The smart trade today was to fade the media.
If you bought the gloomy reaction to Steve Jobs' resignation and sold the excitement over Warren Buffett's investment in BAC, you would have done well. The market was a bit nervous anyway since there were recent gains to protect ahead of Fed Chairman Ben Bernanke's speech Friday morning in Jackson Hole, Wyo., but the news flow didn’t help much and uncertainty in Europe continues to weigh on things.
It was a day of big reversals. In addition to the turns in AAPL and financials, gold climbed steadily after a weak open and finished positive. Unfortunately, that was about the only sector that did anything positive. Oil, retail, tech, drugs and just about everything else was red.
It is a bit depressing to look at the action in small-cap stocks. There is no interest in these names, despite what looks like very compelling valuations in places. These thin stocks can go lower and stay weaker far longer than you think possible, which is why it can be tough to be a value investor.
We’ll see what comes out of Jackson Hole tomorrow. The bears think expectations for some sort of Fed magic are too high, while the bulls are optimistic that just about any move by the Fed will get this market running. It is going to be a good battle.
