WASHINGTON, November 22, 2016 – Pop Quiz: Tuesday’s stock market trading action is pinned once again in positive territory, courtesy of
- Monday’s uptick in oil
- The continuing irrationally exuberant Trump Rally
- The beginning of the traditional Santa Claus Rally
- All of the above
BZZT! Time’s up!
All these answers are guesses. Any one of them could be right. Number 4 may be the closest we have to the correct answer.
In point of fact, as we stated in our companion column earlier, Thanksgiving Week is generally one of the weirdest times of the year to put on a trade or take one off, so we don’t plan to do much. That’s because volume is traditionally light, magnifying moves in the averages, one way or the other, in ways that may not gauge true trader and investor sentiment.
Market tone is good again Tuesday, but the broad-based S&P 500 average, probably the best barometer for the over all market tone, is virtually flat as we punch this column out around 2 p.m. EST. The McClellan Oscillator, our favorite barometer for market health, is hitting overbought territory as the holiday approaches, meaning we may be in danger of some kind of correction next week; which in turn, means “buyer beware.”
That said, although year-end 2015 was a notable exception, year-end “Santa Claus Rallies” in the market are more common than not, so any smackdown next week could be short-lived. But we plan to pretty much wait until next Monday arrives before getting serious about stocks again.
As with our remarks above, we don’t plan to do much between now and next Monday, given that so many traders and investors are already getting out of town for what’s usually cobbled together as a long holiday weekend. Black Friday trading in particular is likely to be sleep-inducing, as its retail stores, online shopping and post-Turkey Day recovery sleeping that will be taking center stage.
Watch, however, for rumors and/or preliminary Black Friday and/or long weekend retail shopping estimates. Reluctant shopping numbers could tank the market early next week. On the other hand, if the stock market’s current post-Trump irrational exuberance continues, the bull could be out of control, Ho! Ho! Ho!
Today, after a brief morning rally, our troubled position in Allergan convertible preferred A stock (symbol: AGN/PRA, your broker’s symbol may vary) is looking anemic again, playing around with the $700 per share handle in thin trading of an already thinly traded issue. On the other hand, a YUGE Trumpian dividend will be showing up in our accounts on December 1, which will give us an added dose of patience for this one as we await the redemption of these shares in 2018 at par value: $1,000 per share.
Like AGN/PRA, shares of Apple (AAPL) were nicely up this morning but are approaching flatline mid-afternoon. Every time this stock moves up, it seems some pundit ritually appears to bad mouth the company, beating it back down again. It’s like an instant replay of the 1990s, when anything not-Microsoft (MSFT) was doomed, doomed, doomed. Boring. But again, much of today’s limp action in that stock is likely due to dwindling volume.
Our investments in management company/vulture capitalists Blackstone (BX) and KKR (KKR) have been gaining nicely for the last several days and are doing so again today, while our ripping good position in Bank of America (BAC) is taking a small step back—probably a good thing, given the tear this one has been on since that Trump presidential win became official.
We’d love to see one of our favorite utilities, Houston-based Centerpoint (CNP) take a step back so we could pick up a few more shares. But it’s another up-day for CNP, so we’ll wait for now.
There are other potentially interesting things out there. But given that this is generally a fake-out week in the market (the other fake-out week occurs between Christmas and New Year’s), we’ll hold fire for now.
Expect sparse to non-existent columns until next Monday. And that’s a good thing. Everyone needs a rest from trading to recharge the batteries, and the Prudent Man is no exception.
So let’s plan to enjoy Turkey Day with all the trimmings, and maybe even a little TV football action, just as long as it’s not happening on pro-Communist ESPN. That outfit, like the NFL, has become a disgusting piece of work for All-American jocks and couch potatoes who just want to watch a sporting event that’s somehow not been politicized by the PC Police.
See you around.