From the Wall Street Journal’s "Stock Futures, Oil Drop on Omicron Vaccine Concerns" posted early Tuesday:
U.S. stock futures fell and investors sheltered in government bonds after drugmakers raised concerns that Covid-19 vaccines won’t work as well against the new Omicron strain...
Investors are trying to parse the risk posed by the new strain. Drugmakers have raised concerns that existing vaccines might be less potent against Omicron, but a lack of concrete information so far is driving uncertainty, and with it, volatility in stock markets.
“Markets are kind of in a holding pattern where no one knows if this is going to be a problem or not,” said Mike Bell, a strategist at J.P. Morgan Asset Management. “Until we have evidence either way on whether the existing vaccines still work against Omicron it doesn’t make sense to make a big bet in either direction.
Charts: Yahoo!Finance sees a bearish relative strength index (RSI) pattern. As of 6:00 a.m., max pain was still at $157.50 with a mountain of calls at $160.
Moderna’s CEO spoke inappropriately when he alarmed everyone last evening that the current crop of vaccines will struggle with the Omicron variant.
Concomitantly, Pfizer’s CEO says boosters, even if they are not as effective as against Delta, should reduce Omnicron’s threat dramatically.
Meanwhile, individuals who have succumb to the Omicron variant report only “mild” symptoms.
A JPM team led by Dubravko Lakos-Bujas, chief U.S. equity strategist, “…. sees further stock upside ahead, albeit more moderate, on better-than-expected earnings growth, easing supply shocks, improved background on China (which JPM upgraded to overweight on expectations for policy easing and as equity risk premiums from regulatory moves are priced in) and emerging markets, normalizing consumer spending habits and, most important, accommodative central banks.” That team also offered upbeat outlook over recent market stress saying, “…. While there have been sporadic setbacks with COVID-19 variants (e.g. delta, omicron), this needs to be seen in the context of higher natural and vaccine-acquired immunity, significantly lower mortality, and new antiviral treatments.”
The message that needs to be broadcasted is the one by the CDC saying Omicron is “…. all the more reason for all vaccinated adult to get a booster dose because the CDC director says, ‘strong immunity will likely prevent serious illness.’”
In summary, there is too little about the Omnicron variant that is known and what “is” known tells us there is a continuing effort by the markets to overreact in the face of mounting evidence that says otherwise.
It was a double whammy, brother Robert Paul. Fears over the new Covid variant, omicron still were being digested, truly unsettling the markets. The markets, though, appeared to be converting the ominous news into an absorbable form of masticating it when Chair Powell “oddly” decided to break another monumental piece of unsettling news thrown at the markets on speeding up the bond-buying taper at its meeting this coming month. It was about as close to a 1-2 boxing punch as anyone can sustain and still be left standing. Guess what, though? The markets did not collapse. The markets remained standing like Rocky, still hanging on by the time the bell rung at 3:00 pm. CST
The markets will have added time over the night to digest both events that occurred today. After doing so, I truly believe the markets will continue its annual Santa Claus rally. The economy is strong. The fact the Fed Chief said he sees reducing more quickly the pace of monthly bond purchases is because the strength of the economy is enhancing inflationary pressures. Essentially, what the good Chairman is saying is that the strength of the economy is taking precedence over worries about the Omicron variant. That is not to mitigate the importance of the variant as much as to acknowledge that we have a powerful economy that seems now to be growing close to a 7% rate. I suspect the markets will dive deep tomorrow into the PMI, ISM and October’s construction spending; all set to be released in the morning. Additionally, the ADP’s private payroll data report will be out tomorrow morning at 8:15 a.m.
My thoughts on it all brother Robert Paul: It only gets better 🙂 Laissez le bon temps rouler!
Geaux
It appears tomorrow will see more gains for AAPL, with gains being spread around more democratically.
Current vaccines ARE effective, just not as effective as against prior variants.
That is to be expected as variants attack in new ways, if they didn’t they wouldn’t be variants. The point is, had current vaccines been available in March 2020 and the threat was Omicron, we would have had far fewer infections and deaths than we did.
So the market is still reactive to the Omicron news and traders are trying to figure out / guess where the world is heading over the next few days to weeks.
WS, the big boys have studied the data (sans media sensationalism) and decided Omicron will be a non-event. You can see it with a price/volume overlay: WS came in with guns blazing for the first hour (it’s usual trade time frame), then having got its fill abandoned the marketplace to the profit takers. The slower reacting retail sector will finish the session looking for perceived bargains, but they two days late and were on the wrong side of the selloff.
