Incredible frustration must characterize mainstream money managers that missed what really happened in the week just past. Of course we’re honored, and patience relieved, that a handful of next-generation speculations soared nicely; but these are not alone in reflecting what I call a shift in market focus. You have pundits reviewing old-line tech and even cyclicals; that’s not where the action is now; and they do that as they fear treading into new territory.Essentially this is a ‘transformation bifurcation’. Instead of money pressing the biggest-cap and mega-techs higher; some gains are being shaved off those; then finding a home in ‘next-generation’ stocks, including those accumulated along with others now finding life. The media pundits will recognize the rallies in bigger stocks that came to life; but typically omit (or demean) the moves in smaller-stocks. Generally they’ll resist even naming the percentage gainers, which is why I noted facial ‘TV cynicism’ when a couple of ours got mentioned briefly, and not reiterated. Our plan: further gains requiring more recognition.
Obviously I don’t know how high is high or what targets are for next year ..how can one. But I do know that the S&P is high on valuation metrics; while many ‘scrappy’ hustlers in technology/AI aren’t high yet, and they’re not rubbish.I said long ago: ‘the problem with the future is that its history isn’t written yet’.
Market X-ray: This week was exhausting in a terrific way. ‘Odds’ favor, if bigger war is avoided this weekend, that S&P will hold reasonably and speculative stocks will extend gains in the new week.Small AI & Quantum stocks may not be as precarious as leading mega-caps in a sense appear. It’s debatable if they’d slide with those, if they get hit. The Trump appointment of Scott Bessent to run Treasury may be a plus too; given he’s a hedge fund manager (Key Square Group and worked for Soros, I heard ..hah! (Do we have a ‘Mercantile’ Government?). Trump is focused on growth and prosperity; we saw that in his first term before Covid struck. And Treasury is going to be a tall challenge this go-round (tariffs vs. Dollar, vs taxes & debt). I am absolutely open-minded to a ‘macro-strumble’ for S&P, but not yet and if it is forthcoming, we’ll address that as needed in the New Year; not happening now when many are primarily feeling FOMO… they missed a new era kick-off in the smaller stocks, which are the beneficiaries of bigger-cap AI tech, etc.I don’t disagree with conventional market psychology that speaks to ‘discipline and patience’, or awaiting high-probability set-up scenarios (thought the heavy selling in small caps ‘was’ a set-up by the way). What pundits won’t generally say is, that what we had or have; a bifurcated status that suggested trimming mega-cap leaders, while accumulating those whose businesses grew or trend developments (like AI or photonics) finally freed from long-term suppression.Financial media is pained to discuss any of this because Wall Street generally needs major volume and typically higher prices, in-order to enter and exit with relative ease. They don’t have that in many smaller stocks, but the investors of this world (such as might be reading this) are looking for under-exploited or value plays, and that’s not pleasing to big money managers, who typically are either not in such stocks … or they are and used them to write options on.. so now they face having to buy-in lest positions be called-away soon. Oh, I think that was part of Friday’s phenomenon; it was November Expiration. Ah ha.
What all this does is create a compelling backdrop for FOMO by managers who are not in smaller stocks that are moving now. It dictates broadcast chats that proclaim nothing going on; while in-reality this was an exciting week. And if history is a guide, the upside -including short-squeezes here and there- plus forced buying where that involves short Calls and so on.. anyway we like get more upside. Further more, after allowing an early December ‘rest’, up more. Just remember ‘today’ (Friday) was a nominal Expiration; part of the impetus.More upside.. is predicated on avoiding nuclear war (at least for the moment, as we will.. since the backstory I’m pondering is whether Biden & Trump both planned the authorization for using US & UK missiles deeper into Russia), as the other backstory might be that President-Elect Trump and ‘first Buddy’ Elon Musk, are secretly working with Ukraine ‘and’ Russia on a basis for ceasefire. I don’t know about that (how could I), merely heard a couple thinking so.
Bottom line: I’ll not dwell more on any of this for now; suffice to say ‘if’ market allows at the start of the holiday week, any initial setbacks will reverse again; and propel stocks higher. Pundits will holler to sell; but actually frustrated that they’re still rising; before presumably a period of temporary calm/ease arrives.I’ll assess more next week… kudos to all of you who stood the test of patience for a few of these to evolve; and most will continue to evolve. I’m surprised to a degree that several seem to be working; but that’s got to be a catch-up as well as possibly caught shorts and skeptics with their pants down into a Nov. Expiration. All this can be a prequel to a December setback intervening; but probably not as of yet. Stay tuned.Enjoy the upcoming semi-holiday week, if flying away early. I’m in chilly Florida so will be right here, enjoying a holiday with good friends who will put-up with my aches & pains and occasional friendly cynicism as to the unique ‘Trump/Musk’ joint Presidency that’s shaping what’s unfolding.Cheers!More By This Author:Market Briefing For Monday, November 11
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