WASHINGTON, April 23, 2015 – Although volume could be a lot higher, Wall Street stock averages are making yet another attempt to break through 2015’s tight trading range Thursday afternoon with all market barometers pointing up heading into the last hour of trading.
Word on the street, at least if you believe the financial media, is that excitement is growing as we approach the Monday release date for the Apple Watch—as in, some people will actually start wearing this (allegedly) hot new bauble. Google earnings are also on tap after today’s close. Nice numbers from Europe’s favorite monopoly will help things, but poor numbers will likely have a very bad effect.
AT&T (symbol: T) surprised with unexpectedly good earnings, though not great ones. The markets even reacted well to IBM’s latest poor earnings report, boosting that stock upward despite the numbers. At least for now, we seem to be back in that “bad news is good” mode.
In other words, if the economy and employment remain moribund, the Feds will keep providing free money to wealthy traders and trading firms while allowing larger companies to issue bonds at ridiculously low interest rates to use the proceeds for buying back shares of their own stock.
This is the nonsense that’s been gaming markets for years. Poor to mediocre to tepid earnings are made to appear more and more impressive when spread out over fewer and fewer shares of stock, creating the impression (which the government wants to create) that the economy is getting better and better when, in reality, it is not.
But, as an active investor, the Maven is forced to play the game to some extent. If you try to invest using only your sense of morality as your guide, you’ll soon end up pushing what remains of your worldly possessions around town in a shopping cart and asking passers-by if they can spare any change for a meal.
We remain conservative here and continue to raise cash. Fridays and Mondays are typically not very nice to investors these days, so there’s no point in spending the last half hour of Thursday buying a lot of merchandise that will get smashed on at least one of those two days.
Today’s trading tips
We continue to slowly sell profitable positions, raising cash for what we think will be the nearly inevitable burst of “sell in May” action. Neither volume nor direction is very convincing in these markets.
So we’ll stay with our preferred stocks and our few remaining shares of REITs, BDCs (Business Development Companies), and our lone pair of MLPs (Master Limited Partnerships), namely Calumet (CLMT) and Kinder Morgan (KMI), both high dividend payers and doing well as oil has unexpectedly been inching up toward the $60 barrel level—the top we’ve been predicting for its near-term trading range, until it isn’t.
We still hold some Schwab ETFs in various areas, but the positions are tiny at the moment, as we expect prices to be better (lower) in May. We also now hold a tiny speculative position in drug maker Activis (ACT) just because.
But our new buying is virtually at a standstill. We love “melt-up” days like today. But in 2015, and with Barack Obama still at America’s helm in a dangerous world, we don’t trust much of anything. Maybe you shouldn’t either.