Every day I go through roughly 200 stocks/indices/indicators, several times per day, looking for signals, attempting to connect dots and ultimately, hoping to find risk/reward situations that create outperformance.
The title Lies, Damn Lies seems appropriate as when the markets want to reveal any kind of truth, they first do so through blatant lies. Conversely, whenever truth appears apparent, there is likely to be deception involved.
These are simply thoughts (some completely random) as I attempt to connect the dots:
- AAPL looks obnoxiously weak. Perhaps earnings will help it gather some steam. However, for the time being it seems that investors are looking elsewhere. The problem I have is that I believe the markets are going much higher from here, however, that is a difficult eventuality to imagine without AAPL's participation. Perhaps we are at that point in the story where the protagonist fades into the sunset. In any case, I do have a buy point in mind for the name substantially lower than where we are now.
- The numbers for assets in money market funds is mind-blowing. Investors are basically positioned now at the same money market levels as in March 2009. I have repeatedly made the point that investors suffer from 2008 PTSD. These money market numbers demonstrate that in vibrant color. The $3 trillion in money markets as of last week is a lot of fire power for equities in the months ahead into what is a relatively thin volume environment, in general.
- As discussed in last nights "Lies" note, financials looks like they want higher prices. We got the first bit of good news for financials with Citi earnings not being nearly horrible enough to justify the recent sell-off, which created a bid beneath the sector today. I expect there to be a few curve balls thrown in the days ahead with so many earnings. However, the path of least resistance will likely be up for the foreseeable future.
- Took a position in BMY today. Defensive names have been left behind in this market. Given that we are at a juncture where sideways and perhaps downside volatility can become more prominent than it has been over the past couple of weeks, defensive oriented long positions are a prudent investment. BMY, in particular, has been beaten up recently due to a highly leveraged purchase of CELG. When BMY announced the acquisition at the beginning of January, debt was being given the stink eye. I expect the skeptical view of debt, in general, to become much less intense over the next few months, allowing investors to see the benefits of their CELG acquisition rather than the perceived negatives.
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