Rational analysis increasingly is 'missing in action' among pundits or other observers of market action, and 'risks'. Elusive goals give stocks fame more in a novelty fashion, than investment merit, though both can apply of course.

Pixabay

It's not that we're on the precipice of a reversal in mass psychology, which for a long time was skeptical of the upside in S&P or big-tech and now embraces it seemingly with abandon and rationalization of why 'value' doesn't matter. Oh really? I suspect tossing-out these criteria for assessment itself is a warning.

Hence, with all the distractions out there now (from the Fed's Meeting now or the political landscape, to the perplexing fatiguing nature of COVID), investors can be forgiven if they're not focused on proper analysis of individual stocks. I suspect however that the market won't be so forgiving when crunch-time hits.

The pathway to have that happen requires a catalyst, and we didn't really get one in 'Roctober', but the world isn't on a calendar and can deliver disruptions whenever they strike. Might it be China? Could Bitcoin (BITCOMP) breaks be able to sort of prick the tech bubble? Could it be an overt move by the nervous Fed?

Any or all are possibilities, not probabilities. (For instance the Fed is hesitant to carry the weight of responsibility for breaking things, even if they should do so.) I'll explore these along with 'gamma-driven' big-tech markets in Video 2.

Executive summary:

• ON Semiconductor (ON) reported stellar results, we're not directly in this, but their success and truly ample funds matters, since they're the new largest customer of AEHR Test Systems, which already tripled for us.

• More customers like ON are sought by AEHR and they have potentially good relationships with most major 'fabs' globally, not just in the U.S., at the same time it's the USA where we should see the largest expansions (AEHR).

• ON's CEO spoke to the focus on being an 'electric vehicle' powerhouse, that 'intelligent power and sensing' at the center of it, he spoke to silicon carbide which is precisely what AEHR supports by testing resilience.

• Higher 'domestic' corporate taxes appear to be off-the-table for now, and if so that's very much a positive for stocks (so long as there's no 'double taxation' related to foreign revenues).

• There's an effort to de-risk markets, but negative catalysts can appear as I touched on in the 2nd video, probably centering on higher 'inflation'.

• Yes that will boost revenues, but may compress margins for big firms that cannot competitively hike prices sufficiently to offset.

• The global chip shortage will continue for awhile, though ultimately you'll get a glut, but not likely such as the mid-'90's when I called that one (very long time ago), probably because there's a 're-shoring' effort to the U.S..

• Market action was almost moribund on Tuesday ahead of FOMC which won't increase rates, but may refer to 'reduced bond buying' (tapering), a similar tone that the ECB took last week.

This is actually a crazy time. The Avis / Budget Group (CAR) move shows how wild it can get. In this case it was a heavy short-interest and stupid beliefs that car rentals would evaporate. COVID made Uber / Lyft less attractive. Hertz taking 100,000 Tesla Model 3's amplifies that people are moving not only toward EV but also car rentals when on trips that include more than tight urban core visit trips (which are conducive to Uber and so on) (HTZZ, UBER, LYFT).

Whether or not there's signed contracts for the cars is still undetermined (after Musk's tweet) but deliveries are started whether discounted deals or not. And Hertz's statement about 'larger infrastructure charging build-outs' is generally irrelevant. Of course they'll need that and it won't help customers on the road, but at least Hertz won't require 'full tanks' (hah.. fully charged Tesla's) when returning the EV's to an Airport. I'd look for Hertz to 'try' buying Mustang EV's from Ford, their classic supplier. That would really give customers flexibility. In that regard, of course we own Ford (since 12 'ish) and indirectly benefit from owning AEHR (from 6 and then 12 ish), a key for Silicon Carbide plays (F, TSLA).

In-sum: 

S&P record high sequence persists, with too much comfort ahead of the Fed's 'clarifications' of tapering moves and views about inflation that's not transitory, even if they continue the nonsense of 'transitory in enduring ways'.

However, the FED has telegraphed pretty well they can always step up rate hike calendars, which could be a wildcard ahead. Also politics may get crazy if the republicans win Virginia big, even if it's mostly on the back of the furor over schools (critical race theory propaganda and such). Plus 'if' they win NJ which some believe possible, expect a sea of change in Washington sobering things a bit (maybe stimulus under 1.6 T or none at all, and while that may not be all that bad long term, sectors that would benefit would feel pressure).