A 'dynamic shift' in sentiment - obviously looms on the horizon, but as contended all Summer, extreme risk (beyond shakeouts or even a correction) are not here 'yet'. The rotation into value or recovery stocks has been trying to start for weeks; and got a little more evident last week, when some airlines and oils based as I described it.  

And even with the plethora of technicians 'complaining' that the Nasdaq is so high, we are not looking for the debt-based catastrophe some are, either.. yet. Which is not to say certain circumstances (physical, financial or political) don't hold within them a prospect or capability to set-up such a risk matrix, as time goes on. So as 'super-cap' risk becomes evident, or the overplayed 'vaccine' stocks decline, specialized stocks such as in particular preventative (prophylactic) or COVID-19 treatment, march ahead. 

Executive summary:

• Manufactured antibodies may both prevent and treat COVID-19, I've noted this for a couple months; increasingly it's being recognized by Dr. Fauci's recent remarks and given a delay in reliable early vaccines, it's seems the best hope for now.

• While other pharmas are in the race (room for all), Sorrento (SRNE) may be closest to a viable treatment (injectable or eventually 'Pill'), due to that quiet earlier testing.

• I'll put Sorrento in a nutshell: CEO Ji ignited a storm of buying when on CBS he announced on May 15 (before Cramer chased him down) that it had discovered a broadly neutralizing antibody, the stock popped and flopped and we believed the original message (mistreated by hot money traders), and bought it around 4.

• Then something similar happened again and the shares fell from grace from around 8 back to around 6 and our response was to buy more, we believed testing and/or treatment was the trick to getting through COVID-19 this year.

• We still believe that, others now chime-in (Fauci included) given the unlikely fast arrival of decent vaccines.

• So, everyone needs to pray (not just investors even with success) that 'antiviral intervention', especially neutralizing and/or monoclonal antibodies, works.

• It's confusing to know whether this is exactly what was tested on Chinese cancer patients, allowing it to already past the Phase 1 safety studies, hence went right to Phase 2 trial, which apparently is ongoing.

• If so it may be that initial excitement prompting CEO Henry Ji to call-out on TV that they had a 'cure', all their proper filings tempered terminology.

• Many thought that was hype, the shares fell in-half and that's when we jumped in and thought CEO ideally was just 'optimistic' and excited, not trying to mislead.

• Sorrento is a broad enough company that it has several hundred on-staff and is borderline going to be more than a speculative biotech if any of this pans-out.

• Contagion in disease and also global despair, combine to press money flows into biotechs, but also the emergency of economic coping amidst this varies widely.

• Several promising advance treatment (like ARDS) candidates aren't too exciting because of a decline (fortunately) in the number of patients going on ventilators as medical staffs become more familiar with earlier interventions. 

• Ultimately this is related to COVID-19 and interest will wane, but down the line as all the needs for treatments and preventatives are even more important than before given the awareness there's no widespread use of a reliable vaccine near-term.

• And to say a change in leadership to value from big-cap growth, well that's a projection I've regularly talked about and is ongoing.

• However the broad list so far cannot offset the heavy-lifting of super-caps.

• A sort of 'reflation' trade will indeed favor many suppressed stocks that we see as 'survivors' of this unprecedented era and will recover somewhat.

• I have also emphasized focusing on individual issues more than 'sectors' as some are better-positioned for recovery than others.

• For-instance, Delta (DAL) and Southwest (LUV) are better postured than competitors; and Delta I described last week as in a 'basing pattern'.

• To expand that meant: some lift likely (but not a huge move because the historic pace of business is just that.. history).

• Monetary policy and fiscal moves are going to be helpful and all this kicks-in in the form of a broader move next year.

• Meanwhile, Saudi Arabia is curtailing oil shipments to the United States (note we don't get much nor do we need any from them, and appreciate that gesture).

• The Saudi move intends bolstering price and that's fine, it helps the salvaging of America's smaller oil companies and helping the broad market (even banks).

• On the COVID-19 front, you hear of other 'saliva' tests (some good accuracy; most not so great) that may join that presumed coming from Sorrento, we aren't just focused on the saliva test, as there are many solutions in the pipeline, though of course the accuracy they claim for the blood test (the 8 minute one) is good, and the Columbia Univ. 30 minute test is said to be very accurate, so we'll see.

• Overall market focuses on COVID-19 and wants to invest in post-COVID-19 beneficiaries (hate to use that word), but it's still going to be a process as all that unfolds.

• Nevertheless by the time COVID-19 is actually 'corralled', best gains will be history too, and we'll look back at our 'masked photos' with very mixed emotions despite it turning-out well with respect to investment decisions both early in the year (sell to a degree); in March with the identified washout S&P low; and in COVID-19stocks.

• My expectation near-term is a continued grind higher, but pressure will be on the list to perform, as they'll be hard-pressed to offset the super-cap influences. 

In-sum: The pattern continues evolving as outlined.