Fierce stock rally, Fed watch make it tough to find bargains

We're interested in many stocks right now but refuse to chase them as markets try to top each day’s positive trading action with yet another one. Ideas: Cliffs Industries and US Steel. Plus: Watch out for the Fed.

The Yellow Kid's take on the Fed's latest threat. Mebbe he owns bank stocks...

WASHINGTON, December 13, 2016 – Very, very short column today, due, oddly enough, to Wall Street’s continuing irrational exuberance. We remain interested in many stocks right now but we refuse to chase them here as markets almost insanely try to top each day’s positive trading action with yet another one, taking occasional one- or two-day pauses just to get a breath.

A crazy bull market rally like this one is just plain fun, particularly after the bizarre trading patterns that dominated most of 2016’s action prior to November 9. Income oriented stocks have remained somewhat anemic to our modest disappointment, given that we still have holdings in several of these issues. But by and large, other holdings, particularly in the long-moribund financial sector (primarily banks, brokerages, insurance companies and non-bank lenders) and the oil patch (post-OPEC agreement) have been doing quite well.

Read also: The Russians are coming… But the stock market is up

Wall Street’s partygoers could get a shock Wednesday if the Fed raises interest rates more than the 0.25 percent mark everyone seems to think they’ll choose. But even this rate hike has probably been built into stocks for at least one or two months, meaning that if and when the hike happens, it shouldn’t shock markets too much if at all.

Even if it does, the way things have been going lately, stocks might shrug off any negatives in one or two trading sessions. But right now, we’re looking around a fairly bare stock pantry for any remaining bargains, and they’re really hard to find.

Trading diary

The items we were looking at in Monday’s column remain largely the same. We did start accumulating a position in U.S. Silica (symbol: SLCA) and will try to pick up a bit more of this fracking and specialty sand miner and purveyor if and when the stock price dips a bit. We continue to look at one or two oil and gas stocks, but again don’t intend to chase them.

We may have missed our chance to get a steel company cheap, but we’re still keeping an eye on AK Steel (AKS) and U.S. Steel (X), looking for a day that takes them down enough for us to get interested. We could also get interested in one of our one-time faves, iron ore miner Cliffs Industries (CLF), which barely survived the recent economic downturn but shows some promise now. It’s off today and maybe we’ll pick some up with half an hour of trading remaining.

But that’s about it. See you tomorrow.

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