The action Wednesday morning is a great illustration of how difficult it is to predict market movement.
At the close Tuesday night there was some concern that the market was nervous about the possibility of an Iranian response to the U.S. That speculation proved correct, but no one predicted that the missile attack and an apparent resolution would occur in the matter of hours.
Suddenly, Wednesday morning, the folks that accurately predicted that Iran would take action find themselves on the wrong side of the action. Buyers are jumping in as they feel confident that Iran is not going to turn into World War III.
President Trump will be speaking about Iran at 11 a.m. ET so there is the potential for some volatility on that event. However, right now it is the bulls that are in control. The action feels like a combination of poor positioning and a short squeeze. Breadth is robust, with 4,500 gainers to 2,400 decliners and stock pickers are doing well.
My top pick this morning was NeoPhotonics (NPTN) , an optical chip producer. The company has products that increase and speed up bandwidth, which will be in increased demand as 5G rolls out. This is not a pure 5G play but optical chips are the way to use 5G most effectively and should benefit.
On Tuesday, I mentioned Personalis (PSNL) as a stock to watch in 2020. After the close it announced the launch of its NeXT DX test for genomic cancer profiling, which is the first that tests all 20,000 genes. If the company announces some contract wins for this product it should do quite well.
I'm on the hunt for more merchandise. The indices may feel extended but the trading in many individual stocks is excellent.
