Bulls Buying Bad News

Greetings from New York, where it’s good to have an ample scalp with the day’s bullish, yet odd, market.

Lowe’s (LOW) was the ostensible catalyst for the rally, based on a quarter which was terrible vs. last year but better than estimates. The stock is giving back much of its gains off a hot open and trading to levels below where it was last Thursday. Banks and casinos are ripping on upgrades and giddiness over dilutive offerings “to pay back TARP.”

Bank of America (BAC) was pushing $40 per share as recently as last October. Selling shares of unknown amounts is bullish after a two-thirds decline is bullish? Today it is. BAC is over 10% higher and State Street (STT) is up over 5% on word that it plans to sell non-guaranteed notes and $1.5 billion in stock.

State says EPS will be higher than prior estimates, begging questions about why they need an offering now and, with the stock being driven higher on news of dilution of unknown size, why not double the outstanding shares if this move is all but paying for itself (roughly $1.3 billion in market-cap gains, and counting, vs. 1.5 billion in shares being sold).

Whimpering about how the market “should” be behaving is akin to howling at the moon; it doesn’t impact the moon at all and amounts to a more annoying version of whining. BAC’s offering is good news because Goldman Sachs (GS) says so and Citigroup (C) concurs. Is it in Goldman and Citi’s self-interest for banks to raise money so far off their highs to be good news? Obviously. Alas I can’t use excuses for not being long banks, let alone India, to pay for groceries. If you want to play with the big wolves you gotta control your whelping and trade in the now.

The Now has the S&P pushing 900 again and more upgrades on the horizon plowing shares higher. Deal with it. Here’s what I’m watching, and doing, with a move I missed:
 

• Carnival Cruise (CCL) guided lower due to Swine Flu. Today being today, the stock is strongly higher, apparently on the hope that this wildly hyped flu will become a Bubonic Plague. Meaning earnings will eventually look great, once the 50% of the US population that survives starts traveling again.
  
  
• Turning that frown upside down, Agrium (AGU) is making a very fertile move, tacking onto gains over 10% since the stock shook off it’s own monster warning of May 6th. I bought the bad news then; in a sadly short-lived fit of optimism. Is making a 2009 high bullish when AGU is still more than 50% below BRIC bubble levels of less than a year ago? The market says yes and I’m holding my nose while hugging my long position.
  
  
• In another entirely personal example of bad news paying itself, Apple (AAPL) is shaking off a bad open, both on the successful test of the support noted by Prof. Cooper and the fact that I misplaced my iPhone and the battery died, meaning I’ll be forced to replace the phone or continue searching for the needle in a hey stack of children’s toys. Given the expense of the phone, and the shoving Apple gave to AT&T (T), my long Apple dip purchase is more or less paying for itself, thanks to my thoughtful willingness to take one for the team of fellow longs.
  
  
• You’re welcome, world of Apple longs. Now we need a few more thousand of you to be considerate enough to replace your iPhones due to what critics (and your inner cynic) might call carelessness and impatience on display. Ignore those nattering nabobs of negativity and start losing those phones and refusing to spend one more minute looking for it. Around these parts we view such behavior as altruistic stimulus spending.
  
  
• Not to be Mr. Negative, but if today is a day for buying lousy companies issuing shares at fire-sale prices, where is the love for my Ford (F)? The company trades for less per share than it’s trailing loss of $7.03 per share. Ford has far more room for improvement than the financials, which is saying quite a bit. At the risk of looking a gift cow in the mouth, if I were smart enough to be long India on Pepe’s call in this life I’d be taking profits on the 17% gains today.
  
  
• At the risk of looking a gift cow in the mouth, if I were smart enough to be long India on Pepe’s call in this life I’d be taking profits on the 20% gains today. The India Fund (IFN), to take one example, has roughly doubled from the March lows. Living in the now or not, buying after 2-month double seems extremely late to the party.