Wednesday Wrap Up, Highs and Lows

We weren’t expecting much action and we didn’t get it except from some of our momentum players like (AAPL), who hit a new high and (GOOG), who went back through $700 with some authority. (BA) is still grounded at $90 but (AIR), who services planes, took off to record highs on big volume.

On the whole, 238 stocks made 52-week highs yesterday BUT 268 less well-known stocks snuck down to 52-week lows. On the high side, of stocks we follow, we had AAPL, (ACI), (ADM) (as usual), AIR, (ATVI) (on fire), (BTU) (used to make fire), (CBI), (CMG), (CNX), (CPST), (DE), (DECK), (DO), (ESLR), (ESRX), (FSLR), (GPS) (a retailer!), (HES) (up and up for a month), (HET), (HRL) (spam, spam, spam), (ICE), (JASO) (pretty much anything solar), (JOYG), (MON) (pretty much all Ag), (MUR), (OXPS), (OXY), (PEET) (interestingly the opposite of SBUX), (POT), (RICK) (never stops), (RIG), (SI), (SOLF), (SWIM), (TIVO), (TRAD), (TSCM) (Merry Christmas Cramer!), (UL), (VIP), (WFT), (WU) and (XLE).

New lows of note were (ABN), (APAB), (BIG), (BOFL) (many small banks), (BSC), (CACH), (CC), (CHS), (CMRG), (DHOM), (DUG), (F), (HOT), (IHG), (IPSU) (interesting commodity story), (M), (MBTF), (OCR), (OMX), (PMTI), (RT), (WM) (still going down), (WMW) and (ZLC). Of the lows, the only ones that are surprising to us are (BSC), (WM) (who we thought were done going down), (DUG) and (ZLC).

On the whole, this is good for our portfolios as we’re seeing gains where we expected them with few downside surprises but I’m hesitant to draw any major conclusions on a low-volume week. We did get the Nasdaq leadership we like to see but oil and gold were romping as the dollar seems to have been firmly rejected at $78 after a nice, month-long run. End of year money went into the IBD 100 stocks, agriculture, internet services, metals and semis. Home builders, home retailers, home insurance, retail and publishing/broadcast (ad sellers) were hit hard. I found this to be an interesting mix because it shows a recessionary sentiment but NOT for the high flyers - as if they operate on some different planet than "regular" stocks.

My concern is we’re just looking at year-end window dressing, aided by a slosh of cheap money flowing in from Europe. We probably won’t know for sure until after next week, when the big boys get back from vacation and the ECB starts asking for some cash back, but it struck me early on in yesterday’s trading that no major decisions were being made. Despite a great (BIDU) run, the (FXI) was lethargic and must break back over $180 very soon or we could be looking at a pretty good correction over in China, probably about 20%.

Back on the 17th we were keeping an eye on the DJ World index, which had broken the 5% rule at 297 but it ended up holding there, bottoming out at 293, which is 27 points off the top so we expect a 20% bounce which would give us 5 points over the 5% line or 302, which is where we are just touching today. We’re going to have to pay close attention to the global markets as this could be quite an auspicious turning point with such a critical test coming right at the turn of the year.

I know, it feels like a Santa Clause rally but it’s exactly what I expected back on Monday the 10th when I said: "Am I being a Scrooge or just a cautious investor? While I want to believe in a Santa Clause rally, the 900 points we’ve gained in the past 10 sessions just seems like a little much to me." That was when I decided to go to cash into the year’s end - we had a good year and there was no need to try to "top it off" with a great December. December did go very well for us, despite my caution but nothing has happened yet to make me regret the near 90% cash position in the Short-Term Portfolio.

We got the break back over 8,000 we wanted from the DAX but we need to get some confirmation from the rest of Europe that $500B was enough money to bail out their banks. If not, that may explain the sudden dollar weakness as Fed action will be required because we simply don’t have enough cash to help our banks get out of this mess and the Fed has to hope that printing more cheap money (the net effect of lowering rates) will cure the problem and that the banks will use this gift wisely and not squander it like they have the last 3 cuts.

OK you kids, this is the last half point - now don’t go spending it all on commodities this time!