Not Every Data Point Is a Game-Changer
Posted at 1:17 p.m. EDT, Thursday, Aug. 26
No sooner do we get the all-important key jobless claims than we are peppered with questions about what the all-important GDP number will bring. This is right after the all-important durable goods numbers and the impossible-to-top-in-importance new-home and existing-home sales.
Such is the moment of total earnings vacuum -- unless you want to count Guess? (GES) and Heico (HEI) -- and things to trade off of.
Given that it seems the only players still left are those who trade ETFs, we see big macro players lining up on every single data point. And, as I have been saying lately, they are not even lining up on the right side of the ledger -- higher oil prices are now reasons to buy health care, drugs, restaurants, foods and techs.
You know what? I don't care about GDP. It will be awful. We will be reading and hearing a lot of canned chatter on double-dips tomorrow, and I will have to laugh. Here's why: The inputs are all mixed. Some regions are good, others are bad. Some stores are doing well, like Urban Outfitters (URBN)
, others are doing not so well, like Guess?. Some sectors are terrific, like aerospace, where we got a great upgrade for Rockwell Collins (COL)
today and a terrific quarter from Heico, both heavy with aviation. But others, like medical equipment, are plunging because of a weak quarter from Medtronic (MDT)
. We don't have enough evidence to refute the anti-medical equipment companies because only Medtronic is reporting now. Not enough data. So sell.
Put simply, we do not have enough information to warrant big swings or big moves. We don't know enough. We are trading on every little macro or micro data points and unimportant quarters and pieces of information, or ticks of futures, oil and copper, are being seized upon as life-threateningly important.
Plus there are so many "on the one hand ... on the other" stories out there it is hard to not be completely confused. Are takeovers a good sign for the market because of undervaluation, or are they bad for the market -- postulated by my friend Jim Stewart in a good piece in the Journal
the other day -- because when they have heated up in the past it usually is more indicative of a market top, not a bottom? Is money coming out of the market a good sign in that the retail investor has historically pulled out money at the bottom? Or is that ridiculous because the retail investor has simply been pulling out money the whole time and being contrary to it has made you no money? Are price-to-earnings multiples so low that it is tempting? Or do the housing, durable goods and GDP numbers tell us that the estimates we are basing our P/E models on may be way too high?
I come back to it's all mixed. If we make a big judgment here, we'll probably be wrong. But big judgments are being made, even if they shouldn't be.
Not every piece of information matters. Not every tick should be of concern.
But don't tell that to the people who are piling in and out of sectors on no new information. They may be too busy taking action to notice!
At the time of publication, Cramer had no positions in the stocks mentioned.