The complete flop of weekend talks in Doha, Qatar to “freeze” OPEC oil production get zero results. Stocks drop briefly, then rally. Invisible hand?
WASHINGTON, April 18, 2016 – Like everything else these days, stocks and bonds are now a political game, just like everything else in these (dis) United States these days. Take the price of oil. Please.
False, bullish hopes for an oil production “freeze” accord during this weekend’s bizarre OPEC talks held in Doha, Quatar were quickly put to rest, as Iran was essentially a no-show (surprise!) and no accord on anything was reached by anyone.
But today’s stock markets run on headlines and manipulations by High-Frequency Traders and central banks. For whatever reason, as oil futures began to line up under big red numbers pointing to Monday’s opening trade, it seems as if the mysterious Plunge Protection Team (PPT) took heed.
After a brief and not very intense negative blowoff during Monday’s first hour of trading in New York, stocks bounced decisively back into the green. Meanwhile, WTI oil futures contracts, down hard initially, are now off less than a point as of just after the noon hour on Wall Street. To paraphrase the poet, “God’s back in his heaven and all’s right with the world.”
Some kind of Invisible Hand other than the one Adam Smith is famous for describing keeps bailing this market out with funny money from somewhere. How long this can go on is anyone’s guess.
ZeroHedge provides these discomfiting thoughts from financial writer Richard Breslow (Bold text via ZeroHedge):
“The world is becoming a more complicated place: a number out of China may do more to the price of your U.S. shares in a retailer than, well, U.S. retail sales. Yet creeping, dangerously, into the investment advice dialog is the argument that buying and holding no matter what the event is the winning strategy…
“A portfolio built to only withstand stress thanks to central bank intervention is one destined to blow-up spectacularly. The embedded flaw in this new logic is that central banks give investors perfect foresight. And nothing can go wrong.”
Stock prices—our main concern in this column—continue to levitate moderately as we write, now around 2:30 p.m. EDT. The Dow is currently up 89.78 (half a percent); the S&P 500 is up 11.53, roughly the same percentage; and the NASDAQ is up a decent 18.73, a slightly less-impressive 0.38 percent.
As we’ve mentioned many times before in this column, we totally don’t get this, but continue to tweak our newly evolving investment strategy, which temporarily diminishes the value of existing and traditional technical and fundamental investing tools in favor of following headlines like the HFTs do while looking for investments in areas either too obscure or too thinly traded for institutions or large funds to invest in, thus dodging the incoming fire from computers much more powerful than ours.
So far, our evolving strategy, in effect for just about a month now, has whittled our horrific January 2016 loss of nearly 8 percent down to less than 1 percent right now. We’ll take it. Next stop, break even. The bottom line is that small investors just can’t play with the big boys in a largely rigged market. The way we can win is by finding little investment hiding places that are simply too small for the big kahunas, their computing programs and that PPT cadre to find, see or care about.
Today’s trading tips
We’re on hold today, although financial institutions are temporarily looking appealing and some healthcare stocks could be on the rebound. In addition, after taking an early morning hit, our small but expensive position in Allergan’s preferred stock (symbol: AGN/PRA at Schwab, may differ at other institutions) is looking good.
We’re not quite ready to get back into the BP and Total (TOT) positions we were forced to dump at too low a price last week. But we’ll watch the pendulum and see if we can get back in.
Teekay Tankers (TNK), a spec position we continue to hold in a beleaguered oil tanker partnership, got hit Friday and early today, but it’s on its way back right now as well. It’s currently the only oil patch position we’re in, although we are beginning to look at the Norwegian oil major known as Statoil (STO). Fun may be available there, too.
But bottom line: today is too weird to do very much. This market still feels as if it lacks support. Plus, it’s official Tax Day today, and many players are probably busy trying to give the IRS as little money as possible before tonight’s mailing/submission deadline.
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