The Stock Market is Moving Higher on Only Four Stocks

The stock market is spiking higher following the Fed's rate move. But, all of the financial stocks, homebuilders, and the other stocks that got a rate bounce last week have now receded, with only the Nasdaq continuing to move meaningfully higher. With several tech names are doing better (specifically EMC and VMWare which I have written about elsewhere, and Garmin which has also been discussed on this board), it increasingly seems that the market is being primarily driven higher by four gems - Google, Apple, Amazon and Rimm. Here is my take on each of them and then my take on the market.

Google - Google is increasingly being viewed as the centerpiece of advertising, not just online advertising. Although the company has yet to generate meaningful revenue from anything other than online revenue, it has grown into its valuation on that alone. I expect it to continue to go up as long as management continues to primarily focus on online opportunities and continues to be the best search engine, or until they fail at something. In other words, there is simply to impetus for these to do anything other than go up.

Apple - Apple's iPhone is probably a dramatic bust, but it doesn't make any difference because the stock is not dramatically overvalued on the basis of its core "razor and blade" business (iPod and iTunes) which is already the standard in the US and is poised to grow worldwide.

RIMM - The valuation may be difficult to justify, but the company has successfully migrated its products from being niche to being widespread.

Amazon - Of all of these companies, this is the one that seems dramatically and absurdly overvalued, but hey what do valuations matter anyway - Bezos has learned to play the PR game so he gets at 100x + PE valuation.

These four stocks have become so powerful that Cramer has now dubbed them the Four Horseman of Tech. Cramer also said that he believes that they are overvalued. To me, therein lies the primary reason why they will continue to go up. You see, Cramer leads large numbers of weak-handed neophites into positions that they don't have the stomach for. While there may be a reason for all of these stocks may eventually go down and go down big, but it will be long after Cramer gets his neophites in. Meanwhile, his neophites will cover at higher and higher prices which will be the next leg up.

I wouldn't short these stocks here and I wouldn't bet with Jim Cramer on this one. If you do, you risk putting yourself in the middle of two large overlapping circles (one who has lost fortunes betting against these stocks over the last year; the other who has lost fortunes betting with Jim Cramer).

I may be wrong, and if you follow my advice you may lose a change to make a fortune short these stocks or the market. I do think you will sleep better at night.