Market Briefing For Monday, February 26

Sidelined liquidity is plentiful; but that's not key. Overall, lack of significant broadening; no technical breakdown (yet); and still mega-cap concentration are factors here. We ultimately will get a Fed rate cut, but not particularly yet.

As to inflation, it's not controlled; but contained .. meaning higher at a slower pace. The economy is adjusting to doing alright with rates not deviating much, and narrow rangebound Oil prices are helping that become a reality.

So yes the bond market is telling us the Fed is overly restrictive; but again it's a Fed that 'wants' inflation; without recession; and that's the 'softish' landing I regularly speak of. If the Fed doesn't ease QT at least (within a few weeks) yes it's problematic, but not yet, and not as an inhibitor of an ensuing Spring rally.

I do think it would have been preferable to shakeout the S&P more than what little we've seen; but more important to back-fill with undervalued stocks while mega-caps get or remain rangebound at extended levels. For smaller AI, with a preference, we think they have barely begun to move; so stay tuned on that as time goes on.

Market X-ray: the risk-reward picture remains risky for mega-cap techs, and favorable for repressed smaller-caps with growing quantifiable prospects. It's hard to say how much more immediate room there is to run the S&P, unless it is facilitated by the back-filling referred to in second-tier issues.

S&P was mostly lateral through the day Friday, and finished modestly at new highs. As to IM-1 (the Moon Lander); its landing gear apparently snagged a rock so partially working; like an airplane with a gear collapse on landing perhaps. Of course you recall Neil Armstrong's final maneuver against Houston wishes as the Lunar Lander was slightly at-risk of hitting a bolder and he did a burn for a few more seconds, and move it to a smoother area. Couldn't do that here; even after an extra 2 hour orbit for that purpose (lag in transmissions issue).

If there's a message communicated to Earth from the Lander, it might be this:

(IM-1-Odie to Houston:) “Help me; I’ve fallen and I can’t get up.”

I just listened/viewed the Intuitive Machines / NASA News Conference, and it's pretty clear why they didn't reveal that 'Odie' (nickname for the Lander) is apparently (not yet confirmed) tipped-over somewhat on its side.

It's still a great accomplishment and the initiative to adapt to the 'other' LiDar was terrific and worked. However remember the 8 degree angle? That might have been why it's tilted.. as it was moving slightly sideways on landing (that means vertical but slippage in some way); and it likely damaged one 'leg'.

We won't know until pictures become available, which everyone hoped would be for this News Conference, but not yet. Over the weekend they said. Sure, the LUNR shares took a big hit (back to the 6's from the 9's) on revelation of this; but they are getting data, and the mission is 'basically' a success. NASA applauded their teamwork to engineer the landing and credit is deserved.

I'm suspecting the clever 'save' during the landing alone will warrant business from NASA (who already has two more missions ordered) and even others in time. To me (noted before the landing) the performance of the 'engine' was a very important achievement, which gleans terrific knowledge going forward.

As for the stock, I suspect it drops in regular trading Monday morning, unless 'pictures' reveal something other than a 'tipped over' Lander. More or less this is like an aircraft landing and blows a tire or one gear collapses; but landing's successful and everyone's alive and in this case the technologies are working well and they expect stabilized communications will yield most desired data. I also believe shares (if they drop Monday) will recover somewhat; not as most say 'to the moon', but adequately, and price may 'orbit' in a range for awhile. I know I suggested some may want to sell and play with 'house money' if it did double; and the shares 'more than doubled' before this late news. So thinking that 'if' an investor sold some, either buy it back or just hold the rest for now.

Late in the 'presser', perhaps the CEO slipped when mentioning an engineer might have forgot to 'turn off' a laser safety-switch before launch. Really; they don't have protocols and check lists. Maybe I misunderstood. Anyway if this is hit hard, I suspect the moaning of investors will be greeted by institutions or other speculators eager to buy it, as 'rinse & repeat' before mission IM-2.

Bottom line: aside 'somewhat' of a disappointment that LUNR's 'Odie' is tilted; while awaiting more news on the Mission. They actually 'operationally proved' some of the new technology (especially engine and LiDar measurement that they used) and there was inference that some can be licensed to others too.

As to S&P it's obviously very extended, however there's no change yet in our overall view or focus on AI-related applications (software primarily) that have promise over time; while we have a high level S&P range. More next week.

It does not take 'rocket science' to compute an overbought mega-cap market or S&P; Fibonacci or not; obviously extended market anyone can recognize.

It's comical to view technicians trying to explain what is so 'patently obvious'; which by the way is no assurance of the kind of decline that would be likely. It is unlikely to be a broad market catharsis; though more shakeouts feasible.


More By This Author:

Market Briefing For Tuesday, February 20
Market Briefing For Thursday, February 15
Market Briefing For Wednesday, February 14

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 follow Gene on Twitter  more

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