Market Briefing For Tuesday, Oct. 19

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Resilience is the key word to describe this market for some time, and totally inline with our outlook for an upward-tilted Expiration last week, mild defense to start this week and then onward, potentially to another record S&P high.

Barring some financial (or other exogenous) crisis for which the market clearly has not priced-in, we don't say onward and upward, but believe the high-level S&P range can persist, at least for awhile. I don't disagree with Carl Icahn or evade concerns about how current monetary policy leads to an 'accident' or other concerns about a 'thread the needle approach' the Fed has embraced, while recognizing that aspect throughout the pandemic, hence the reason we called for the down-to-up turn on March 23rd last year.

Now it's stretched and I've said numerous times they're kicking the can down the road, but I'm not the Fed. They choreographed this dance, we just knew it had to be played as long as possible so assessed it accordingly. Not over yet.

Certainly the slower Industrial Production, Housing and other factors, are sort of contradictory to what's going on in this market, including COVID.

COVID breakthrough cases are increasing, a new variant in the UK has been seen in both vaccinated and unvaccinated people, and we don't yet know if it can be addressed by the existing (clearly fairly mediocre) available vaccines.

Of course RIP to General / Sec'y. of State Powell. He was vaccinated and that's triggered ridiculous debate among agenda-driven broadcasters. Sort of shameful that the 'so-called' news networks would debate his long-term fight with pancreatic cancer and other comorbidities with either campaigning for or against a vaccination, or simply to further discredit the vaccines. But yes we'll have better vaccines in the future, probably sometime in 2022.

It's pretty evident that the vaccines never were really able to 'prevent infection' as some (many) officials claimed, but do help preventing severe cases and so a lot fewer deaths. What it achieved beyond that was less pressure on terribly challenged hospital teams, and fewer cases (like mine) of ICU-caused injury. I make this overall point as there's plenty of room for better treatments and pills beyond the existing vaccines or even the Merck pill which is 'questionable' as to whether their 'trial' was halted 'too soon'.

Meanwhile, Apple (AAPL) introduced new laptops, which are more than an upgrade, at today's special Presentation. We've already outline the prospects, so there is delight we got it right, notch and all (cleverly hidden by an information strip).

Hard-core techies are pretty excited about the performance of the MacBook Pro's, at slightly higher prices, and a bit more heft (3.5 lb on the 13" model or 4.7 lb on the 16"). Notice I mentioned weight more than features. What might be noticed as I mentioned is departure of a handful of their top chip designers, who went 'elsewhere'. Cause one to sort of think of 'either' TSMC (TSM) or new Intel (INTC) supplying Apple with processors about 2-3 years from now made in the USA from either of their new Arizona foundries.

 

Oh yes, Apple upgraded their 'base' AirPod (careful, no noise cancellation on this mode, and the AirPod Pro update is maybe next year, present one fine).

I listened close to Apple's top German semiconductor Director explaining the new M1 Pro (and Max) processor. He highlighted their industry-leading CPU and GPU integration on a SOC (system on chip) wafer (Max being the largest wafer in the industry incidentally, and unneeded unless a videographer or an engineer for-instance). The whole system delivering much faster thru-put and beats competition on all fronts, as far as a PC processor goes. (They did not introduce a new powerful 'Mini' nor the 'Pro' line of high-end computers. Nor larger iMac, stay tuned.) The performance should be fairly compelling and it will help Apple in their quest to keep the ball rolling on regular gains, though of course they can't repeat precisely the last 10 year's outcome, can they? If they move in the direction we think with 'clinic on your wrist' technology and a clever approach to the EV / control automotive space, that will be fascinating.

What is interesting to me is: it wasn't clear whether M1 Pro includes optical transmission, but I wouldn't be surprised if it did. While not essential (yet) on a laptop, it is key to technology in Ai, AR, or most future infrared technologies. And we already know that AMD and Intel are both planning ahead thusly.

This, and rumor-mill speculation about not just Apple Watch 8, but not even future AirPod Pro's coming with 'health sensor' capabilities points us directly to Rockley Photonics, which we believe is heavily involved with Apple both on current and future product development. The rumors these would appear in the recently-launched Watch 7 were premature of course, and that helped drive (RKLY) stock to about half the initial SPAC-launched recent NYSE debut.

I said then we'd consider buying it at half price so we're initiating just that, with a reminder that you may not know for sure about next year's 'features' coming to retail until months from now. You might hear sooner from other partners. It's likely going to take a bit more time, but optimistic it's building a base near 7.

In other areas, AEHR has simply been a powerhouse stock, we're long from 6 with new or added positions at 12 or a hair below, and short-term target now achieved, but the trend is up and we see it higher over time. Of course we've got no reason to chase it higher, but institutions do, as they missed this one for the most part, and are not very well represented in AEHR Test Systems.

A look at the low float and shares outstanding, reveals low market cap for this company, presuming they really have a lock on this type of SiC testing. Thus if so I can imagine funds finding a way to get in and price lifting to 30-40 or +. Also, General Motors (GM) signed a serious EV-related contract with Wolf (that's the old Cree), and Wolf is an AEHR customer (I believe). Connect dots?

In-sum: 

For now the pattern evolves as targeted, but not looking for much as far as S&P is concerned. So higher but beware excess enthusiasm.

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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