Is narrow ever good? Is it always bad when a small group of stocks leads us? I know it gets tiresome to see Facebook (FB), Amazon (AMZN), Alphabet (GOOGL) and Netflix (NFLX) endlessly leading us.
You can't blame buyers, though.
We now know that every incremental sale on Amazon is actually a profitable one and the vision worked. It isn't like we are doing less on Facebook. All that is happening is that advertisers keep seeing a better value proposition.
Alphabet has religion and religion means profits, thanks to the addition of Ruth Porat. Keep an eye, again, on the incredibly undermanaged YouTube to expect that to be something that can be the biggest contributor to the bottom line after search/programmatic.
Then Netflix is, indeed, the only "hit" company of any network never to have just a "one and done." Think about all of the shows that get cancelled on the networks. Then remember that there has always been such demand for each new show on Netflix that a sequel gets done.
More important, though, is the fact that the market is broadening. But it is doing it in a selective way. Anointed retailers, for example, the housing-related plays, they aren't coming in. We are seeing endless strength, however, in a couple of big Dow retail-relateds: McDonald's (MCD), Home Depot (HD) and Nike (NKE). They are true leaders.
The fact that the Avago (AVGO)/Qorvo (QRVO)/Skyworks Solutions (SWKS)/NXP Semiconductors (NXPI) contingent seems to be done going down without sacrificing the upside in a Texas Instruments (TXN) or an Analog Devices (ADI) or Microsoft (MSFT) or Intel (INTC) is very positive, especially in light of the HP Inc. (HPQ) figures.
I think that you have to be heartened that the Kimberly-Clark (KMB)/Clorox (CLX)/Procter & Gamble (PG) group isn't quitting despite the strength of the dollar and the relatively less attractive nature of their yields vs. soon to be rising rates.
Remember when the drug stocks seemed to be hit every day? Recall when Eli Lilly (LLY) fell from $84 to the mid-$70s on the disappointment of a heart drug that wasn't even in the numbers? Well, look where that one is. Obviously the new verdict is in on Allergan (AGN)-Pfizer (PFE) and it is a positive one. (Lilly and Allergan are holdings in my charitable trust, Action Alerts PLUS.)
The fact that the banks roared and are resting -- and not giving up the gains -- is such a good sign. I suspect these stocks will go ballistic to the upside if we get a strong employment number. You have to build in three rate increases between now and next year at this time to make a real bull case. I think we will get them.
Which leaves travel, leisure and airlines vs. oil and gas. I think the latter is settling as a $40-$48 siege. The former? I say lower oil prices trump terrorist warnings and things return to normal. I like Expedia (EXPE), Priceline (PCLN), Delta Air Lines (DAL), American Airlines (AAL) and Southwest (LUV).
All in all, it is a more sanguine situation the broader we go and I think the breadth will improve as the rest of the year goes on. Somewhat sanguine!
And a Happy Thanksgiving to all!
