As I scan my tra­di­tional watch lists most of the stocks in them are doing “meh” – they take 3 steps for­ward and 2 steps back.  Or vice versa.  They are really doing very lit­tle other than churn­ing.  Most of the lead­er­ship of the past 2–3 years has died – bro­ken charts every­where.   See Mr. Amazon.com (AMZN) for but one example.

Lately, it has been a mar­ket whose lead­er­ship is in safety and yield.  Not typ­i­cally what you asso­ciate with a bull move.  Many of these stocks are very over­bought (in some cases extremely so) but each day the buy­ers come in and buy more…. one won­ders if Mr. Bernanke with his multi year (and per­haps decade long) low inter­est rate pol­icy has begun foment­ing the next bub­ble: yield.  No longer able to get yield in tra­di­tional havens, investors are pushed into equi­ties that pro­vide it.  Seem­ingly, en masse.When stock price appre­ci­a­tion expands in excess of earn­ings or cash flow – that means mul­ti­ples are expand­ing.   Mul­ti­ples are a judge­ment call – but gen­er­ally fall within very long term his­tor­i­cal ranges.  We are now see­ing excess in the ranges but like good lem­mings the crowd is being herded…

Iron­i­cally these are con­sid­ered ‘safe’ stocks – but we all have seen this game before and know how the crowded trade ends.  But we never know when.

I think as you scan the 52 week high list a very obvi­ous pat­tern should be apparent.

Dis­clo­sure Notice

Any secu­ri­ties men­tioned on this page are not held by the author in his per­sonal port­fo­lio. Secu­ri­ties men­tioned may or may not be held by the author in the mutual fund he man­ages, the Pal­adin Long Short Fund (PALFX). For a list of the afore­men­tioned fund's hold­ings at the end of the prior quar­ter, visit the Pal­adin Funds web­site at http://www.paladinfunds.com/holdings/blog

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