For a while there, we had written off the consumer packaged goods stocks. But perhaps because of lower gasoline prices and lower plastic prices -- huge ingredient there -- or maybe, again, because of the bond market equivalent status, it has come back into play. The tide has clearly turned positive for the household products companies: Kimberly (KMB), Colgate (CLP), Procter (PG), McCormick (MKC), Hershey (HSY), Kellogg (K) and even the lowly General Mills (GIS), which at last cut numbers enough to report an upside surprise this week. They don't set the world on fire, but they've ended up being pretty darned good as bounce-back candidates. They, too, say under 2% for the 10-year.
Oil may have had a big comeback last week and it is quite evident from the charts because most of the oils did rally back to resistance. But that didn't take away from the amazing, continuing rally in consumer spending. Whether it be the big chains, like Wal-Mart (WMT) or Target (TGT) or Home Depot (HD), Lowe's (LOW) and Costco (COST), or the discount apparel companies like TJX (TJX) and Ross (ROST), or the higher-end housing-relateds like Williams-Sonoma (WSM), or Restoration Hardware (RH), or Nordstrom (JWN) and Dillard's (DDS), the curious mall-based amalgam of L Brands (LB) and even the perennially disappointing Kohl's (KSS). It just no longer seems to matter. They all go higher.
The oddity here is the relentless buying in the non-auto makers. I call them that because the market clearly hates the big automakers, mostly because they are hostage to overseas markets. But the market wants exposure to the group, so investors relentlessly pursue O'Reilly (ORLY), Autozone (AZN), Genuine Auto Parts (GPC), Snap-On (SNA) and CarMax (KMX). These stocks tend not to be liked by the analysts, in particularly Autozone, but that hasn't mattered one whit to the buyers.
The homebuilders have definitively NOT ignited, but that hasn't kept suppliers inside the homes from doing fantastically. Twice this week, first with Whirlpool (WHR) and then with Sherwin-Williams (SHW), we read negative headlines but, again, they just proved to be buying opportunities. Tool maker Stanley Black & Decker (SWK) doesn't want to quit, no more than Masco (MAS), Jarden (JAH) or Newell (NWL), all fabulously strong.
But it's hard to find a better chart than Kroger, which, along with CVS (CVS), seem to be the two that can do NO wrong in the eyes of investors.
The takeover bug has hit the group, at last, and that's allowed Staples (SPLS) and Office Depot (ODP) to go higher. Mergers work.
Restaurants? Anything domestic just won't quit, whether it be Brinker (EAT), or Popeye's (PLKI), Cracker Barrel (CBRL), or DineEquity (DIN), Buffalo Wild Wings (BWLD) or Jack in the Box (JACK). But you get controversial when you go overseas, with the exception of Domino's (DPZ), which has been pretty much best in show.
It looks like the banks just aren't going to catch fire, like most thought by now, in part because they will most likely disappoint again as the yield curve hurts them once again. Sure SunTrust (STI) and Wells Fargo (WFC) and US Bancorp (USB) broke out, but to where? They are well behind the market. But the faux financials -- CME (CME), Intercontinental Exchange (ICE), b (NDAQ) -- trade as if we are the beginning of a brand new bull market. The asset gatherers like T. Rowe (TROW) and Janus (JNS) -- thank you Bill Gross -- are now on the move. The momentum had gone away from MasterCard (MA) and Visa (V), but it is back. The only plain-out bank that's roaring is PNC (PNC), perhaps because it is the biggest bank that has managed to stay out of the negative headlines?
New tech seemed to catch a bid last week, with that one-two punch of Adobe (ADBE) and Red Hat (RHT) doing well for the cloud. But it's old tech that continues to shine and the favorites remain Seagate (STX), Western Digital (WDC) and Hewlett-Packard (HPQ), as well as the merging entities of Cypress (CY)-Spansion (CODE), RF Micro (RFMD)-TriQuint (TQNT) and the merged ones, namely Avago (AVGO) -- LSI -- and Lam Research (LRCX) -- Novellus -- and Applied Materials (AMAT) -- Tokyo Electron, although still waiting on clearance there. The noticeably absent names are anything connected to the Internet, which the market now just hates. Avnet (AVT), Analog Devices (ADI) and Texas Instruments (TXN) seem on the verge of making statement breakouts if you are looking for laggards.
Travel and leisure remain strong, but its tandem play, the transports, didn't keep up, perhaps in part to the perceived disappointment of FedEx -- I though it not all that disappointing -- and in part because the oil bounce was so pronounced that it wouldn't let the airlines run. Still Disney (DIS), Marriott (MAR), Wyndham (WYN) and Royal Caribbean (RCL) all acted well. Still no flies on the group.
Finally, and this is where you have to suspend your imagination a bit, we saw a definitive rally in what can only be considered the international industrials -- and this move must bear watching. We got a positive outlook from Honeywell (HON) and tremendous action in United Tech (UTX) even as it guided things DOWN! These companies have some real defense business. Could that be it? Northrop (NOC) and Lockheed (LMT) kept up their winning ways. But Ingersoll-Rand (IR) and Danaher (DHR) act like gangbusters, too. You have to ask, what the heck is that about? Because it would seem to be that there's a pulse overseas somewhere. There's just not that much new business here to justify the moves.
Everything else that I saw is pretty much one-off and can be swatted away pretty easily as individual moves, not anything group -- Time Warner (TWX) and Fox (FOX) or Waste Management (WM) or DuPont (DD) -- proxy fight there --- or Constellation Brands (STZ) and Molson Coors (TAP).
Still, you have to marvel at that distribution of positives, especially when you line it up with all of the commentators who always seem to have one foot out the door. That's a list that says have both in or don't let the door hit you and split you in half!
Needless to say, anything mineral and oil managed to put on a spurt up to levels of the last wave of destruction. But you do have to say, what's the point of bottom-fishing when top-casting has worked all year?
With so few days left, I wouldn't try a different kind of angling. What's worked has only continued to work even harder as the year runs out. Go with it!
