The Guinness Book of World Records refers to the Honey Badger as “the most fearless animal in all the animal kingdom.” In popular culture, people know that the honey badger “just don’t care!” Recently, the stock market has seen numerous events that could potentially slow it down, but like the honey badger, the market doesn’t care! Here are a few examples:
1) Oil moved from $95 to $109 recently, and the market doesn’t care. A few retail stocks have slowed down, but for the most part, the increase in gas prices has not bothered the overall market.
2) We have seen interest rates (specifically mortgage rates) rise over the last 10 weeks, and the market doesn’t care. The market seems to be telling us that bond yields are not quite high enough to truly be competition for stocks.
3) Fed President Bernanke has openly discussed “tapering” bond purchases when he sees improvements in the economy (which he is already starting to see). Initially, the market did care, but brushed it off and rocketed to new highs.
4) $MSFT $INTC $GOOG all missed earnings estimates last week, and the market didn’t care.
5) $CELG halted one of their Phase 3 trials due to “a number of deaths.” Last time I checked, death was a REALLY bad side effect, but please check with your doctor if death is right for you. In all seriousness, I thought the stock would get hit, but it was mostly unaffected.
6) Global turmoil continues in Egypt, Turkey, Greece, etc. but once again, the US stock market doesn’t care.
So the big question is: When will the market START to care? Will it take an unforeseen event to bring it down? Or will it just continue higher and continue to surprise people to the upside? For me, I simply go by the price action of stocks, which is very strong and broad based. Of course we will see pullbacks, shakeouts, and minor corrections along the way, but I stick to my instincts that the market is going much higher into year-end. The resilience of this market combined with the strong price action keeps me on the long side until any major warning signs appear. Good luck trading!
I can be reached at: jfahmy@zorcapital.com.
Follow me on Twitter @jfahmy
Follow me on StockTwits @jfahmy