As I discussed earlier this morning, it is rotation that is the name of the game right now. All the major indices are trading in positive territory this morning but breath is running almost dead even. There are a few different themes causing rotation in and out of various stocks and sectors.
First, Jerome Powell announced a new Fed policy that will allow them to exceed its 2% inflation target at times as long as average inflation over a longer period stays contained. This dropped the dollar, pushed bonds higher and caused a spike in precious metals, but all three moves quickly reversed and trapped traders that tried to chase those trades.
Another issue is that Abbott Labs (ABT) announced a quick and cheap Covid test. This killed a host of Covid speculative plays that have been betting on their own products. A good example is Fluidigm Corp. (FLDM) which flew higher yesterday on news of a Covid saliva test but gave it all back and more today.
A third issue ii there are some reports that Microsoft (MSFT) is close to a deal for TikTok. That sent MSFT up sharply and is keeping the Nasdaq 100 (QQQ) green although the FATMAAN stocks are mixed.
I'm trying to knock out some quick trades and have been focusing on buying dips rather than chasing momentum. I bought some more Inseego (INSG) in anticipation that they will have contract news announced soon.
I also bought more of my favorite, Personalis (PSNL) which had a buy recommendation from Wainwright and a $30 target, but sold off sharply. PSNL does gene testing but I believe that some sellers may have it confused with Covid testing which it isn't involved in at all. Anything with the word 'testing' is getting hit due to Abbott and it is a mistake. The market isn't always very smart.
(Abbott Labs and Microsoft are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.)
