With the significant rise in market interest rates last week, I was a little surprised to see a fair amount of the rate sensitive stocks holding their own. Ever since the FOMC stopped raising rates in August, many bulls have been relying heavily on a rate cut as justification for higher stock prices. In January, the economic data made it increasingly clear that not only was a cut not on the way, but now it’s off the table for the foreseeable future. There is even a slim bet towards hikes before cuts. This left the bulls with two choices: 1) throw in the towel or 2) spin the story towards growth. We know permabulls have a great inability to admit their mistakes so it almost seemed like there was a conference call to get everyone on board.

• “Cuts are not necessary.”
• “Look how great the economy is doing.”
• “Earnings are going well.”
• “The greatest story never told.”

Pretty impressive actually.  Whenever I hear this backtracking, I keep saying to myself  “Cut it out”  but in fact, that is what they are trying to do.  And after looking at a lot of charts, it really does seem like the impact of higher rates is less serious than a week earlier.   I am keeping a close eye on it, but if I see more strength in areas that I am expecting weakness, I will hesitate to stay negative on stocks that should be heading lower on higher rates.