When rates rise, these stocks often rise

  • October 18, 2005
  • Tim Truebenbach

Timothy J. Truebenbach is the President of True Capital Management and
general partner of True Capital Partners LP, a hedge fund. He uses a
disciplined model that trades on the intermediate-term time frame. For a
free trial to Tim’s Nightly Stock Analysis Report


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The market just completed the fourth trading day into a new attempted rally. 
We have yet to see it produce a follow-through day, so technically it is still
locked in the correction that began in August.

After the bell, Intel
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trading lower.  It will be interesting to see how the market responds to this
stock since it has already been knocked from any leadership ranks.  On an annual
basis, for example, the stock is underperforming 63% of all other stocks in the
market.



 

 

In contrast, take a peak at Apple
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in the top 4% of the market.


 

Trading individual stocks has proven to be quite hazardous in the current
environment.  Shakeouts, breakouts and everything in between has proved the norm
and have made for a very uncertain investment.  The market itself has had a
clear trend in place since October of 2002 when it put in a bottom, but
intermediate ups and downs have also been normal.  ETF’s and index funds have
helped smooth out returns and may be a great consideration.  Another investment
to consider are medical and biotech names
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rising interest rate environments. 

 

Of course the negative of this sector is that it is always subject to the whims
of the FDA. 

 

Overall, the market remains in a correction as it is experiencing one of the
‘downs’ of the past few years.  Since the averages have already made healthy
retracements of the May through August gains there is a good chance the market
will exhaust its selling in the near-term.  As always, know where you are
placing your stop and cutting your loss if things go wrong.

Tim Truebenbach