nike (NKE), along with a big boost in the dividend and a stock split. The transports were suddenly e energized by a takeover outreach for down-and-out Norfolk Southern (NSC). Airgas (ARG), the chemical company which famously balked at a $70 bid from Air Products (APD) five years ago, got an offer from French rival Air Liquide that was simply too juicy to pass up, more than double the Air Products thwarted hostile offer.
Even the consumer products companies, with their 3% yields, did well once we heard from even the most hawkish Fed governors and presidents that one and wait has become the mantra, meaning the Fed isn't going to take up rates on autopilot even as December seems like lift-off. Oh, and FANG roared higher anyway, with support from none other than Apple (AAPL), which two big firms had recently pronounced as moribund for the duration, in still one more attempt to trade and not own Apple via channel checks that have often been more wrong than right.
Yep, it's been a remarkable week, one where we came in narrow and limping and went up wide and strong. The market, energized by everything from mergers to earnings to the Fed, crushed the bears just when it seemed like they had at last broken free and were ready to maul anything that moved.
