OCT 14…United Health (UNH) up 1% on beat and earnings outlook. UNH is one of our top picks in healthcare.
OCT 13….Core US Inflation hits a 40 yr high with CPI up 6.6% climbing 0.6% for the second month,Shelter. food and medical care were all major factors in rise. Services are a big concern. Stocks recover slightly from earlier losses. Healthcare stocks holding, energy shows gains, Consumer discretionary sector hit hardest. Bank stocks green. Major imdices now green at 11:20A EDT
- Quidel /Ortho (QDEL) up over 9% on preliminary results. COVID product revenue looks strong.
- A lot of green in MedTech with IHI up 0.78% to $4 handle.
OCT 12…11a EDT Moderna (MRNA) up 8.9% on exercise of Option Deal with Merck for personalized cancer vaccine joint development.
US stocks weigh impact of higher than expected PPI data. FED minutes on next.
OCT 11…1:15 EDT….Amgen Upgraded by Morgan Stanley and stock rises 6%. IBB and XBI both show gains,
David Kostin of Goldman Sachs sees S&P of 3600 by year end, no recession.
Loretta Mester of Cleveland FED offers more tough talk on rates.
Is a Fractured FED ahead?
OCT 10...Merck (MRK) was upgraded by Guggenheim. MRK is one of our top biopharma picks. Stock was up 3.29%.
Stocks took a hit about 10:00am EDT presumably from comments made by J.P.Morgan CEO that stocks could fall another 20% from a “hard landing”. You can read about it tomorrow,
Choppy Days Lie Ahead So Why Fight the FED?
- Roller coaster market last week created more uncertainty (see AMD results).
- FEDspeak dominates choppy trading pattern.
- Focus on sectors away from MACRO: Healthcare and Energy,
We are in a bear market with choppy days over the next few months.Two brief rallies with higher lows on the S&P give us hope. I wish I was 100% cash then I could buy more short dated treasuries and make 4+% on my money. But my cash position is only about 20% so I need to trade the market while lowering my risk. Everything written and spoken out there seems to be about the FED fighting inflation. So that means rates go up, economic growth wanes, earnings go down in a “risk off” market. But will inflation go down enough for a FED looking in the rear view mirror? Big earnings weeks are coming up : PEP, JPM, TSM, UNH etc.
Note on charts below after Friday’s action and weakness in tech stocks on Friday the NASDAQ is at 2022 lows.
SPY at 362.79 (S&P at 3639.66) on 2 yr chart.
Here is one “bullish” narrative as a 2022 summary model from reading all the opinions from various analysts and strategists:
- Technicals hold S&P 3600 level with upside limited to 4000 level by year end.
- FED raises rates 75 bps and 50 bps in December then pauses.
- Top sectors remain healthcare and energy.
- Soft landing. means no recession, and no further geopolitical risk.
- Wildcards and tail risk: Ukraine and more earnings misses?
We have focused on large cap growth, healthcare and energy stocks. There can be upside from speculative small cap growth with the XBI as momentum indicator. Here are some other key MACRO indicators to track for the choppy months ahead:10 Year and Two Year Yield, USD, Crude.