Tuesday Talk: Action!

U.S. stock markets started the week in continued action mode. The S&P 500 closed at 4,255, up nearly 8 points, the Dow closed at 34,394, down 85 points and the Nasdaq Composite closed at 14,174, up nearly 105 points. Currently futures are trading near yesterday's closes, S&P futures are up 5 points, Dow futures are up 11 points and Nasdaq 100 futures are up 17 points.

Source: The New York Times

Looking at the list of most actives above one can see that the action in the stock market is across all major sectors, industrials, finance, technology and consumer cyclical.

Tarun Chandra in a TalkMarkets Editor's Choice column entitled, Biotechs Ready To Roar takes a look at the sector in light of the FDA's approval of Biogen's (BIIB) neurodegenerative disease prevention drug ADUHELM, last week. The drug has shown to be effective in breaking down plaque deposits in the blood and is considered to be a possible weapon in the fight against Alzheimer's disease.

"Biogen has set a precedent, showing a much easier path to approval for investigative drug treatments focused on neurodegenerative diseases like Alzheimer's and Parkinson's where there is a significant unmet need...Many companies will benefit from this change, irrespective of their approach to neurodegenerative diseases. It will be harder now for FDA to push back on important surrogate point biomarker successes...Acquiring smaller cap companies with innovative approaches and drug treatments can be a worthwhile bet for larger pharmaceuticals and biotechs...A few attractive neurodegenerative treatment companies in the space include Denali Therapeutics (DNLI), Cassava Sciences (SAVA), Anavex Life Sciences (AVXL), Prothena (PRTA), Annovis Bio (ANVS), Arvinas (ARVN), Supernus Pharmaceuticals (SUPN), INmune Bio (INMB), Biohaven Pharmaceutical (BHVN), Intra-Cellular Therapies (ITCI), and Karuna Therapeutics (KRTX)."


Chandra concludes with a strong shoutout for the healthcare sector and biotechs in particular.

"The healthcare sector has been advancing to new highs in the second quarter, while biotechs have struggled (IBB) (XBI). If biotech, the largest industry group within healthcare by the number of companies, turns around, then healthcare indexes (XLV) will see more new highs. Biotechs have been consolidating for over three months. The time now appears right for the group to stage a forceful rally. We believe it will be rewarding to raise biotech exposure for the near term."

Contributor Rafael Zorabedian scans the action for ETFs and finds The ETF You Want For Sunny And (Potentially) Cloudy Days. If you haven't guessed from the title he's talking about alternative energy ETFs, in this case solar.

"I like to find bullish short to medium-term technicals, and the Invesco Solar ETF (TAN) just closed over its 50-day moving average yesterday...Just like some of the other markets that I am currently following, TAN seems to make sense given the current US administration and democratic congressional majority...Regardless of your personal opinion on solar vs. fossil fuels, the idea is to try to profit from economic conditions. TAN could be a great addition to holdings to get exposure from a sector that has already experienced a meaningful pullback..." 

Zorabedian's article is loaded with further trading details and charts. Caveat Emptor but as we have noted before, alternative energy is expected to be one of the prime beneficiaries on the Biden infrastructure program.

Mark Putrino from the staff at Benzinga looks at Oil, Copper and Gold as inflation hedges in the coming months in his article, 3 Commodity Stocks To Consider For Inflation.

Wire, Copper, Electric, Stop, Closeup


"As inflation heats up, the stocks of some commodity-based companies can move higher. These companies hold a large part of their assets in commodities, so as their prices move higher, the companies become more valuable. They include Exxon Mobil Corporation (XOM), Southern Copper Corporation (SCCO), and Newmont Corporation ( NEM). Exxon benefits from higher oil prices. The stock has hit resistance at the $63.50 level and it could be on the verge of a breakout. Southern Copper benefits from higher copper prices. Shares have dropped to support around the $67 level and there’s a chance they rebound. As the price of gold increases, so does Newmont's value. The shares are close to the $68.50 level and there’s a chance they find support and rally."

