WASHINGTON, May 5, 2015 – This will be another of our shorter columns this week. We’re still in the midst of virtual all-nighters as we get through the generally excellent American Ring cycle of Wagner operas now on tap this week by the Washington National Opera at the Kennedy Center. You’ve got to catch up on your sleep by sleeping in after each one of these 4-5 plus hour long epics, which is what we did Thursday morning.
We should have stayed in bed. This is a stock market that wants to go down. But bears appear nervous about making a decisive move, and enough bulls keep sneaking in to keep this market’s downward tendencies in check, resulting in another one of those boring trading ranges we’ve been experiencing since the start of 2015. Markets will only go up so far before crunching right back down again to the support lines where the previous rallies started.
This kind of action is great for traders, which is something we are generally not. However, aside from dividend-bearing stocks, the old tried-and-true buy-and-hold philosophy just doesn’t get you anywhere fast in this market, so you’re pretty much forced to trade just to extract capital gains.
Stocks these days are always “Waiting for Godot,” the guy or the event that never shows up. There’s no conviction out there, save that America’s miserable failure of a lame duck president likely has a few more destructive ray beams to fire on the American way of life before he exits, stage left of course, from the White House he’s debased for nearly eight years.
The gloomy failure of this administration will haunt the U.S. likely for decades to come, no matter who succeeds him in Washington. Markets know this is the endgame of this act, but are perhaps afraid that the next act will be even worse, now that an electoral contest is shaping up between the two party candidates with the largest negative rating we’ve seen in national politics since they started keeping stats. People and institutions just don’t like to put money down on such a scenario.
The Federal job report, likely gamed as usual, will be out tomorrow. In background, oil has been taking hits, then bouncing back on stories and rumors, such as today’s brush fire in Canada (far from the tar sands fields it turns out) and more trouble being reported in Libya. We continue to regard the latter is par for the course ever since Obama and her Hillary-ness conducted their brilliant foreign policy coup in Benghazi. But the market doesn’t like it.
No confidence. No buying. That’s about it for today’s markets and, perhaps, tomorrow’s, depending on those job numbers.
Two of our favorite holdings got the smash-mouth treatment today. Allergan Preferred A (symbol: AGN/PRA) was on the receiving end of another selling smackdown, driving that stock to close below its pretty-much steady apparent support at around 800. We picked up a little more, although we wonder what’s going on since the stock and its huge dividend go ex- next week, which means some folks, at least, should already be bidding the stock up. But again, in 2016 nothing makes much sense nor is it likely to, so we continue to hold and pick at the stock whenever it gets hit.
However, good investing etiquette dictates that we stop soon, as our position, from a monetary standpoint, is getting too large to be diversified.
On the other end, we sold out our large position in Teekay Tankers (TNK) today for a tiny loss after having been up 6-8 percent for the better part of two weeks. This was a reactive sell, based on current volume coupled with something odd. The company is already long overdue for declaring its dividend. But it hasn’t done so.
This worries us a bit, since the company’s quarterly report is set to occur later this month and now we suspect it may carry bad news—like maybe its parent company cutting the dividend which TNK more or less implied wouldn’t be cut. Teekay Corp. (TK) and Teekay LNG Partners (TGP) already cut their dividends drastically. But research reports declared that TNK is doing fine and won’t cut its own dividend. But what if its holding company, TK, does do just that?
When things get weird, we get out. We’ll jump right back in if we could get some clarity here. But as oil has remained steady to upward momentum, we remain puzzled why this high dividend payer should start giving back the nice gains it just had last week when all was supposedly right with the world. We’ll keep you posted. But right now, we have no idea when—or if—TNK is going to pay out its latest fat dividend.
Aside from this, and maintaining our now nearly break-even position in our double-short S&P 500 ETF hedge, aka SDS, we’re still not inclined to do much as long as this market keeps playing the indecisive game.