NEW YORK ( Real Money) -- You could tell the moment that you saw Humana ( HUM) jump 5 into the bell, and then another 5 after it, that the growth guys had found still one more recession-proof domestic security name they loved. It was just classic.
We read every day that the government is trying to rein in Medicare, and we actually believe it. But then, when they have a chance to actually save some money, they give it away and allow the so-called enemy -- the health maintenance organizations (HMOs) -- a chance to recoup a huge amount of money.
At this juncture, that was very important in the market because the rest of the recession-proof domestic security names had run so much that we needed more heroes, and the government instantly provided them.
The market is at an important and difficult place. The materials, the techs and the oils all seem about to fall apart. Cisco's ( CSCO) a prime example: It did the extraordinary and raised its dividend much higher than people had thought, and it went down! If Merck ( MRK) were to raise its dividend that much, its shares would be through the roof.At the same time, on Monday the sellers came for the transportation stocks. The transports are the exact other side of Aetna ( AET) and Humana. They are the enemy now -- suddenly just a group of stocks that can't react positively if we even get a down day or two in traffic. Here's how I see it. Just when everyone is thinking the Fed has to tighten, the stocks are saying --particularly the industrials -- that the economy has taken a step down. They can't flee the industrials enough. I know this. For Action Alerts PLUS, we run a diversified portfolio of companies that includes industrials and financials and techs, even as we are underweighted in the latter. These all need a modicum of growth. The market is saying we won't get it. It's a bad omen for now. If you own economically sensitive stocks, despite the rally in Europe today I expect you to underperform. That's how things are setting up. They aren't going to change on a dime. The coloration has changed radically. We all feel it. Just dancing around it.