E Market Briefing For Thursday, Dec. 31

Price movement sensitivity - is limited, as markets tend to finish a year fairly stable, with the concerns secondary to contemplating many challenges. For sure we've had two years of overall great technology performance, and for us it was better than that, because instead of panic in March, we caught the low, and more important (to me personally as a couple comments brought-forth a bit of emotion), was the identification of pandemic risk back in January.

It was remarks about masks and PPI that helped at least two families let me know, that made a dent, causing me to realize this at times can be more than about investing, and better to have erred on the side of caution last January.

The long-expected bit of a rollover, most recently occurring over a month ago for many smaller-cap stocks is behind for now, remains elusive for bigger-cap stocks that sustained near-record highs, while internally stocks corrected a bit already, and probably have more of that ahead, but not immediately in 2021.

The concerns about an early-year retreat are understandable but variable. It's almost as split a viewpoint as the odds for the Senate runoff race in Georgia.

Today we got a new record S&P close, led by Oils, banks and usual suspects.

Good move in small-caps today, Russell fairly lateral, and nothing parabolic except for some of the Asian stocks, which have moved quickly both ways. In a benign sense, you 'bleed-off' the overbought condition with internal rotation and so far in the US, that's what we have.

However we don't want to get too comfy with this behavior at yearend, but for sure you have the Fed Put in-essence, and that underpins the market. There is the rising tension with Iran again, which may be behind Oil's firmness, while of course actual conflict with Iran would not be taken well by markets overall.

If in 2021 the economy outperforms stocks, that's for later in the year and for sure the market is anticipating 'post-COVID' behavior and (hopefully) not really too euphoric about the impact of vaccines on suppressing the pandemic. The smaller stocks 'should' do better for now, if one considers the 'January Effect', which of course is traditional and not precise to contemplate in this backdrop.

It is by no means as simple as rolling-out vaccines, hence a market concern as well. It is almost a year since I first warned of 'WuFlu' and as this pathogen has (and continues) to be more at the core of what happens to the economy, to our lives, and to the markets, I will continue this focus as long as needed.

Perhaps it's true that most professionals do re-balancing (including tax moves as well) in November, not December, and we pointed that out this week. Now we will see if we get 'the January Effect' this go-round. Concurrently biotechs we watch took-out round numbers where stops might have been clustered, so that combined with tax-sales unrelated to forward prospects, for that matter it created a possibly interesting entry point while some were exiting.

Let's review where COVID relates to Sorrento (SRNE), which is always a been just a 'pending, pending, pending' story to so many, hence medical and more so the analyst skepticism that has prevailed. So is that about to change?

Sure, if they finally get a test approved, with actual treatments the longer-term key. Today they applied for Authorization to market Covi-Stix (antigen test kit) in Mexico, which they say did independent tests that validate high sensitivity. I could speculate Mexico could be a bigger deal: free-trade-zone manufacturing since 'rapid test kits' for home will be a very big long-lasting market. As many of you know there are tax-free Maquiladora zones which could enable 'cheap' mass production and affordable consumer pricing for these kits. Besides that assuring affordable kits 'in' Mexico, with the Peso around 20 to 1 vs Dollar for now, and the NAFTA2 situation better than China, to avoid any import / export issues, you get rapid manufacture and sale in both countries. Just a thought.

But again this is 'pending'. But once something is approved, it won't be at 7 although so far every good news gets a bump and then crushed anew. So it's not going to be surprising 'if' the EUA for Covi-Stix is approved yields that sort of action again (a rally and drop), but this time an ensuing rebound sticks as it seems for the first time with regard to COVID solutions, something's approved.

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