E Market Briefing For Wednesday, Oct.13

A complex battle has been outlined on both sides of S&P 4400. So, having forecast the rebounds to that area, we expected no defining structure, quickly answering questions about whether there was more correction ahead, much less the extent of potential new unwinding of mega-cap institutional holdings (which they are loathe to do unless making lateral moves into comparables).

Iphone 13, Iphone, Smartphone

Pixabay

Each time we probed lower, the bottoming action was expected, but had clear tones of 'hail Mary' rebounds to them, hence incomplete as far as longer-term. That invited questions not just about the Fed, or earnings, but even the China bond market chaos, and whether any of that would be an existential problem in our markets that typically are more myopic.

Now it will probably be resolved downward with the continuation pattern that I have outline in these reports and videos. Apple's slowing iPhone 13 will be a media explanation, when in-reality the chip slowdown is 'not' news, although it is also not broadly known that the relationship with China is fraying. As goes Apple (AAPL), goes the S&P (SPX), and perhaps that's the simplest way to frame this.

In-advance we shared the probability that questioning whether this correction has indeed completed would be the case, as the market was likely to shuffle, repeatedly, in the rebound resistance area (roughly the 50-DMA) for awhile.

It was also a good opportunity to focus on areas leading the pack, or likely to, as we increasingly ponder not just inflation or stagflation, but sectors for 2022. Energy remains strong, semiconductors too. But since we've been right there all year (Chevron (CVX) and AMD (AMD) are good examples as for common stock), we're expanding a bit into suppliers 'to' the semiconductor fabs, hence AEHR pick.

I spent time with the AEHR institutional Presentation today, the CEO has 20 years experience in this field, with the Silicon Carbide being the new wafers they are believed in-the-lead (for now anyway). I particularly caught a remark about Intel and Nvidia (NVDA) both realizing their next-generation chips will have to include a photonics aspect (chip-to-chip speed), and all that requires 'burn-in' reliability, hence (AEHR). We already own it, and new readers or investors can either ignore it, or hope for a dip if there is any decline with a market break.

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This is an excerpt from Gene Inger's Daily Briefing, which typically includes one or two videos as well as more charts and analyses. You can subscribe for  more

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William K. 2 days ago Member's comment

I am mentioning this, not as a judgement or to be critical, BUT keep in mind that China IS A POLICE STATE! That makes it very different from the US and most other countries. It also means that investors need to understand that the rules in China are much different.

Gene Inger 2 days ago Author's comment

S&P, NASDAQ, New York Composite, Oscillators and other charts are ONLY available to members of my ingerletter.com website Daily Briefing. Join and send feedback and I'll upgrade you to MarketCast on the house for awhile. Only if you mention hearing about my work on TalkMarkets. And please understand that I need to redact most of my analysis shared here as a rumor is that we are a small business and have zero income if you don't subscribe :). Thank you. Gene