On this first negative week in a long time there certainly does have the flavour of a trend change, at least based on Friday’s widely negative price action. But a chart of the VXX, not a perfect reflection of VIX but a good enough proxy for now, shows the volatility index still very much pinned to the floor since early November. Friday’s jump in the VIX does not really register on the charts. Rising treasury yields are of course the most watched level but equities have a habit of being dumb so it may take some time.
Firstly, the inflation/commodity names which had been going up strongly since the election suffered a sharp correction on Friday with most names hugging the upper parallel before the drop (but not MOS—so food demand is real then). At this point essentially everything is priced to exuberance so any small hitch was likely to result in -6% or more drops eventually.
Hydrogen fuel cell names, having had an unbelievable run this year fell hard on Friday with BLDP -10.5%, FCEL -9.7%, BE -6.85%, NKLA -7% and PLUG -7.9%. As much as I support BLDP, I cannot buy at the moment with a p/s of 72 (why is it that the Canadian stocks are so inflated in a bubble—is it a reflection of the smaller market?).
Recent IPO names are still insane but corrected on Friday.
Meanwhile QS continues to fall after I left at $125 (currently $53.50 and below the battery briefing levels).
Payment companies V -.08% and MA -1% have similar looking charts that are backing off their highs.
Tech is having a miserable time and even the most disconnected stock in the universe, TSLA, was down a bit on Friday. SHOP with a p/s of 56 is a cousin of TSLA it seems with huge valuations and tiny income.
TSLA now has superior competition in every market, EU market share collapse, stagnant sales growth in the US for the last three years (TM has been growing during that same time) and the entire $100 to $826 price move seems to be due to China (in as far as anything this inexplicable can be explained), which is odd given the small volumes and increase in competition there. Therefore, the one catalyst that might actually move TSLA until the sales erosion is obvious on the top line may well be a Jack Ma type action against TSLA. Is that risk set out in SEC filings as a risk factor?
Is ZM’s recent bounce to the upper parallel trying to tell us something about the failure to control COVID? Only non-experts would tout “herd immunity” as a solution. The entirely expected mutations that are now causing concern were inevitable because governments failed to act sufficiently to reduce infection spread.
Felix qui nihil debet 