Go With What's Worked, Part 1

You know when it is a romp. It's a romp when 10 different groups catch fire all at once, 10 groups that are so antithetical to each other that you have to wonder how it is possible that we could be experiencing some sort of golden age of mirth without any outward signs of mirth-making.

That's how, after close perusal this weekend, the charts really look. They are full of the holiday spirit.

Now, throughout this historic run, with 49 new highs, four groups have consistently led the market higher, four groups that have pretty much everyone fooled: utilities, healthcare, insurers and real estate investment trusts.

These groups had everyone fooled for several reasons. First, the smart money didn't really ever see the decline in interest rates coming. It was so focused on what the Fed would do, it never thought about what the market would do, and never even believed for a minute that it was possible to have growth without inflation and that growth would not produce enough loan demand to raise the price of money on its own.

The big boys always figured that the Fed would be late to follow rates higher. I can understand how they would feel. We had a huge spike in rates in the spring of 2013 and that had been viewed as the template of what would happen in 2014. If you recall, that bond selloff was all about how the Fed signaled that the end of accommodation was near. That caused rates to gap up.

So, the large macro investors who make big decisions about stocks and bonds figured that when the Fed signaled in 2014 that it was done with its bond-buying program the same thing would happen, or even perhaps more so, because it was obvious that the economy was much stronger this time around.

But it didn't happen. The rest of the world got weaker. Europe went back into a recession. China started slowing. Japan's big stimulus plan failed. Latin American is teetering on going almost all socialist. And oil crashed.

All of these combined to make it so that the Fed was pretty much neutered by events. It just didn't matter what the Fed did. More importantly, the Fed didn't need to do anything because if the Fed's goal is to promote growth without inflation, well then, get out of the way because that's exactly what we have.

That's why we have these four leaders.

You have the utilities going higher because their yields are safe and bountiful vs. Treasuries. This most recent run in the utilities looks, to me, like the 10-year is going to slice through 2%. It's just too powerful and the Utes have led all year. It doesn't hurt that their costs are going down. Nor does it hurt that the demand is going higher. Utilities aren't known for their upside surprises, but they are absolutely capable of generating them. Oh, and because of the ETF-ization of all things, it really doesn't matter which utility you own. The good are trading with the bad; they are all trading higher.

The second group, the real estate investment trusts are, also, trading with bonds. The rally these last two weeks also shows me that our 10-year will most likely not be able to stay above 2% for long. Many of the best-performing real estate investment trusts are in areas that make no sense at all if you hear the stories about retail: the malls, the shopping centers, the strip malls, they are all performing fabulously. Now each one can always tell you that's because there are plenty of retailers that can't do business via UPS (UPS) or FedEx (FDX). That said, you would think that someone would be worried about this group. Doesn't seem like it. For the longest time the healthcare real estate investment trusts were viewed suspiciously, as if somehow they were going to be hurt by the Affordable Care Act. Didn't happen, though, and now the Ventas (VTR) healthcare-REIT-types are off to the races.

Apartment real estate investment trusts have been hot all year and they remain that way. It's nothing but bountiful for these companies, given that housing starts are still at incredibly low levels vs. where they should be given the size and increase of the population.

The continual gains in the office real estate investment trusts is either a sign, again, that investors are remaining yield hungry, or that there's simply not a lot of competition coming in the form of new construction -- or, alas, both!

Boy, the insurers are hard to figure. The buying in the group is so pronounced, but for what reasons? The rates aren't going up. The damaged portfolios of yesteryear have long since improved. Perhaps the most important thing that's occurred? For many, the comparisons are easier. No disasters so far this quarter and there isn't much left of it.

The healthcare trade is, and has been, the best all year. You could throw darts at the winners here: the biotechs, the cost containers and the medical devices. But even Big Pharma has joined the party.

All year the healthcare stocks have been led by those companies that can demonstrate they save the system money, although the more cynical might argue that these are the biggest winners in the Affordable Care Act. Here, again, I am thinking of AmerisourceBergen (ABC), Cardinal (CAH) and McKesson (MCK) on the drug supplier side and, Humana (HUM), Cigna (CI), United Health (UNH) and Anthem (ANTM) (the former WellPoint) in the cost manager side. These stocks are, literally, every-single-dip stocks. Just relentless.

You have to be amazed that the biotechs never cooled off, but they had strong leadership with new drugs -- Celgene (CELG) with its Revlimid extensions and its farm-team approach that gave it the glorious Agios (AGIO), Biogen Idec (BIIB) which, just when it looked like  it was going to roll over, broke news of a potential Alzheimers drug, and Regeneron (REGN) with its new anti-cholesterol drug and anti-asthma formulation to go with its remarkable eye-care business.

The consolidators, Valeant (VRX), Actavis (ACT), which purchased Allergan and Becton Dickinson (BDX), which bought CareFusion, are loved for their acquisitions. It doesn't hurt that each of these just sends more money back into the sector. bb(SYK), Zimmer (ZMH) and Edwards Lifesciences (EW) are more stocks that never seem to stay down for more than a few sessions. Two that never quit that nobody talks about? How about Steris (STE) and Stericycle (SRCL), just part of the vast medical chain of events that we pay so much for in this country.

In the last few weeks the smaller biotechs have really come alive, whether it be Agios or bluebird bio (BLUE) or Kite (KITE) or Isis (ISIS), the first three being part of the immunotherapy advance of personalized cancer drugs and the latter with a potential anti-coagulant that knows when to allow some coagulation, but not enough to kill.

I would be remiss if I didn't highlight the generic drug makers as favorites, particularly after the phenomenal run of Perrigo (PRGO) just last week, the inversion knock-off company that had been stalled most of the year, but is finally coming on. 

Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long UPS.