So a few more to add to the mix for consideration.

With so much action going on in the markets taking it all in and turning our insights into productive investment decisions is no easy task. This week the column looks to some of TalkMarkets most popular contributors to see what they are making of the action.

Stock Exchange, World Economy, Bull



Mish Shedlock  goes straight to the horse's mouth so to speak, in Jamie Dimon Stockpiles Cash, Thinks Inflation Is Here To Stay, Fears PayPal.

  • " “We have a lot of cash and capability and we’re going to be very patient because I think you have a very good chance inflation will be more than transitory,” said Dimon, the longtime JPMorgan (JPM) CEO.
  • “If you look at our balance sheet, we have $500 billion in cash, we’ve actually been effectively stockpiling more and more cash waiting for opportunities to invest at higher rates,” Dimon said. “I do expect to see higher rates and more inflation, and we’re prepared for that.”
  • Dimon warned that banks were under threat from fintech and Big Tech players including PayPal (PYPL), which has a larger market capitalization than nearly all U.S. banks."

Michael Kramer reviews Monday's trading and includes charts and comments on some important sector ETFs and stocks that he is currently following in his article, Stocks Are Saved By The Sound Of The Bell As The Reflation Trade Is Crushed.

"The index (S&P 500) was down most of the day as investors continued to move out of the reflation trade. The index managed to rally in the final 20 minutes of trading, but other than that, there was nothing to speak of for the index level. It seems as if the technology rotation was barely strong enough to help offset the decline in the reflation asset. But Apple (AAPL) appeared to do most of the heavy lifting. Typically a rising wedge pattern breaks lower, and at first, the S&P 500 did break lower. But it came back hard in the final 20 minutes, and that allowed it to retest the trend line. The rising wedge in the housing and financial stocks broke lower as they are supposed to, already. But I can’t speak to where the S&P 500 will go from here because the rotation was back into some growth stocks. Apparently, not all growth stocks benefited. Usually, when we see this big advance higher in the final minutes of trading, they are reversed right on the open. So we will find out tomorrow (today). 

The Staff at Schaeffer's Research in their article S&P 500, Nasdaq Kick Off Week With Record Highs have this to say about the start of the trading week:

"The Dow logged an 85-point drop on Monday, weighed down by anxieties surrounding the upcoming U.S. Federal Reserve meeting. Investors aren't expecting the two-day meeting to result in any major decisions, though the central bank's inflation rate forecasts could have a dramatic effect on the market's next move. The S&P 500 spent most of the day hovering just below the breakeven, before jumping to its third-straight record closing high within the final few moments of trading. The Nasdaq also hit a fresh record close, as the retreating 10-year Treasury signaled to some investors that it was time to buy back into Big Tech. "

In addition they attributed the decline in gold to a rise in crypto (to talk about passing "bucks" between two hot potatoes).

"Gold (GLD) prices tumbled today, settling at a one-month low as the commodity's red-hot rally begins to cool. Bitcoin's (BITCOMP) rally may also be to blame for the softening precious metal. August-dated gold dipped $13.70, or 0.7%, to settle at $1,865.90 an ounce."

TM contributor Jesse, over at Jesse's Cafe Americain gives his take in Stocks And Precious Metals Charts - All Eyes On The Fed - FOMC On Wednesday.

"Stocks were on a late afternoon tear, led by the real meme stocks, the big cap techs. The Dollar edged a bit lower. The VIX shows a decline in the perception of risk. Or at least an increase in the mispricing of it. Gold and silver (SLV) were hit very hard in the quiet overnight trading. They recovered quite a bit from the overnight losses, but still finished the day a bit lower. The big tickle this week is the FOMC meeting on Wednesday."

But I think Jesse's graphic best reflects where he thinks things are.

Let's hope things don't get as tangled up as that.

Have a good week.

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.