As usual, it is a bright, sunny day here in Central California. In fact, the weather lately has been beautiful, if you don’t count the wind that shows up each day every year in May. Funny how that works – it has been beautiful, if you don’t count …
If you don’t count the recent volatility in the market, it too has been, well, not beautiful, but certainly an overall positive. The fact is the market has not tanked, given the geopolitical pressure from the Ukraine/Russia devolution and other negative pushers.
- The advance game despite ongoing geopolitical concerns in the Ukraine after pro-Russian rebels voted in favor of self-rule in eastern regions of the country in a referendum dismissed by Kiev and Western governments as illegal.
Nor has the constant chatter about the impending crash of the market crashed the market. Oh, and the once again projected earnings failure has yet to materialize, which might explain why the market, despite the volatility of it, has yet to collapse.
- Of the 453 S&P 500 constituents that have released results this season, 76 percent have beaten estimates for profit, while 53 percent have exceeded projections for revenue, data compiled by Bloomberg show.
And today’s market has opened the day, nay the week, as if it thinks it is a beautiful day, even if the Ukraine/Russia episode devolved even further over the weekend.
- At the end of the day, U.S. corporate earnings will be little affected by Ukraine. Unless market sentiment drastically changes, stocks are likely to be supported.
If you don’t count the recent pattern of opening strong, failing to hold, and then finishing way off the top, then, yes, today’s opening suggests it is a beautiful day.
- The index’s members increased their earnings by 5.5 percent and their sales by 3 percent in the first quarter, according to analysts surveyed by Bloomberg.
Over and over again, we heard what a dismal economic first quarter of the year the US economy experienced, yet somehow, companies managed to make money through that period and decently at that. True, the high-flying momentum stocks took a hit, and that rolled into a risk-off fire sale of small cap and technology stocks and that did some damage, but overall, the market has fared this sell-off quite well, although I do have a big concern today.
The QQV, the volatility index that measures “fear” in the NASDAQ, which is the broad measure of technology stocks, jumped over 200% this morning. It went from 5 or so to 15 plus. That is a scary leap, and I am not sure what to make of it just yet.
On the other hand, the VIX, which is a measure of “fear” in the broad market dropped this morning, leaving it down in the low 12 range. And the Russell 2000 index (RUT), which is a broad measure of small-cap stocks, is up 24 points. As well, all my trades (small-cap, biotech, technology, and energy) are pushing hard into the green.
Yes, today is starting off beautifully, even if the weekend did not go so well in Ukraine and the market as of late has been less-than favorable to my style of trading. I still like the market these days, longer term.
Aside from companies making money in the second quarter, the market has other drivers coming up. One of those drivers is the technological transformation, which is producing lots of new investment opportunities.
Do you remember the word ‘biosimilar” from last week? Well, I started my education on the subject, and here is what I now know …
- Biosimilars also known as follow-on biologics are biologic medical products whose active drug substance is made by a living organism or derived from a living organism by means of recombinant DNA or controlled gene expression methods.
Putting aside the techno talk, the fact is that biotech companies are now having success creating medical products from manipulating genes of living organisms. The question is: what companies?
Trade in the day; invest in your life …
