Market Briefing For Tuesday, Nov. 9

Optimizing portfolio strategies in this market, is fairly straight-forward, even if it doesn't fit catch-phrase descriptions of overbought vs oversold or valuations in an extended or undervalued way. The reason is because it's all those.
 

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We may argue that the market, meaning the S&P (SPY) and NDX/QQQ or similar, have an almost historic overbought 'superficial' image, however the underlying factors, as has been the case for many months, remain mixed or bifurcated.

Now some small caps making higher highs is not solely particularly indicative of strength, but reflects unique characteristics which were often overlooked for a time until some even came along to arouse interest (AEHR is a perfect case for this, while on the high end of big caps so is AMD with today's 'Meta' deal).

Meanwhile others mostly suppressed for months remain so (tax selling, a very normal characteristic of this time of year). That holds stocks down especially if there's no expectation of immediate stunning developments (new selection for Rockley Photonics fits this description, likely a few months until it's clear as to whether 'clinic on your wrist' will be part of Apple Watch 8 in 2022, and as or if it is, the shares will likely be substantially higher), while little LightPath (LPTH) might trade somewhat similarly (traders accumulating gradually, suspecting something new (as the CEO promises forthcoming).. perhaps 1-3 deals next year that potentially will loft it by a double or more).

(Canada claims there's a review of this before the pipeline is shut. Better be. The United States, an industrial nation, is not yet-ready to rely on renewables as promising as that may be. This Winter doesn't need to teach that lesson.)

And then there's the enigma stock, Sorrento Therapeutics (SRNE) with it's quixotic CEO who isn't foolish (perhaps overly clever) in promoting his science before it was remotely ready for prime-time as far as the COVID-portfolio, but at some expense and nerve-wracking to shareholders, bought time to develop those or more importantly SP-102 (non-opioid epidural pain reliever for sciatica) which could emerge from Phase 3 very soon, then submit an NDA (in this case FDA has given it 'fast-track' approval to go forth). Will something work from all the javelins he's throwing? Probably yes, seems better than 'fantasy football'.

Will we see it come through with even more patience? The controversial CEO says so, but of course the shorts and others oppose him because repeatedly he took investors on a primrose path route, to get to this point. However, one more FDA approval and I suspect it gets a good move. It's a FOMO stock.

So it's quite a 'mix' of winners and not so much losers, but of moribund stocks. And I think we've assessed each of these as representative of the market that focuses on where it sees action, not where it doesn't. Perhaps part of insanity in price dominating most market talk now, is a measure of 'peer competition' among hedge funds or others, who may believe a stock will do well in 2022's second half, but aren't willing to buy on a scale-in during these last few weeks of the year, which may be the low-price-point for a few of them.

Turn the clock back (yes we did last night) to late 2018 and my pick for 2019 was viewed as 'too speculative' by some and there were bears on Wall Street. That was AMD, we're in this from 17'ish and it's 150'ish now.. that might be an exception, but it's not, as I had already seen and had described their newest processor (in Berlin from an AMD Product Developer). Now traders all like it, and agree it's a sector leader. Would I buy it now, nope, but envision 200 in the future. Continue suggesting holding the vast majority of initial positions. It's one stock where even if you want to trim a bit, deferring into a new tax year may be a consideration.

AEHR Test Systems was my earlier-than-usual pick for 2022 at 6'ish, so that was only in August this year as I recall, and it's about a quadruple. There was news in this case (discussed it often) from ON Semiconductor contracting for specialized gear to certify (Silicon Carbide) wafers. Jumped on AEHR quick as well as suggested buying more on the pullback to 12's, now consolidating above the 20-22 short-term (3rd raise) target. Eventually likely lots higher. It's a reminder (as was AMD which had to be nursed higher at times) that nothing is usually a straight-line move, there are hills, valleys, and boring stretches.

One cautionary note: glad to see the USA inviting international visitors, flights resumed from the U.K. and elsewhere today (Virgin Atlantic's first flight very welcomed, although it's not exactly tourist season at Disneyworld). The very succinct caution: several countries across Europe are figuring new strategies to confront a 4th wave of COVID cases. Hate to be the bearer of bad news.

Denmark, with one of the highest vaccination rates on the continent, plans to reintroduce restrictions to halt a recent spike in cases. Germany’s infection rate soared to the highest since the start of the pandemic. And Russia's poor vaccine, Sputnik V, is so bad it's unacceptable even by the WHO. Either their approval or that of the FDA is required for a Russian to visit the U.S.A. Just a reminder that even though the Pill is coming it's not here, but COVID is at risk of coming back, even Dr. Gottlieb agrees that we should drop our guard. But we are dropping it quickly, and well, we'll see. Markets ignoring this for now.

This is an excerpt from Gene Inger's Daily Briefing, which typically includes one or two videos as well as more charts and analyses. You can subscribe for  more

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William K. 2 years ago Member's comment

Inflation is almost always permanent. And any statement that it is only temporary or "transitory" is understood to be false. Like the sun rising in the west, some things just do not happen.

AMD was always going to succeed, just not always immediately. Always a good choice there.

And as for international travel, the borders should have been closed at the verystart, instead of announcing that folks had a few weeks to bring the plague back before closing way too late. But DUMB MOVES seem to be very much the policy of our government. What would have been done if the plagyue had been found to only attack that "1% group"? The closure would have been within an hour, enforced by the AirForce.