Ripping runs are not what this market is looking for. That's last year's S&P. Because of all the factors intervening or risking intrusion into markets, cyclical plays are attracting investment; but that doesn't mean the best percentages in this year's market will be in big-caps; while it also doesn't mean they're not impacted by a series of Fed actions; presuming the Fed retains it's mantra.

This Fed may be emboldened by knowledge that so many of the major techs are 'cash rich' presently; so their performance may not be severely stressed, as the Fed hikes rates. But the backdrop psychology may differentiate their stock performance from their operating results and smooth funding ability. At the same time 'if' Covid becomes chronic instead of 'acute', as seems likely in the next few weeks; the Fed will have a less-obstructed path to hike 'more'.

The small-cap and mid-caps generally have suffered different kinds of runs for a few months now; and are already crashed. As they look forward (especially if they have disruptive or novel technologies), and 'if' they have funding (or for that matter after dilution deals with necessary visits to the money well where it is necessary) for progress; they will mostly extricate from their ditches, and might be running higher while some bigger techs retreat into swoon-mode.

That takes you to the NDX/QQQ and every possibility for a harder hit his year; but the timing doesn't have to be right now, when everyone is nervous about it or so it seems. Contrary thinking would provide some suspicion for big stocks getting a grip and actually rebounding in January's second half; but that's iffy.

(I don't intend to dwell on individual stocks for now; but it's pretty clear smaller caps rose and tanked together; and then were mostly neutral Friday. They're entitled to bounce.)

In sum: this year may highlight innovative approaches in tech, healthcare as well as other areas like EV's and related components (photonics is part), since the era of blindly buying Indexes mostly passed (at least for awhile).

Many money managers have or are trimming positions in the very pricey, but seriously profitable mega-caps; and the contrariness view would be nibbling a bit at those likely to have some (speculative) rebound in January's 2nd half.

We've talked about 'active' over 'passive' management being the preference, really for over a year (bifurcation); while both would agree with me now about the prominence of Oil(s) and (slightly lesser extent) Banks among leaders. It is still a mixed picture, and these alone cannot sustain the entire market.

The 10-year T-Note made it to around 1.8%; and that's pre-pandemic levels. I hasten to point-out yet-again that yields pressing 2% is not an impediment to business activity or growth; but it has a psychological impact on markets and perhaps (with a lag) even to home mortgages or so on, as the 30-year firms.

(Typically home buyers rush as you've seen, to buy if they can, and thus there appears to be stability in Housing, when in-reality that's 'get off the fence' type reactions, followed by lower sales and re-financing's as/if rates stay higher.)

Technically.. in the NASDAQ chart last night I highlighted a rising-bottoms or controlling trend-line. However, a break below the 'lateral lows' of prior weeks would be in the 15,400 vicinity of the NDX, which correlates roughly to 14,800 for NASDAQ. Both of these are likely to be penetrated on the downside over time. It's the near-term 'defense' (or lack of holding efforts) to monitor for now.

The coming week could easily see an early battle around these levels; helping to washout and set-up a rebound especially if short-rates firm even a bit more. It is conceivable that a washout and trading move improves tone for January's second-half; but there's no assurance of anything more than that, for now.

By the way, the CFO of Sorrento (SRNE),Mr. Najjam Asghar,passed away suddenly yesterday; and there is no information about his successor (likely his assistant for now). Condolences of course; although we've never heard from the CFO, as Sorrento does not hold 'normal' typical Quarterly Conference Calls (yet). I had talked just once with the Strategy VP, Dr. Sabati, and he said they will do so once they start to make money (his words). One can hope that's soon.

For that matter there are so many market variables that even the Fed may be less sure of their ability to enact rapid hikes (or even tapering) than they'd like per plans, in their belated effort to emerge from being behind-the-curve (which they really can't). No matter what they do, with inflation having traction, there's a prospect for inflation-adjusted rates to remain negative for more than a year.

Expensive crowded big-cap stocks are 'mixed'; Oils & financials strongest. A sell-off in super-caps like Tesla actually have the S&P looking weaker than the broad market actually is (hence down S&P with slightly favorable breadth). Of course there are tough-to-clarify plays like AT&T, which was a recent bargain; as will benefit in still murky ways from the Discovery / Warner deal (largest holder becomes AT&T). In Oil or mixed ICE/EV; Chevron and Ford are fine.

There's a secular growth story in Semiconductors that hasn't ended; even as of course the sector charts had been moving above traditional trend for awhile. It may be more of a concentration into new technologies like Silicon Carbide or similar (new material) wafers; and embrace of photonics (a longer-term major improvement in data transfer speeds optically within processors) is already at least hinted at by AMD and Intel; as emphasized by AEHR Test Systems. In a longer time-frame, real extreme speculation like LightWave is out there; at the same time closer horizon plays like Rockley Photonics or LightPath do have work or applications that overlap into some of the new tech areas.

Overall. . .we've believed for a long time that the Fed needed to 'get a grip' on policy so as to avoid the basic corner they painted themselves into; and it will remain dubious if they'll achieve their objectives. It took a long time for parties to end for the Fed; and so much so that major CEO's recognized this situation too and thus engaged in buybacks last year while they could; and then largest inside-selling ever (!). That's unlikely to be replicated this year; as investors do grasp how some of that behavior was a short-term gain with long-term pain in a sense (fewer shares outstanding pressed prices up; then executives sold).

Still you have a mixture of stock performance and you have a small group of a shrinking mega-cap sector, that can continue buybacks and dividends, without borrowing or new issues. So again it will vary by stock, their motivations, and of course their capabilities if they're to continue the activities absent borrowing as some did to facilitate the buybacks over the past two years.

For the new week perhaps some consolidation and then an effort to improve the market's tone; especially as the small-caps should be entitled to bounce.