Market's Eyes Are Bigger Than Its Stomach; Chokes On New Supply

While investors are in love with the U.S. stock market again, they may be getting full. They are getting full from all the new stock coming to the market in the form of IPOs and secondaries. This may be a case were the market's eyes are bigger than its stomach.

Today there were 5 IPOs and countless secondaries. The dollar value of today's stock offerings was about $2.5 billion. While not an overly enormous amount in itself, this trends has been going on for months and recently ticked higher. This week's IPOs will be the most since 2007.

Some of the larger stock offerings today were A123 Systems, Inc. (Nasdaq: AONE) at $380 million, Artio Global Investors Inc. (NYSE: ART) at $650 million, Alexandria Real Estate Equities, Inc. (NYSE: ARE) at $213 million, and Colony Financial, Inc. (NYSE: CLNY) at $250 million.

It is our view that the market needs to digest all this new stock before it can head higher. Maybe a little antacid, in the form of more M&A, could help us fight through the pain.

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