Altered demand was expected (retreat) during Expiration; but not big time. Also suspect we could see an interesting flow next week; where mega-caps sort of retreat to then rebound modestly; while small-caps find some stability.Friday’s Quarterly Expiration was not melodramatic, but mild as expected and what comes from here is debatable. Yes I know one analyst hiked S&P target goals to 6100; and got a lot of criticism. I believe the unspoken part of that will require a broadening out. To wit: trivial gains (if at all) for big-cap leaders, with better performance (stability at least) for run-of-the-mine S&P components.
Amidst the foregoing subtle shift (too soon in the Fall to be more significant), it seems reasonable to focus on several small-caps that are undervalued or at least under-appreciated by the market (possibly because too many players at retail, and too many institutions loaning out shares for option-writer income).It is normal for certain institutions (Citade?) to engage in such behavior and the interest or fee brokers will pay those who lend shares can be significant. I think such activity allows investors to see both ‘high’ institutional holdings and heavier short-selling, which is facilitated by those institutions loaning shares.I also believe at the ‘pivot point’ (as best institutional managers can gauge) of a company’s fundamentals to visibly improve, and/or coming tax-selling time ends, later this year, you find stability and even notable rallies (the institutions at that point hold their shares, stop lending shares to option writers, or if they they’re writing options, they then focus on Puts not Calls). That sets up a true advance so I’m thinking particularly something like SoundHound can benefit from that. Market X-ray: the new week can be a toss-up of consolidation and then effort to extend upside; given the very satisfactory handling of Friday’s Expiration.There are few reasons to be immediately worried in this extended market; but of course one needs to be on-guard for more correction (geopolitical risk too). ‘If’ we can get sufficient broadening-out to cushion S&P, it may limit retreats.
Hedge fund people are not rushing to sell ‘everything’ as bears constantly are contending. They are shuffling and shifting from overworked big-caps into the value or small-cap plays; especially where you have ‘application’ software AI prospects; at least that’s my opinion. It may take months to see if that’s right.Next week we’ll hear more about Intel & Qualcomm; I can see where that could be very interesting; Intel working on (they’ve lagged) AI processors; and Qualcomm with knowledge that eventually Apple wants to ditch them for in-house chips. I could thus see where the symbiosis may exist; but no idea if they’ll combine.
Bottom line: the bulls still have the upper hand; pullbacks are moderate; in the wake of the projected surge Friday after a pop-and-flop on the rate cut was absorbed. We also got to new highs absent technology; and I continue to look for ‘application software’ to be a key in both big and small-cap segments. Oil may rebound further too.More By This Author:
Market Briefing For Monday, Sept 23
