Chilly East Coast Monday inspires “Meh” trade in stocks

Nothing very inspiring on the horizon. Oil prices sink, taking that sector and commodities, down while slightly alleviating ovebought market conditions.

Wile E. Coyote satire.
Wile E. Coyote (and Wall Street) look like they're in trouble again. (Satirical rework of Wile E. Coyote. Character copyright: Warner Brothers.)

WASHINGTON, Oct. 19, 2015 – Brrr. It’s cold today on the East Coast, as global warming climate change has once again resulted in subfreezing temperatures here rather earlier than normal for October. How allegedly anthropomorphic warming can make us colder and colder every winter is beyond the Maven’s ken. But then again, it must be “settled science,” right? Right?

As if inspired by this frigid blast of global warming climate change fallout, we find ourselves dealing with a cold, shoulder-shrugging, “meh” Monday on Wall Street as well. Monday’s trading action has been slightly to fairly negative, with only the briefest forays by the averages into positive territory. Averages have ranged from anemic to down, with more moves to the downside likely as the afternoon progresses. Boring, really.

It’s very possible that after last week’s surprisingly bullish ran, markets may need to catch their collective breath by wobbling sideways or going modestly down until the excess is corrected on those charts that everyone uses to foretell the market’s future.

Longer term, we see few catalysts to kick this market back into bullish gear. Job numbers remain anemic, and oil—after a brief recent pop—is headed in a decidedly negative direction today, taking producers, suppliers and refineries all down with them since, as we all know, everyone is going to stop buying gasoline, right? Ditto commodities, since the Chinese are already sitting on most of them, or so it seems.

The market’s illogic and irrationality goes on and on, making it hard to invest, which is what the Maven actually prefers to do. Instead, our brain trust has begun to accumulate a few tiny positions here and there in various ETFs, hoping to catch at least a tiny bit of a ride if they go the way we’re betting they’ll go, which is generally up. Anything to improve this year’s numbers, even slightly, as nearly everyone waits for a hoped-for end-of-year Santa Claus rally to get underway if it ever does.

Stocks, like the country, seem to be losing conviction as we near the final year of the Obama debacle. Everyone is just tired and worn out fighting the obvious stupidity and obliviousness, and this world-weariness seems best reflected in trading action such as we’re experiencing today.

Today’s Trading Tips

Not much to get worked up about today. That said, nibbling at equal-weight ETFs that follow various averages without weighting holdings in favor of larger-cap stocks might prove useful here, particularly if your broker allows you to acquire then without commission, as our broker does with some of them.

Reasonable equal weight ETF bets right now might represent the discretionary purchases stock sector (symbol: RCD), healthcare and related (RYH), tech (RYT) and even those boring but high-yielding utilities (RYU). You can make surprisingly good little trades on these if you buy them in small increments. (Some of the per-share prices are fairly high.)

Our little wins in these equal weight ETFs are helping to offset our dismay over the stalling of our favorite refineries, due in part (and somewhat irrationally so) to seriously weakening (again) crude oil prices, although the logic of this continues to defy me. Refiners, at least certain ones, may also be wilting a bit since it’s nearly winter-time down-time for some refineries, due to traditionally seasonal repair work.

Another problem today: it seems a barge has sunk in the Houston ship channel, home to many refineries. Those refineries upstream of the sinking—including one owned by Valero (VLO), one of our two current refinery investments, are now effectively shuttered until the channel can be cleared, however long that takes. This has had the effect of piling negative news on to Valero’s already mysteriously stymied stock price, which was already under early pressure today from that oil price decline. Our other fave, Tesoro (TSO) was also hit.

The volatility remains just awful in the oil patch in general, although we are still looking at two high-yielding stocks, Nordic American Tankers (NAT) and Occidental Petroleum (OXY), which seem to have stabilized and offer attractively high-dividends “Wile U Wait,” as some clever 1920s magazine ad copy used to read.

We continue to sneak in to shares of midsized bank First Niagara (FNFG) as well. They want to sell out to the highest bidder, and sooner or later, they will. Chatter is that they’ll have to land a price of $13-ish per share at least, and they’re sitting at just over $10 per share today. If they actually land a deal, it would be worth the weight. If not, we’ll get clobbered in the position we’re building, but what the heck… 2015 has just been that kind of year.

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Terry Ponick
Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17