WASHINGTON, February 12, 2014 – Wednesday’s markets are giving us a chance to catch our collective breath this afternoon. In our last two trading episodes, as you may remember, we were first told to prepare for gloom, doom, and a market apocalypse with stocks set to correct, oh, maybe 150 percent in a matter of days. But this week, we’re now told, we might be hitting new Dow highs, maybe Dow 30,000 or higher.
Take your pick. We choose neither scenario, however, as both the financial press as well as serial tweeters like Carl Icahn are, as usual, either pushing their ignorance (as with the former) or their books (as with the latter), and extreme cases rarely come to pass, 2008-2009 notwithstanding. But perhaps part of the reason for today’s tepid markets is simply that traders need a little room to breathe after the manic-depression of the last three weeks or so.
It’s also possible that traders are taking an early grocery-shopping break to gear up for Snowmageddon II, which is threatened up and down the entire East Coast today and tomorrow, ranging all the way from the rock-bound coast of Maine to normally warmish Jacksonville, Florida more or less. The South is likely to get clobbered worse, given they’re more likely to get an ice storm which even those remaining Hummers still on the road will find impossible to negotiate.
This threatened two-day storm event is likely to knock out a good deal of power, put a great many companies and stores out of business for one or more days, and otherwise wreak temporary havoc on the economy, so maybe traders are also hedging their bets. Who knows? In any event, the market has gotten pretty overheated, so taking a break here is a good thing.
No compelling bargains to tout today, although we duly note that our old faves, the REITs, which we were forced to dump last summer due to the market’s extended taper tantrum, have been snapping back, demonstrating surprising resilience in early 2014. Most REITs by now have shuffled their portfolios and largely shored up book value since then.
Meanwhile, at least thus far, tapering hasn’t unduly affected interest rates for REITs. So, at least for now, it’s safe to get into these as well as utilities, which are also on a moderate comeback trail.
The market remains treacherous, however, so play it safe and avoid big commitments.
As just mentioned, REITs and utilities seem okay to buy here. We jumped into a secondary of Atmos (ATO), a Dallas-based natgas distributor with a nice dividend. The secondary offer appeared out of nowhere yesterday afternoon and we jumped on it when it priced low as it’s been a winner for us before.
Nothing else much excites us right now, however. Too confusing. But stay tuned. The clouds do tend to part after a while.