Editor's Note: This article was originally published on Real Money at 6 a.m. on April 4.
"My existence led by confusion boats, mutiny from stern to bow."
That line from Bob Dylan's "My Back Pages" keeps bouncing through my head when I go over the charts because the winners are so confusing, confusing to the point that it's a mutiny from the orthodoxy to which we've all become so accustomed. Second nature's not working. Maybe, I was so much older then and I have to be younger than that now.
Where are the confusion boats?
Let's start with the obvious: the three strongest sectors in this market are the companies integrally involved in construction, both domestic and commercial, and the consumer packaged goods and utilities.
That's the mutiny from orthodoxy writ large, the idea that we could be so bipolar that some would think we could be in a construction boom while others think a recession is around the corner.
What can explain it all?
It's possible that interest rates are so low and credit is freeing up enough that there's building going on. We know residential's been strong for some time.
That's what Home Depot's (HD) stock has been saying and now, even after that foray into Canada, the trend is strong enough to capture Lowe's (LOW) , too. You see the strength in Whirlpool (WHR) , now aided by a bizarrely strong real for that atavistic Brazilian business.
But also it's in Masco (MAS) and Stanley Black & Decker (SWK) (a holding in my Action Alerts PLUS Charitable Trust Portfolio), Weyerhaeuser (WY) , RPM (RPM) , PPG (PPG) and Sherwin-Williams (SHW) , although the latter could be all about the coming Valspar (VAL) consolidation.
I have been so impressed with Briggs & Stratton (BGG) and the spring selling season could be great for outside-the-house fixer-upper products. Leggett & Platt (LEG) and Fortune Brands Home & Security (FBHS) aren't quitting any time soon.
You get the sense that the homebuilders are really starting to fire on all cylinders again. How else to justify the strength of aggregate companies like Martin Marietta Materials (MLM) , Vulcan Materials (VMC) and Waste Management (WM) , which really is a play on residential construction.
But it's the commercial part that's intriguing, because it's new.
Grainger (GWW) , Fastenal (FAST) , Illinois Tool Works (ITW) , Nucor (NUE) -- even after it preannounced to the downside for the bazillionth time -- and all the commercial heating ventilation and air conditioning companies.
Could it, at last, signal that we have worked our way through the office building boom and bust that was integral to the Great Recession? Tough to tell.
It sure isn't new shopping malls or centers. The REITs in that sector aren't building much at all. I have to believe that commercial construction's nascent, but growing.
Then there are those confusion boats of consumer packaged goods. It's hard not to find one on the 52-week high list: Campbell's (CPB) , Church & Dwight (CHD) , Coca-Cola (KO) , Colgate (CL) , ConAgra (CAG) , Constellation Brands (STZ) , Estee Lauder (EL) , General Mills (GIS) , Hershey (HSY) , Kimberly-Clark (KMB) , McCormick (MKC) , Molson (TAP) , PepsiCo (PEP) , Procter & Gamble (PG) and J.M. Smucker (SJM) . I find myself reconciling that these aren't recession stocks. They are plays on deflation still so prevalent in the commodity complex. It gives you some solace to see Tyson (TSN) in the group. After all, that's just a raw bet on the agriculture complex coming down.
One thing's for certain, even though the utilities are flying strong, the best of the consumer packaged goods stocks right now are no longer in the bond market equivalent territory. The best of the best, arguably, are the ones with the most exposure to overseas -- wagers that the weaker dollar is at last upon us.
If that's the case, then why the retreat to the domestic security of the utilities? Maybe that's just the Fed green-lighting natural, and therefore low, rates. You got a better explanation if construction is strong? I sure don't.
The other patterns I see? They are portfolio default winners, a desire of portfolio managers to have faux financials and faux health care because of the endless and enduring underperformance of net interest margin starved banks and politically bereft drugs and biotech.
The former always seem to propel the usual cast of benign, but growing, characters: Fiserve (FISV) , MSCI (MSCI) , Morningstar (MORN) , Equifax (EFX) -- what a perennial winner that is -- as well as all of the insurers.
As always, I am most impressed with Edwards Lifesciences (EW) , with that device that allows cardiologists to perform open heart surgery without cracking the chest cavity, perhaps the greatest innovation since Intuitive Surgical's (ISRG) Da Vinci machine -- or at least the charts seem to say.
Finally there's the high-growth stocks as always that stand out: Adobe (ADBE) and Salesforce (CRM) in software, Broadcom (AVGO) , Lam Research (LRCX) and the always-undervalued Texas Instruments (TXN) . Facebook (FB) and, of course, Alphabet (GOOGL) , always amaze, and new stocks Flextronics (FLEX) and Accenture (ACN) are breaking out nicely.
But I keep coming back to those confusion boats and perhaps the notion that there is no mutiny, just harmony among those who think things are great and those who think they aren't and maybe never will be.