A 'technical bounce' was due after a washout, and that was our expectation. However, everyone is calling this a bounce rather than an opportunity, so that makes it possibly a more significant battle.. and from a key S&P trend line (SPX, SPY).

Too many simply call it a 'little bounce' and that's ok. But they omit that it's a bit like some we've seen during key struggles before, in the old S&P trend of course, and perhaps it will be how the S&P acts when on the defense next, as will better tell the tale. However I have a hunch it may do pretty well. We'll talk a bit about COVID too, and include a few words about LightPath (LPTH).

One reason I have that thought is our own forecast for a January bounce after initial chop (which was an understatement), and then perhaps trouble later on. But that won't help the Bears, who already are missing the recognition of how it gets going, and in a sense sometimes gets help from seasonal investments.

Sure, the 'yield' issues are there, and ultimately matter a whole lot. The freak show sell-off generated by the Fed's more aggressive 'plans', contributed lots to the early washout, however I've tried to point out that even with 4 or 5 hikes in the Funds Rate they won't make much of a dent in inflation, given origins in this particular situation.

Also they won't suppress Oil prices much, and that matters. And ironically our call for Bitcoin to break from that double-top around 60,000 wasn't just right, but the decline (it briefly broke 40,000 today) might surprisingly have shifted a bit of funds from crypto into small-cap stocks, in any event that all happened (BITCOMP).

The macro inflows of cash into crypto may not change over the full year, not of course an area I focus on (though we've apparently called a few moves in the sector), and I don't intend to more than I do. But I didn't intend to explore more small stock 'bets' except for the reality that the big ones got too pricey. I think the mega-cap techs generally still are, but yes they help current lifting of course, and were needed, along with Oils and Banks, to rebound somewhat.

Meanwhile... the Needham Conference began, and first-up of stocks we view and are optimistic about, was LightPath Technologies. They revealed a new slide presentation, which was quite encouraging along the lines we've written. I will share just a couple of the slides, perhaps the presentation will appear on their website soon.

Emphasizing the 'new LightPath' throughout, it's pretty clear CEO Rubin was intent on sharing the correct sharpened vision of their forward outlook. Noting the LPTH shares are around 60% of 52-week highs when price was around 5, but with stronger fundamentals, really does put a sharp edge to my theme on this photonics/optics stock having transformed itself considerably in 2 years.

I've watched and traded this stock for many years, both spectacularly and for a frustrating period as well. In recent months I'd welcomed the transformation of the company beyond the ISP Optics acquisition, but also into 'space' and a slew of related infrared capabilities, and the cleaning-up of Chinese corruption which might have suppressed revenues for a long-time. It was the new team's inquiries that led to changes there, although the main business is in the U.S.

That U.S. focus is probably why LPTH has a faster growth curve developing it seems, and hence there is a form of 'leverage' working for them if they readily can meet demand to fulfill customer needs. The recent U.S. Navy 'exclusive' patent-use deal matters to customers/contractors requiring US Made gear. So if LightPath can ramp up to 50 million for-instance and accretive, and without incurring significant debt, at some point the share price should reflect that.

Also I'd not be surprised if there was some M&A activity this year. I believed it was low-risk speculation under 2 for months, and LPTH is not far above it yet, but could gain traction to move notably really at any time they have news that is sufficiently substantive to move it. It's worth observing light volume retreats characterize dips, and that's in my view not just bullish, but just reflects patient investors holding for higher levels. How high and when, depends on news.

Overall:

Rotational markets have been ongoing for months. I am just slightly hopeful that enough damage has been done beneath the strong S&P 'cover', so that we can at least have a chance of migrating through the pandemic into a broader and more comfortable recovery path (for markets and life overall).

A defensive bias has been (and probably remains) appropriate, but there was simply what appeared to be compelling values in the 'barbell' as we see it, as well as realizing that represents what most analysts consider riskier gambles, and in a way they are, but in another way they're not (that would argue pricey mega-caps are not well-priced and often are leading, but have notable risk as examples seen for the better part of a year in the 'pandemic-theme' stocks.

I understand the 'Street's' focus on dividend so-called value stocks, definition of value is hard to cull-out for some of them. This market and this generation isn't very content clipping coupons, not to say they shouldn't be (millennials in my mind, not my generation which is more conservative generally), and that's likely hurt them last year in meme stocks and many got hooked on crypto and are hurting now. I haven't taken a survey, but I bet there's frustration.

Part of my hopeful tone (while still expecting after the bounce S&P tries lower again) .. relates to COVID, and 'maybe' the idea that we either emerge or admit defeat and just live with the virus (that stance, being considered in the UK by the way, 'is' defeat), accepting herd immunity. Part of the problem is there has not been adequate evidence of no further mutation variants 'or' ultimate lower risk from what we have now (a mix of Omicron and Delta) aside S. Africa. If it proves that we can legitimately draw that conclusion, it will help emergence.