|
Daily Market Update – February 26, 2014 (Close) I recently had a comment on Seeking Alpha by someone who is absolutely convinced that Deckers, which reports earnings this week will be another Michael Kors in that regard. Specifically, he was as sure and as emotional as you could likely be that Deckers will blow out their numbers and equally certain that they’ll put forward great guidance. He then equated those two with shares going to $95, which would represent about a 12% gain. He may very well be right. In fact, the option market almost agreed with that opinion, believing that shares could go to $93. However, another part of the equation is a little less objective than the numbers. which arguably can themselves have some of their objectivity stripped away and modified as they’re being processed prior to reporting. That part of the equation is the reaction of the market place. No one ever has any clue how the market will react. Ever. Just look at Monday’s nearly 200 point gain. In fact, the market itself may not be monolithic. Now just look at Macys yesterday. It was down about 2% in the pre-open and then immediately turned around once the bell rang and was one of the strongest stocks for the day, up about 6%. How could that be? Doug Kass, a fairly well know investor who is often short the market, just bemoaned the fact that no one ever says “I don’t know.” It’s s if there’s some shame in admitting that there’s sometimes neither rhyme nor reason for that which we observe. When it comes to retail, which has been an abysmal place to be as that part of the economy isn’t readily demonstrating much in the way of vitality, suddenly the message is that disappointing performance may be good. That’s essentially an aexample of “if you can’t beat them, join them,” at work. That’s not too unusual, as we’ve certainly seen days when good news isn’t good enough or good news is met by choruses of “what have you done for me lately?” I don’t mind a more accepting attitude, as I’d be happy to see some of my retail stocks get assigned or at least make back some of what they’ve lost. Certainly if you suffered when the attitude was not as accepting you feel as if you’re owed something. For those that don’t have the patience that comes with having pretty much seen it all, you may never get the opportunity to see both sides of that sine curve that takes you through ups and downs, not only in price but in attitude and outlook. I’m also reminded a little of some emotional reactions to some opinions regarding Facebook and Apple back in mid-2012. If you can recall where those two stocks were at that point, you can probably guess what the prevailing emotional opinions were at that time. While you can always select out examples to prove or disprove a point, one thing that is certain is that certainty and the emotion that supports that certainty aren’t in your best interests when it comes to investing. I can’t remember the last time I was excited by a stock or the market. It undoubtedly goes back to the last time my broker tried to sell me on something, but that was a really long time ago. I always said “yes” and almost always felt some remorse when we sold something at a loss, since I had the bad habit of continuing to follow the stock and watch that sine curve. With the market still within easy striking reach of another new high it’s easy to get excited but I still can’t get excited about individual stocks. I still see them as utilitarian and helping to contribute to a larger mosaic rather than any one specific stock standing out as a superstar. I really don’t know how analysts can do what they do. There was a recent story this week that spoke of how burned out they get and how quickly most leave the industry as they are constantly measured by their ability to hit the long ball, which most people are aware is well correlated with strike outs. But everyone loves making the headlines. I like staying below the radar and plugging away. Mid-week on the day before more Congressional testimony from Janet Yellen, I don’t know how much plugging away there will be today, probably not too much, but if the market wants to continue on a little ride higher today and maybe for the rest of the week, I still don’t mind being an observer and occasional participant in something new. For the moment, this week is looking as quiet as last week was busy as far as trading is concerned. For now, my focus is on seeing a reasonable portion of this weeks’s expirations either being assigned or rolled over, although I’d like to add to the paltry three new positions for the week, if only something would excite me. I was a little surprised by having made a few trades as the day unfolded, both adding new positions and finding some new cover in a day that really had no strong tone or conviction one way or another, but did demonstrate some continues resistance at the 1850 level on the S&P 500. While previous attempts at a correction had no problems blasting through their respective highs and while I’ve been expecting the same to happen this time around, so far it’s proving to be a little different. Tomorrow we get Janet Yellen, so we’ll see whether she can once again give the market a goose, as she did a couple of weeks ago in her second, albeit interrupted, day of testimony. In the past, with both Greenspan and Bernanke, but especially Greenspan, when testimony was given over two consecutive days, we rarely saw the same market performance on both days. In fact, so often the net result was no impact, despite the frequent strong moves that ended up cancelling one another out. This time, thanks to the two week weather induced break the result may be different. That would be nice as the week and its contracts come to an end.
|
