WASHINGTON, October 5, 2016 – We took a couple of days off from our column this week and today’s will be a relatively short one. The reason? Save for oil prices, October trading action thus far has largely resembled the last couple of weeks in September; namely the rigid, bipolar trading action, alternating one or two up days with one or two down days. Rinse, repeat. Why should we add to the useless verbiage? Maybe we should write stupid stories on Kim Kardashian on slow news days like it seems everyone else does when they’re searching for clickbait.
Kardashian’s latest excellent European “to catch a thief” adventure has been swelling pageviews for the Internet’s shameless SEO artists. That’s the reason why they routinely post vapid stories about this moderately attractive, decidedly broad-of-beam young woman who’s never done anything useful with her life and never will.
KimTrivia has become a predictable online commodity, particularly on sites that should know better, like The Daily Caller. That said, Kardashian pulls in scads of eyeballs on sites like The DC, whose excellent reporting with a conservative slant mustn’t be pulling much in the way of readership otherwise. Unfortunately for the Maven, Kimmie doesn’t have much pull in the very real world of Wall Street, however. Her ongoing non-adventures will never give this column a significant boost, even though we’ve given the topic a feeble try today just for the hell of it.
If nothing else, Kimmie-fixation shows us precisely why the Western World is in such a rapid, seemingly irreversible decline. Nobody, it seems, reads much of anything else.
Back in the boring real world, no amount of spoken or written blather can really explain why current market action appears to be broken. It’s hugely confusing for seasoned traders and it’s complete nonsense, save for those out-of-control HFTs who love trading like this and are probably causing it as in and out, in and out action is a major part of their game. Wednesday’s ongoing rally, which gathered force in the final hour of trading, has been led by a big jump in the price of crude oil, with WTI nearing its current upper limit of $50 and change per bbl. (currently at $49.75, up 2.28 percent today), and Brent crude over that magic milestone, currently trading around $51.80 bbl.
Oil has caught bids before and markets have ignored those up-moves. But this week’s sprint toward the $50 mark has excited oil stocks, which, in turn, has, for a day at least, revived the link between oil prices and positive trading days for the most part. Hence, perhaps, today’s rally, which, if tradition holds, will be erased Thursday or Friday.
Anemic ADP employment numbers in the 154,000 range for September may give us an early reason for anticipating the next downturn. Federal numbers, generally more reliable, are due out Friday, though in any case, these numbers are lousy and could be depressing to us, both mentally and portfolio-wise.
We’ll just have to wait and see, almost certainly without Kim Kardashian anywhere nearby.
We’ve been slowly winding out of unproductive positions. Despite the addition of REITs as a separate category to the S&P 500, our theory—namely that these stocks would catch a bid in September and October as affected ETFs re-juggled to adjust to this reality—hasn’t played out as we expected.
We’re holding on to our current REITs, in this case United Properties (symbol: UMH) and Ashford Hospitality Trust REIT (AHT), but we’re slowly unloading shares of the Schwab REIT ETF (SCHH). Our two individual REITs are directly involved in real estate ownership, while the Schwab is a mixture of ownership REITs and mortgage REITs, the latter of which remain in the S&P financial sector. That sector has been suffering, along with its always-confused fellow-financials, so we’re lightening up on SCHH, which we’d been buying after every successive drop.
That said, SCHH continues to drop, so perhaps it’s best to trim back this position and sit on a small number of shares until this continuous liquidation runs its course. After a certain amount of time and negative percentages, it’s no longer productive to stay in a situation that won’t get any better any time soon.
We continue to rejoice in our small position in the shares of last week’s stunning Nutanix IPO (NTNX), given that we were lucky enough to get a tiny allocation of shares in this hot, hot, hot issue. As we’ve explained before, we can’t flip the shares or trade them for 31 days due to our discount brokerage’s policy on IPO shares, so we’ll likely have to watch them erode a little or a lot as investors without such restrictions unload these shares for the outsizes gains, which, as of Monday, had reached in excess of 160%
NTNX started to pull back from the $40+ dollar mark on Tuesday, and is continuing a fairly mild selloff today. The stock is currently trading at $36.74, off $1.35 on the day but still up nearly 130 percent from its IPO price of $16 per share. We expect some steady erosion, alas, in the weeks ahead as the stock tries to find its true price. Hopefully, however, we’ll still be left with above-average gains when we decide it’s time to go.
We’ve been trying to get into refiners Valero (VLO) and Marathon Petroleum (MPC), but aren’t going to chase them today. Both pay fine dividends, but again, if markets stay in the current pattern, they’ll be down again Thursday or Friday, so that might be the time, particularly if the current oil rally looks like it finally has some staying power.
We cannot invest in Kim Kardashian, however. Her shares do not appear to be listed, at least on any major exchange.