Market players are looking forward to a long weekend, but first they will have to contend with an usual number of market crosscurrents.
On Wednesday, the indices were mixed, but there was some unusually poor action in software, health care and biotechnology. Small-caps lagged, but a few large-caps — most notably Apple (AAPL) , JPMorgan Chase (JPM) and Qualcomm (QCOM) — helped to hold up the indices.
Concerns about single-payer health care were the primary reason given for selling in health care and biotechnology, but the pressure is also a function of how momentum works to the downside as well. The chances of single-payer healthcare are remote at best, but once the selling started and picked up steam, there was little choice for many traders but to take their stops and move to the sidelines. Some of these stocks will become bargains, but there will be no rush to buy with the “Medicare for All” issue in the air.
The market will also have to deal with another political issue today in the form of the Mueller Report. There is no great mystery about what will take place. The news media is going to provide breathless coverage of the many details in the report and the Trump opponents will proclaim again that impeachment is justified.
The market has been quite sanguine over the political battles surrounding the Mueller Report, but the drama today is likely to be a substantial distraction and I suspect that many market players will prefer to start their long weekend early rather than listen to the news coverage.
Another distraction today is the Pinterest (PINS) IPO, which was priced last night at $19 — above the expected range of $15-$17. Lyft (LYFT) was also priced well above the expected range, so it will be interesting to see how PINS performs after Lyft was so aggressively flipped into strength.
In addition to these distractions, there is some weak economic news out of Europe and we have the meat of earnings season starting next week. Technical conditions of the indices still look good, but the pockets of internal weakness are a concern that could develop into something far more troubling.
I don’t like the action I’m seeing in many individual stocks and I don’t like these distractions. I’ll been focusing more on defense today.
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