Special Bulletin: Feb 16, 2023

Marna and the “Big Short?”

That title sounds like a children’s book, doesn’t it? But it’s anything but that. Today’s post is more of a sector analysis than a general market condition bulletin. Although, they are tied together somewhat.

The healthcare sector looks sick. (Isn’t that ironic?) By that we mean the stocks in the health care group overall are trading in a weak fashion (there are a few exceptions, of course). Their relative strength ratings are moving down and many stocks are trading under their key moving averages (mav’s). As a whole, they are not participating in the recent rally. The XLF (State Street’s Select Sector SPDR Health Care ETF) is actually negative for the year. Why is this?

We don’t know for sure. Maybe it’s the return (rotation back) into tech and growth stocks that started with the follow-through day on 01/06/23. Perhaps the health care stocks will snap out of their lethargic ways soon and join the overall market in the uptrend.

Or perhaps not. Maybe there’s a bigger problem looming under the surface. A problem that has been ignored, even hidden, by the legacy press. A situation that is growing worse by the day and can’t be stifled much longer. I’m referring to the “jabs” and specifically the mRNA shots.

If you haven’t been reading The Epoch Times newspaper/website, I believe you need to be. There are so many stories (dozens and dozens) coming out almost daily that suggest the shots and the boosters fail quickly, and worse, may cause many unintended and serious complications. These real issues are happening at an alarming rate based on the observations of past vaccine data over the last 30 + years.

We are not trying to scare anybody. We understand that this is an emotionally charged topic. The point is that this group of stocks is trading sickly when this should be their heyday of innovation and distribution of their “new” products.

The charts of Johnson & Johnson (JNJ), Pfizer (PFE), Biontech (BNTX), and Moderna (MRNA) tell the story.

What does this all mean? We are wondering that too. There is a chance that a future, seriously negative announcement (more of an admission maybe) could rock and roil these sort of stocks and alarm investors (not to mention the public at large) and cause a serious downdraft in certain healthcare stocks and in the overall market. As long as the major indexes hold above their 21 & 50-day mav’s the risk is greatly diminished. But if this developing story has real teeth to it, then the technical internals of the market will alert us early.

We are not recommending shorting these stocks. (Full disclosure: I do personally own a small number of puts on PFE, MRNA, & BNTX as a market hedge.) That is not an investment recommendation. Each investor needs to judge for themselves what the sloppy action referenced above is suggesting and make investments/adjustments in their portfolio’s accordingly.

Having said all of that, we have discovered that big pharma has a good deal with the government—even if someone is hurt by a “vaccine,” the drug maker may be exempt from liability claims. Learn more about that here.

Perhaps those stocks will rally from here and the shorts will get squeezed and life will be good again. Unfortunately, more than just these stocks have been getting sick recently. Time will tell… and so will the “math of the market.”

Our Current Market Outlook remains “Uptrend Under Pressure” with a yellow light but is on the verge of going green again. Our “Core Four” (see top of page) sports 2 green and 2 yellow lights with a volatile (and complacent) VIX.

This is the judgment, that the Light has come into the world, and men loved the darkness rather than the Light, for their deeds were evil. For everyone who does evil hates the Light, and does not come to the Light for fear that his deeds will be exposed. John 3:19-20 NASB 1995

Game plan: Remain optimistic and ready to play defense. Don’t overreact and fully bail out as long as the S&P 500 is still over its 21 & 50-day mav’s. Continue to expect a test of those mav’s in the near future. 

Note: You can learn more about The Triumphant Core Four risk management system by clicking here.

Have a Triumphant day! ®