Market Briefing For Thursday, June 8
Smoke & Mirrors - dominated the action Wednesday, as Canadian fires sure clouded everyone's vision, hobbled Air Traffic in all of the New York City area airports, and even Philadelphia (hence both international hubs of American in Philly, and United at Newark, plus a secondary international Delta JFK hub).
Aside the possible impact on humanity, there's particulates causing friction or damage on jet turbine blades, even outdoor (typically rooftop) HVAC systems if they don't have frequently replaced or cleaned HEPA filtering systems. This is going to persist a few days, so amazing Airline stocks held up. Others didn't and many stock & bond traders likely escaped to Air Conditioning quickly, or a rapid retreat homeward, which was also part of the afternoon's S&P retreat.
It's still a neutral overall pattern, generally lighter volume on declining stocks at the same time the air came out of most of the mega-cap AI plays, finally. I have been warning about the concentration in that handful of mega-caps, as it requires better breadth (and we have some of that) to hold things together.
Of course the reality is most all speculative mega-cap plays were extended in parabolic unsustainable ways, so the key to those will be performance on the forthcoming rebounds, which inevitably should be anticipated, even before we get the FOMC decision (hopefully a 'pass') on rate hikes next week.
After the Close AEHR did a very brief virtual presentation for Wm. Blair, and it was underwhelming, only because there was no Q&A period to glean any info with regard to forward estimates (AEHR). However I suspect those will be higher and might be discussed in July, when they report FY Q4 results.
In the meantime the shares were firm in the morning and defensive later with virtually all the Semiconductor sector stocks, as well as ahead of Wm. Blair. I will be interested if 'their' analyst (who initiated a 45 target almost reached so far but no cigar yet) raises his estimates for the new (just started) Fiscal Year.
That would give a clue, and assist the shares in recovering sooner rather than after one of the volatile but often short-lived corrective phases in the past year or two. Meanwhile, unless AEHR is going to become a 'Meme' type of stock (it isn't and likely won't) and run vertical to triple digits, a stair-step is normal. The shares got a top rating from IBD (Investor's Business Daily) more recently and some additional following, but generally isn't a household name (that's a plus).
A lot of stocks are entitled to correct, and I have remarked about how many money managers and analysts were capitulating to a more bullish stance, with JP Morgan's analyst a notable holdout. I have been fairly consistent arguing that the 'head & shoulders' bottom was last October, and in the past few weeks suggested we'd get some sort of shakeout in June, with a hook being what might be the FOMC passing on a rate hike and then 'sell the news' prevailing, or they hike and S&P sells off but then rebounds sooner (the idea would be no need to fret July as much). So it's a bit of a conflicted time.
I suspect the reflections of this day will repeat tomorrow, but possibly opposite with selling early then rebound, but again nothing impressive, neither disaster not upward extension, leaving tensions remaining ahead of FOMC next week.
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