WASHINGTON – Sitting here Tuesday afternoon in front of a 27-inch Macintosh screen, it’s been hard to stay awake. Aside from fussing with a small position here, starting a small position there, and liquidating several small, floundering positions, it’s clear that Mr Market lacks motivation, conviction and direction today. So this summer’s back-and-fill chapter of stock market roulette continues. Boring.
Bulls and bears continue playing stock market roulette
Monday market action was okay, but it fizzled at the end. Tuesday looks better. But after Monday’s last-minute surprisingly bearish squish, you can’t be confident of anything.
Bullish analysts still claim that the current market boredom predicts another big bull leg soon. But such observations often end up as just plain old bull.
Bearish analysts figure that pride goeth before a fall. A more or less imminent fall, which means that we should be afraid. VERY afraid. Just like we should be afraid with the likely never-ending parade of Covid-19 variants. That likely exist to provide the current Washington Junta, aka, the Biden Administration, with an excuse to promote another round of mail-in voter fraud in Midterm Election 2022.
Monday’s closing McClellan Oscillator (via Stockcharts.com) gives us a clearer picture of Mr Market’s bull-bear dilemma. After a recent, nearly-predictable early summer market crash, we quickly enjoyed a nice tentative bounce back in US stocks and market averages. But no sooner did this cross the zero (neutral) line on the x-axis, than the oscillator’s action faltered. It’s easy to see at the right of this chart. More commonly, investors enjoy a bigger bounceback, not a jagged, indecisive, feeble bounce like this one.
McClellan Oscillator as of Market Close on Monday, August 2, 2021. Indecision abounds.
Summer doldrums, vacationing investors, Covid-Revival terrorism stalk the elusive summer rally
But whether it’s traditional summer doldrums, absent vacationing investors, or Covid-Revival Fear (ruthlessly promoted by the most aggressively ignorant “reporters” of all time), our almost convincing summer rally stalled in its tracks. Stock market roulette remains firmly in control, meaning no one seems to know what he, she or it is doing. Stocks keep trying to get juiced again Tuesday. But the usual ooomph and rich, juicy animal spirits are missing. As of 3 p.m. ET, all three major averages seem unable to get much past a deadly dull 0.6% gain. (And we still remember what happened to that rally attempt a few minutes before the final Monday bell.)
So investors appear justifiably indecisive at the moment. This makes even the most normal buy and sell decisions seem treacherous. You can just feel the nervousness out there.
Direction, misdirection and pure evil oozing from “elected” officials and administrative goons often subverts rational investing
Distraction and misdirection like this makes it tough for any stock market columnist or guru to provide useful insight or investment suggestions. If the bulls are right, why isn’t international travel wide open now and why is everyone still wearing masks? If the bears are right, we’re all going to die. (Or have our votes gifted to living hacks of the correct political persuasion.) So what’s the use of trying to win against Mr Market in a pointless game of market roulette? Or find a job. Or pay the rent, for that matter.
Today, we are utterly surrounded and illegally ruled by the wealthy and / or pedigreed “legally elected” and / or duly bribed dunces and goons. This shady cadre currently runs our terminally confused, seriously polarized country. The resulting endless, mindless chaos these idiots cause makes it tough to come up with anything more than a short-term investing strategy these days.
But we keep giving it a try here, along with countless other home gamers nationwide.
Playing our own game: Finding great, interesting stocks that no “professionals” see or care about
So what are we doing, personally to avoid boredom and indecision? In this and successive columns, we’ll drill down on some stocks we do find interesting right now. Yeah, let’s talk stocks for a change, instead of focusing on the fake news stories and media shills that tout them. Even though they still can move markets when we least expect it. What a concept!
Let’s look at one ignored ticker symbol that’s made us money recently and still is. Though you’ve seen it these columns before…
Cleveland-Cliffs (NYSE:CLF):
I’ve mentioned this one before in several articles over the years. (Like this one here.) Maybe I’m a bit biased, or nostalgic on this onetime iron ore mining company. That’s because I worked over one summer on one of their iron ore carriers on the Great Lakes to earn college tuition money.
Not sure if they still run those boats (that’s what they call them on the lakes), but, after a big turn-of-the-20th expansion into Australia and Canada, including the purchase of additional iron ore mines and (gasp!) coal mines, Cliffs nearly went under. But, after their near-death experience during and after the Great Recession, this Cleveland-based company dumped the coal, the Aussies and the Canadians and retreated back to their old specialty, mostly in Michigan and Minnesota.
Cliffs’ three aggressive moves
But more recently, in three very aggressive moves, they completed a brand-new, innovative “hot-briqueting” facility in Toledo, Ohio that refines their main mining product – taconite, a semi-refined iron ore – into a more pure product that can skip traditional steel mill blast-furnace processing, as I understand it. Which saves energy, cuts down on pollution, and makes it easier for steel companies to create rolled, finished steel as well.
Which brings us to two more aggressive moves. Cliffs shocked the US steel universe by buying AK Steel outright, and by purchasing most of Arcelor Mittal’s primary US steel plants. Overnight, Cliffs became, overnight, a vertically integrated, low cost, cradle-to-grave steelmaker, starting out in its mines and taconite plants, moving that product to its Toledo plant for further refining, then off to its now wholly owned steel plant to produce highly competitive, US-made steel.
This is not your father’s Cleveland-Cliffs. Analysts are asleep
Because of its earlier problems, Cliffs shares have been heavily and almost habitually shorted for years. This has made them an astoundingly good buy, but one that nobody noticed because everyone seems to think this is the old Cleveland-Cliffs. Too bad for them.
I’ve been on a slow motion buying binge for some time now, and the stock has slowly crept upwards, despite periodic selling and shorting storms, just because.
But where the shares caught an unexpected updraft happened last month when the Meme Stock Kids discovered that CLF shares were still highly shorted. BAM! In July, they started buying shares hand over fist. In just one or two days they caused a massive short-squeeze (as they did earlier in Game Stop and AMC), driving the stock up to the highest price they’ve seen in years, nearly $26 per share. Reverse stock market roulette. Some of those crazy kids made real money here. And helped me out in the process.
Shares have remained high ever since, given that Cliffs also recently announced spectacular Q2 earnings. But the sellers are currently nibbling away again, making shares a potential buy in the $22-24 range. If they slip a bit more, I might be tempted to add more shares to my position. Again.
A potential buy sign for an (allegedly) uninspiring industrial stock in an uninspiring market
This is one of those rare potential plays where Wall Street seems happy to remain ignorant of a once-hated company’s almost magical transformation into something entirely different. A company that has also transformed itself into a major innovator in an industry that Wall Street’s current computer-driven stock mavens routinely ignore. As long as they keep ignoring it, investors will be able to keep buying shares at decent prices. Even as its earning continue to increase in future quarters.
