Small-cap defense and drone stocks remain attractive for investors buying the dip. The Strait of Hormuz will probably dictate the rest.
Gains moderated in most tickers that gained solidly earlier this week; while S&P and DJIA big-caps (mostly lagged before today); actually caught-up with performance the more focused-sector stocks already showed before Friday.
Much of the upside hoopla was sort-of faded by intraweek traders; while for sure there was influence from April Expiration, which concluded Friday; and especially where Option 'writers' tried to contain gains below round number strikes where Open Interest was fairly high.
There was a news-related 'gap-up' in many areas which invited selling by the crowd that doesn't chase . . . especially when you ponder dubious statements on the Middle East, especially considering of course Iran is amenable to Oil shipments being opened-up through Hormuz; they just don't want to hear the rest of the rationale for the U.S. working with them to settle things down. Just a for-instance, as my intraday notes reflect, we'll have to see 'if' Tehran really agrees with POTUS as to letting the U.S. retrieve the 'radioactive dust', etc.
In any event Oil dropped drastically in the early part of Friday as you'd expect, and that considerably did help the backdrop; whereas the reality is conflicting reports about how this will go; considering that the 'closure' was an Iranian threat of International Waters; so actually Iran isn't accommodating anyone but themselves, as what they get is economic wreckage if they don't conform to unimpeded 'Strait' travel.
Especially after a dozen days generally higher for the Index; some sobering was not only justified, but was seen against the backdrop of a higher Dow Industrials and so on, which had clearly lagged the more aggressive tech plays. And a couple confusing or contradictory comments from Nvidia weighed on some of those mega-cap types too; although again most firmed at day's end leaving the market free to respond to 'actual' developments next week. So, the overall engine for this market will have to remain tech; other drivers don't tend to be sustainable and often reflect defensive postures, or shifts into the old-guard during periods of unease. All this is of course uneasy; but we stayed-the-course; bought dips in new-era focus tickers and envision most moving to higher levels within a reasonable period of time.
Bottom-line: small-cap value stocks, particularly our Global Defense plays as tend 'not' to be just mom-and-pop start-ups; but nevertheless smaller serious businesses with some experience (especially as relates to dual-purpose use .. both military and commercial .. drones or photonics); and not easy at all to be sure about who wins what; as most decisions are still being evaluated by both Dept. of War and other agencies that have interest in these kind of products.
Apparently I longed-for a longer misadventure away from the markets; so my thanks to a couple members noting I had referred to returning to my desk on May 27; instead of April 27. Yes it's only a one-week voyage so sorry it's not longer .. ah ha. Anyway I will abbreviate all this as much rushing for the trip. And yes I will keep an eye on things next week while 'trying' to get some rest (why is it I usually need a vacation from a vacation; almost every time lol).
Cheers..back in a week; but perhaps my psyche is saying also travel in May.
Disclosure:
This is an excerpt from Gene's Daily Briefing (distributed nightly), which typically includes videos as well as more charts and analysis.
Comments
Log in or sign up to join the conversation.