Laissez le bon temps rouler
Geaux
We may get back to a 30 trailing P/E a lot quicker than I had anticipated….
How many times have we denoted on this forum that when the seas are troubled who better can navigate them than Apple? Investors rushed today to get aboard the Apple ship.
Apple has a prodigious cash flow investors now see as a safe haven. Everyone knows that if the situation worsens, then Apple can weather the storm, still pay dividends and still continue share buybacks.
This is a company that is firing on all cylinders. It has a pipeline of new and innovative products rolling out; and more to come.
The products out on the market are selling strongly from all reports that we are getting. We are going to have a big December quarter despite supply constraints; and, look out for the March quarter. It just keep on keeping on getting better.
Laissez le bon temps rouler
Geaux
173 M shares traded on a down day like today is a phenomenal number – and Apple’s up another buck after hours.
But what amazes me is the valuation, which has yet to even return to a 30 trailing P/E. How is it that investors failed to see the value proposition that is Apple when they are literally staring it right in the face….
“… Apple can trade…divorced from fundamentals…”
Apple hardly ever DOESN’T do that – and not because its over-valued….
But today? Friday’s AAPL selloff was a joke, and folks are finally starting to figure that out.
The whole market just did an about-face, and guess which stock is leading the parade….
137 M shares traded today. I’ve said it before, but if enough folks are not day-trading but rather are socking that AAPL away for a year or five, then that’s exceedingly bullish for the stock price. We’ll see as December rolls by….
Looks like Mr. Market is taking note of Apple after all of these months of lower than reasonable pricing. So now the Apple 3.0 subscribers who are the historic longs, especially Jerry Doyle and Joseph Bland, are being rewarded for their conviction.
Today’s close puts 4 more analysts underwater (including Katy Hubert) and we should see a post from PED very soon to that point. I’ll refer back to the last underwater post from Nov. 19, 2021 for the chart:
https://www.ped30.com/2021/11/19/apple-analysts-underwater-160-55/
But it’s okay because now Dan looks like Nostradamus compared to the “tepid” crowd.
“…due to a lack of definitive guidance from management.”
Apple was being necessarily conservative. If production capacity is now picking up faster than they expected, that would have been unwise to project.
I believe WS, like me, price targets are based 95% on management’s guidance. Nobody is better at forecasting Apple’s performance than Apple management. You just have to know the formula by which they give the Company some wiggle room.
Since Luca became CFO, management’s has proved quite accurate after applying what I believe is it’s wiggle room factor. Since March 2020, without guidance, my estimates haven’t been anywhere near as good.
I like it! Upvoted!
If the Omicron variant is really what’s roiling the market, that would help explain why Apple is bucking the trend.
“Was it the variant, the Fed or both that roiled the markets today?”
Would that it were that simple! As a pretty fair body-surfer in my time, I’d say Apple caught a monster wave that few saw coming. That it peaked while everyone else troughed is just a strange combination of events. But the wave itself is real, and it’s been building underneath Apple for quite some time.
Variants were always going to happen, and ditto the actions of the fed. But the swell that is lifting AAPL has little to do with those events, which is why AAPL is such an outlier today.
This wave actually started back at the end of August, but got curtailed by – let’s call it “lack of faith”. And then it regained its footing in mid-November – only to get sandbagged last Friday by the Omnicron news and by the short day and options houses being forced to dump their weekly stock purchases in half the normally allotted time.
So what is this “wave” comprised of? Buyers who have been on the fence for months suddenly realizing that the Apple freight train really is leaving the station.
IMHO.
Not – quite – a new ATH close, which is still $165.70. And I believe the intra-day ATH was $167 and some pennies….
As I’m typing this on Dec. 1, Nov. 30’s intraday high was $165.52, still below the all time intraday high. The close of $165.30 is a new all time closing high per same sources and AAPLInvestors which PED will quote shortly. I’ve not seen or can find any evidence of regular trading hours trades in the $167+ range you mentioned over the past 52 weeks. Per Nasdaq Nov. 30 After-Hours High was $166.64 @ (07:59:36 PM) before the AH session ended at $166.50.
We will see if AAPL can continue to buck the market downdraft and push beyond $166-167 in the coming days, would love to have it make your comment a reality. Cheers!