WASHINGTON, July 17, 2012 – Short column today. We’ve been indulging in a sort of rolling summer vacation since the beginning of the Shepherdstown, WV Contemporary American Theater Festival (CATF) early this month. Lorin Maazel’s up-and-coming Castleton opera and symphony fest has been ongoing in the Shenandoah foothills of Virginia, and we haven’t yet been able even to get to the quadrennial William Kapell International Piano Competition at the University of Maryland’s Clarice Smith Center. Today, we’re off to Cleveland on business, and next week we begin a roadtrip that will end at the Santa Fe Opera.
All the Maven’s performing arts activities have been a welcome antidote to a market that’s been stuck in neutral with a downside bias, as was amply proven by yesterday’s boring negative action. Even our short trip to Cleveland will offer a welcome break from this endless thrashing, although we’ll issue our report from there tomorrow morning.
Erasing a fair bit of Friday’s nice gains, stocks again drifted lower yesterday on a poor retail sales report; which, along with the drip, drip, drip of other negative reports lately, returned the market to the low volume, distribution mode that’s characterized the action since roughly April.
In any event, the Dow Jones Industrials—which ETF Digest’s Dave Fry likes to call “window dressing for the tourists” due to its small number of huge industrial stocks that don’t really reflect the market as a whole—was off 0.4% while the Nazz and the S&P 500 each dropped a fraction of a percent.
The tech heavy NASDAQ is the playground of traders who like high beta and the resultant high volatility of these stocks, so it’s best to stay cautious here as that average seems still to be emulating at least a shadow of its usual summer seasonal doldrums. Hot rumors of Apple’s next iPhone continue to keep that stock perky. But then again, at circa $600 per share these days—and actually cheap vs. its price-earnings (PE)—the stock is too expensive for small investors to acquire in much quantity, making it a better long-term, deep-in-the-money call possibility for those who dare dally in options in this market.
Some technical trading-oriented research services are recommending that you start “schnitzeling” out (a nice Jim Cramer coinage) of utility positions here, as from a price standpoint they may have peaked. That said, these stocks tend to be slowpokes in either direction and we’ve decided to hang around for the great dividend yields (4-6%) until any alleged down move gains in velocity.
We are still hanging onto housing and mortgage REITs as well in spite of similar recommendations by the technicians. With seriously juicy 8-10-14-18% yields, these stocks would really need a pronounced trend to the downside before we considered leaving them, given their tremendous over performance in a market that refuses to allow even the tiniest capital gain to the few little guys in Investmentland.
For the most part, we’re sticking with REITs that have mixed portfolios of Federally-insured and non-Federally-insured mortgages as continuing refinances—healthy for the housing economy at some point—are taking out government agency backed paper at the higher rates, thus dropping yield for those REITs that invest only in that paper.
Well, it’s up to Cleveland for us. Have a great day, stay cash-y, and hope that Ben Bernanke’s latest pronouncements today and tomorrow, will add a little pep to this moribund market’s step.
Disclaimer: The author of this column maintains several active trading and investment portfolios and owns residential and investment real estate.
Positions mentioned above describe this author’s own investment decisions and should not be construed as either buy or sell recommendations. The current market is highly treacherous and all investors travel at their own risk, so caution should be exercised at all times.
Illustrations, charts, commentary, and analysis are only the author’s view of current or historical market activity and don’t constitute a recommendation to buy or sell any security or contract. Views, indications, and analysis aren’t necessarily predictive of any future market or government action. Rather they indicate the author’s opinion as to a range of possibilities that may occur going forward.
References to other reporters, analysts, pundits, or commentators are illustrative only and do not necessarily represent an endorsement of such individuals’ points of view. If specific investment vehicles are mentioned in any article under this column heading, the author will always fully disclose any active or contemplated investments in said vehicles.
Read more of Terry’s news and reviews at Curtain Up! in the Entertain Us neighborhood of the Washington Times Communities. For Terry’s investing and political insights, visit his Communities columns, The Prudent Man and Morning Market Maven, in Business.
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