Stocks Rally for All the Wrong Reasons

Hype and Profiteering Driving Stocks!

Stocks have been on an upswing of late, but for all the wrong reasons. As signs pointed toward the passing of unemployment insurance extensions and the renewal of tax breaks for the rich, investors grew enthused and sent shares higher. Then this week offered a better than expected retail sales report, and traders feigned excitement. But, dear readers, be careful who you listen to, because this information is not as inspiring as the hyped up media and temptation toting traders make it sound.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

(Tickers: NYSE: XRT, NYSE: WMT, NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ, NYSE: BAC, NYSE: GS, NYSE: MS, NYSE: WFC, NYSE: C, NYSE: WMT, NYSE: GE, NYSE: F, NYSE: GM)

Stocks Rally for All the Wrong Reasons

Stocks are on the rise, but the chart for the Dow is deceiving. It illustrates rally through midday each day this week, but late day moves lower, including today (12/15). Thus, it depicts a market short on confidence, but looking for profits. The Dow is only up about a percentage point in reality since the December announcement of the Obama Administration, through which it declared a dastardly agreement with the GOP. The secret meeting would renew tax breaks for all Americans, including those making more than $250K, who the Democrats wanted to leave out this time around. The deal would also speed the extension of unemployment insurance, and offer the Republicans the subliminal coercive idea that a cooperative relationship might be possible between the White House and Congress over the next two years.

So, the market grew enthused, not because of robust economic growth or an improving labor market, but rather because politicians would avoid making the disastrous mistake of cutting off 2 million Americans from their sustaining government supports (unemployment checks). Also, the Dow was determined, not because of a budget balancing endeavor, but because of a budget breaking continuation of tax cuts to the rich, who are notorious for keeping the winnings to themselves. Now, one might argue that the rich reinvest and make capital available to American enterprise, but let's face it, there's no tangible reason for the rise in stocks. We all know there's no way the GOP was going to go down in history, especially ahead of Christmas, as a holdout on unemployment insurance extensions.

Tuesday's Retail Sales Report for the month of November showed activity increased 0.8%, which was a slower rate of growth than October's pace. However, the market was overjoyed that October's data was revised up to 1.7%, from the 1.2% initially reported. The popular press also focused on the fact that the result exceeded the economists' consensus view, which was set at 0.6%, even after the prior month revision (which raised the bar). Also enthusing, were the sales when excluding autos, as those figures increased 1.2% in November, against economists' expectations for 0.7%.

However, wise readers, you will recall why there has been such robust early sales activity from your reading of recent scribbling on these pages. It is because there are a ton more desperate bargain seekers out there this tired year trying to get the best bang for their Christmas buck. So, early sales activity might not offer the great news for the full season that stock investors seem to imply they expect. As this becomes apparent, expect those tricky traders to pull the rug out and run, and then the press will remember that Black Friday does not a holiday shopping season make. Investors should also be reminded that discounted goods make for a lower dollar sales tally and tighter profit margin at Macy's (NYSE: M) and friends.



This article should prove interesting to investors in NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE, NYSE: RHI, NYSE: KFY, NYSE: MAN, NYSE: MWW, Nasdaq: KELYA, Nasdaq: JOBS, NYSE: JOB, Nasdaq: CECO, Nasdaq: PAYX, NYSE: ASF, Nasdaq: KFRC, NYSE: TBI, NYSE: DHX, NYSE: SFN, NYSE: CDI, Nasdaq: CCRN, Nasdaq: ASGN, NYSE: AHS, Nasdaq: BBSI, Nasdaq: HHGP, NYSE: SRT, Nasdaq: RCMT, Nasdaq: VSCP.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.