Stepping in front of a truck is essentially the near anyone contemplating a short-sale of the S&P or even a handful of momentum leaders, must feel. For sure this is a different environment, and fortunately we were among the few it seems, that had both the year's initial distribution, plunge, and March low .. all captured in our guidelines.

However we were emphatic about selling during a pre-pandemic and already overbought market of January, and vehement about buying when there's dire desperation such as the late March low. More recently we have had what may seem to new members as a more neutral view, after getting the S&P breakout into what I called an 'overshoot zone'.. above the yellow line in the S&P chart I will show again for those not recalling), with 'probably' no higher than 3800 for this phase. A bumpy road in 2021? Probably, despite prospects of growth for GDP, especially 'if' we see the Nation and world migrate into an 'actual' (rather than wistful) post-COVID era.

This matters because if we saw a dramatic extension possible we would say so (and do in some small stocks, not the overplayed pricey ones as even includes stocks that exploded higher in just the last couple days)...If that was predictable with any certainty near-term I'd say so, likewise a huge break that so many persist calling for (and continues defying them) is also not worthy of playing, because those small group of momentum stocks have buyers as the deer in oncoming headlights, if they misstep at all.

That's why I've cautioned about excess optimism, excess pessimism, and as it unfolds it turns out being cautious without insisting on huge transitions from one direction or another, has been an appropriate stance. Relative neutrality, at any given moment, may seem 'boring', but all we're trying to do is 'read the backdrop' as the market sees it (not necessarily the financial news media) for hints of what 'Mr. Market' wants to do next.

With a friendly Fed, a COVID Stimulus Bill probably unveiled any moment, it's a strange time to 'fight the trend', ill-advised to 'fight the Fed', and maybe not so wise to short anything, even though it's reasonable for fluff to be vented out of most of them (and some did even today). To wit, the really monster moves of this year are behind, both plunging downward or soaring upward (erratically at times), with no problem harvesting portions of gains in the big stocks, while

Hence 'don't fight the Fed' or the trend has remained appropriate, we got a Tuesday turnaround looked for, it's not dramatic, it is news-sensitive, and this is still a very expensive market with regard to the super-caps, but not so many others are that extended. Which means the market is receptive to stories. (SRNE)

Executive Summary:

• The intraweek rally began as anticipated, and it's not over.

• An upward extension does have psychological resistance, but can be overcome especially if we get a solid (and quick) Stimulus Bill.

• A big 'booster shot' won't be the rollout of vaccines (opposite possibly as side-effect stories are seemingly pretty grim), but the strong Banks and Oil stocks (we wanted both.. needed both.. to fuel this rally and got it).

• Although you got (of course) the Pfizer (PFE) FDA approval, note that a few of the bigger vaccine stocks were again on the defense, perhaps the twin doses of vaccine having fairly significant side effects getting attention.

• Amidst this Sorrento, which promises lower side effects by virtue of the low-dose nature of their monoclonal antibodies contrasted even to others using similar antibodies, holds steady and rebounded a tad, expectations are for (hopefully favorable) rulings for the FDA very soon.

• On that topic, Dr. Ji was on another virtual biotech conference outlining a slew of treatments and tests we know about, but illuminated a bit more as relates to improvements in tests (whether that's an excuse for delays or a real effort working with Columbia and the FDA we really wouldn't know).

• This week is about hopes and dreams, and an ongoing upside bias we've argued should or could exhaust, but we wouldn't fight it.

• S&P and DJIA have slowed-down as numerous firms are warning of new hits, and of course we've been on the lookout for shakeouts anytime now that we're in the 3700-3800 S&P area.

• However we are not joining the doom & gloom 'red alert' crowd and so on, barring some exogenous 'black swan', which all those bearish technicians don't know of either, so they're just playing off basic overbought technical indicators, and I suspect covering themselves since they definitely know it is a bull market driven by the 'Fed Put', as it has been for months.

• The Supreme Court throwing out Trump campaigns Pennsylvania case is not a swan, this was probably anticipated by most to be the outcome.

• Texas and other states filed a Motion against the Decision by SCOTUS, and Pennsylvania responded that their Motion doesn't address the statute in question, I'm not a lawyer and have no idea, and this remains pending.

• A 335-78 bipartisan vote to approve Defense Legislation, that authorizes pay raises for American troops reflected lawmaker optimism Congress is likely able to force enactment of the bill over Mr. Trump’s objections, that would be the first veto override of his presidency, but most politicians do want to be supportive of military pay and so on.

• There is a 'rotation angle' within technology stocks, some of this will shift in 2021 from tech stocks that 'almost solely' benefited from work-at-home to the better semiconductors (including our homerun AMD long-held stock it seems we intend to continue holding), and also network beneficiaries.

• 5G will come into its own, as today's 'consumer moaning' of little benefit is what we've spoken of, the products out there ahead of the 'real world 5G' as relates to truly fast longer-range coverage (carriers deserve consumer ire, since they have advertised 5G 'as if it would be transformative 'now', it will be over time, but for building-out networks it's more 2021-2023).

• Back to the vaccines, it now unfolds (also suspected but unfortunate) that a couple of the vaccines did not have the 90% efficacy in older groups as were limited in the 'trials'.

• Again while 90% of people don't catch it as a generalization, it means the 'great efficacy' be taken with a grain of salt, many remain dubious.

• Two patients on the AstraZeneca (AZN) trial died of unusual illnesses, and they were not in the placebo group.

• Unsure if I'll call this an endorsement, but Israel evaluated the alternatives and decided on the Pfizer vaccine, they have 8 million doses and will now commence vaccinations based on FDA approval (withheld pending that).

• Overall this is a tricky time coming right up with the COVID spread, a clear need for Stimulus, no perfect answer regarding shutdowns versus a more open approach, though broad closings are anathema to small business.

In-sum: the market strength persists, but shows signs of exhaustion. The big welcoming mat to Pfizer tried to dampen concerns about side-effects, but was not entirely successful in squashing the concerns for them or others.

Taxes, regulations and other factors that will influence 2021 aren't focused-on much. They are almost an ignored consideration for now, given the light touch Tesla (TSLA) talking about 'why' the purported Texas move, or Elon's candid critique of doing business in California. This and the gigantic housing shift may rise to more prominence when evaluating banks and others that do well next year.

Despite the resilience and persistence of this S&P toward the (max realistic in my view for now) 3800 level, the trend is tired, and some of the focus on other stocks (sector specific chasing) reflects this too (Lidar, with profit-taking, and a new look at beneficiaries of Ai, AR, 5G and so on is part of this).

There are many areas (including competition and/or cooperation with China), we will be addressing in the New Year, and don't be surprised if there's both efforts to calm and efforts to further disrupt, before we get to Spring. First let's get past the political hurdles and move forward to vanquishing COVID ideally in the presence of monoclonal antibodies that increasingly will save lives.

Daily action - again saw momentum shift in the Senior Indexes, came back up as our Tuesday turnaround, even as more talk of a compromise Stimulus bill hit the wires. Technical analysis isn't everything, but it definitely challenges those who try to simplify trading to a series of indicators, and especially if they fail to deconstruct it into sectors. The riskier trend continues grinding higher.

After the Close, Sorrento updated the pending status for important Covi-AMG and Covi-Drops (nasal and both based on STI-2020 as I recall) from Preclinical finally to Phase 1. Most likely the IND's have been approved today by the FDA, but we can't be sure. Perhaps a press release will follow.