Velocity of volatility was tempered as expected, by an 'automatic rally' I'd forecast for Tuesday. And yes, too many are making too much of the behavior and overlooking 'already achieved' corrective levels of a majority of stocks. It's almost 'as if' every reason is trotted-out for the rebound, except technical...just a normal predictable 'automatic rally' before threatening underlying support is once again a risk, more likely next week than the next day or three...

Pexels

It's also too 'elitist' to be dismissive of Monday's decline, which reflected a sort of 'whoosh' effect we've been warning of in the 'super-caps', not average stock movements. With a big caveat: there is a presumed growth scare and that's of course the COVID / Delta worries, or the degree to which it throttles optimism. It of course limits the ability to forecast economic conditions, more than usual.

Now, in efforts to defend their bullish portfolios, some money managers have come around to our point of view, that we already had months of distribution, essentially under-cover of the strong S&P, NDX, SOX and so on. During that they pumped-up (also expected) Banks and Oils to give additional 'cover' by having Dow Industrials move towards a record (it's price-weighted versus the S&P which is capitalization-weighted), as most investors recognize.

That's fine (if belated welcome to their candor), but it won't ensure significant growth. What we need is 'neutralizing the Delta variant', which isn't sufficiently accomplished by the existing vaccines, though they apparently are helpful. So besides questioning long-COVID and long-term vaccine toxicity risks unknown with any specificity, I remain hopeful for 'pills, nose drops/sprays', monoclonal antibodies (MaB's) and so on that can actually end the scourge of COVID.

That is why for quite some time I've emphasized COVID, not yields, as a key. Now we have Sorrento Therapeutics (SRNE), continuing to act unlike normal stocks, with several progress reports. Among these: Phase 3 recruiting for non-opioid pain relief (epidural injection version) is complete, so they move forward. And they set-up Sorrento Mexico to handle marketing, testing and other deals in Mexico and parts of Latin America. This also stated: they're now authorized to ship to Mexico, which will begin with 1,000,000 test kits (25 units per box). It's unclear how many units are in inventory at this point. Also keep in mind now you have Celularity (CELU) public via a SPAC, and while the shares tend to drop after such a way of going public, if Sorrento retains their 25% ownership, that has a few possible combinations or collaborations one can envision in the future.

Remember, we view all of this as rotating corrective action in our 'bull market' that began on March 23rd 2020 as we nailed that low. This projected retrench is a self-correcting phase (call it rolling bear market for many smaller stocks), within the overall favorable structure of our 'cycle' from the 2020 low. Again, a quick look at our Oscillator charts (with Summation and A/D) affirm this too.

Supplies of energy might be the second key, again beyond the Fed for now. If Oil rebounds and holds sufficiently, that actually will be a very favorable sign. I want to see stable-firm Oil and Dollar too, but not 100/bbl nonsense barring a geopolitical crisis of course. So we'll see if Oil can hold and rally a bit more.

Nominal GDP growth this year will be in-excess of 4%, and that means rates of course are mispriced relative to the economy, but the Fed and fiscal people are focused on Employment, at the exclusion of worries about National Debt.

Some are talking about the 'trillions' in Money Market Funds and 'breaking the buck', which needs to not happen, but could be a problematic catalyst if it did. Government (not just the Fed) has continued to boost wealth with stocks high on the totem pole, but at times it gets so high that smoke signals are visible.

Well that was the beginning of the year, prompting the concentration into what you know as the 'momentum' big-caps that dominated trading and volume, as well as gave (and give) the big managers and hedge folks places to hide, or in a sense just being in positions where entry or egress isn't too difficult.

Meanwhile . . . listening to the verbal altercation between Senator Paul, and a feisty Dr. Fauci, left me doubting what both had to say. However, I did see the video from 2018 in which Fauci talked about 'phase 3' of specific research, as at-minimum that wasn't followed at Wuhan. Paul is also right about how funds were funneled to 'Batwoman's' research at Wuhan Lab. Turns out in Obama's time they cancelled such funding, and Fauci circumvented that with nobody in authority noticing that during the rest of Obama's and early Trump's years.

You might already know that such 'gain of function' research was outlawed 'in' the United States years ago. The concern was a very powerful infectious virus might escape and cause an international pandemic. So we outsourced it, but I pointed-out 18 months ago, the French built the Lab, were denied access on its completion (they were supposed to run it), and the Chinese developed the Sars-Cov-2, which I used to call 'WuFlu' before the COVID designation arrived.

Note that by the nature of 'gain of function', that means make it stronger. And for our new members: back in late Jan. or early Feb. 2020 when Dr. Read of Leicester University in the UK, got a gene sequencing map from Bangkok (US Army/Thai research center) he'd agreed with initial interpretations, there were strands of HIV in the virus and that's impossible in nature. Not only was that evaluation (for me) sufficient evidence of a probable engineered virus, but the realization it was likely a bio-weapon (presumably) unintentionally released.

Oil stabilized, and as you know I thought mid-70's/bbl was plenty. Goldman Sachs say that 'extra barrels of oil promised by OPEC won't be enough to plug the gap between production and recovering demand'. Looking for Brent at an average of $80 a barrel in the fourth quarter, while not mentioning 100 this time, though they warn of prices "gyrating wildly in the coming weeks." I don't see gyrating wildly, maybe a 60-75 range sensitive to geopolitics too.

If we have to deal a good bit longer with COVID, it would be tough as Congress isn't likely to 'spend' like a drunken sailor like that have with both parties in the pandemic. I look at Miami, which is overrun with COVID, and Orlando where it's reported ICU's are 97% full, and ponder how can this be if everyone's already vaccinated. Of course the answer is those are aren't, and also breakthroughs. Note how many politicians, media folks and others are testing positive after a full series of vaccinations (including the entire on-air staff of the network that's primarily opposing vaccines, except for themselves and family... just noting it). That's discouraging, whether blaming the 'variant' of the virus, or conceivably the waning efficacy of the vaccines.

Valuation is overrated as a measure, more important is volume and price plus actual developments by companies that precede achievement of new revenue in most cases. The whole environment is a bit surreal, but this is the pattern in the most part expected for months and especially this month.