We've got news today that would normally cause some stocks to go higher, not lower, but it just doesn't matter as the market's in a nasty mood.
I am talking about stocks like Spirit Air (SAVE), where the capacity's up 17% but the traffic is only up 15%. For that, and a downgrade from Raymond James, you have a stock that's down 13%. But it is up more than 60%. Who can blame anyone from taking profits?
You've got VF Corp. (VFC) off badly, even as Burlington Stores (BURL) reported sharply-better-than-expected numbers. And you have the housing stocks all down, even as we hear that Fannie Mae and Freddie Mac are going to loosen loan standards dramatically. That's huge, given that they are essentially the market.
Now, I don't blame people for wanting to sell. We are up so much. Plus, we have a price war in telco that is hitting Verizon (VZ) and AT&T (T). We have a purchase of Cubist (CBST) by Merck (MRK) that, had it waited one day -- 24 hours -- would have paid a lot less for it. What a bonehead move.
We've got some of the major banks, including Bank of America (BAC) and Citigroup (C) telling you to take down numbers. That's been the best-performing group, so it can come under pressure.
But I come back to the point that we have been up on a straight line and that's just not sustainable. You are not going to have Spirit go up every day on the same news of lower oil prices. You've got the industrials doing well, even as Europe, now represented by Greece with a huge one-day decline, struggles and China has a selloff that's monumental in nature and Brazil is finally entering bear-market territory.
Do you really need more reasons to sell off? So, I say let it come down. Let is rain, just like it is on the East Coast, and we will revisit when yields are bigger on the telcos or the bank numbers are cut or the companies with overseas businesses like the ones that are going down big today have their numbers cut on currency or on weakness in Europe.
Then you can buy. The profit-taking ends at some point. In this market you actually can tell when it is over, so I say why not wait until it tells us more and the numbers get cut. This market will tell us what to do. Just remember, their weakness is our strength and we just got a telephone bill tax cut to go with our gasoline bill tax cut. I know we shouldn't rejoice. I do know that we're a heck of a lot more rational if we sell off than if we keep running. Time to shake out the weak hands and get those who have more of a moral fiber to stick around and let new people in altogether.