Sure, the market is forward-looking, but the moves we are seeing today feel three to four months back-to-normal projection rather than the summer of 2021 back to normal.
As far as profits, I say flaunt them if you've got them. Big mover? Sell the stock or the call and roll it up to a call or call spread closer to the current price. No need to make a guess at the top here, but no need to risk other profit-takers or news that it could be the second half of 2021 before the vaccine makes a wide-spread appearance.
Pfizer (PFE) says they will make the vaccine free to all Americans. I don't doubt that. The CEO has volunteered to be first. Another kudos. I doubt I'll hesitate to take it, but we still face the possibility of resistance from a large mass of the population refusing to take the vaccine. Heck, we can't even get people to wear masks, and suddenly we believe those same folks will allow something to be injected into their bodies?
We're left at the precipice of decisions. This isn't a great position. Chase and risk reversal. Fade or sit and risk the market running without you. Well, we're seeing tech isn't running without you on a vaccine. Quite the contrary. Instead, we're seeing a reversion to the mean on the beaten-down travel and energy names along with retail, leisure, and entertainment. Those stocks have to immediately price out the worst-case scenario as that appears off the table. But off the table is en masse as there will still be names burning cash at a clip even a vaccine won't cure.
My view, although it may not matter today or even this week, is that the paradigm shift in how businesses operate is real. Post-Covid business isn't reverting back to pre-Covid business operations. I've talked with more executives who have said they have been operating more efficiently at lower costs allowing more work-from-home and using travel less. Why change a model that is showing to be more profitable?
Yes, some businesses will come back to pre-Covid. Casinos, restaurants, hotels, and airlines can't operate in the same manner. Retail will push for an environment that resembles 2019 more so than 2020. But this means all beaten down stocks don't deserve the same push that we're seeing this morning. I don't think office buildings will see the same level of occupancies as pre-Covid. Malls were already dying. Movie theaters already struggled. Some in these groups will survive, but I expect to see a culling, ultimately resulting in consolidation.
Streaming, eGaming, and iGaming may have experienced a pull-forward in initial growth, but those groups are here to stay. They have the same addictive properties as social media. Folks want immediate gratification, excitement, and the rush of dopamine. Content providers have learned they can tap new growth without having to always rely on traditional approaches. The pullbacks in these sectors should represent a great opportunity for 2021.
This type of short-term market phenomenon is exciting to watch but challenging to trade beyond intraday scalps. It should create some excellent put selling opportunities in tech or names that benefitted from work-from-home. Selling puts generates income and offers the seller an opportunity to buy shares at a lower price.
Overall, the Pfizer news appears to be a great thing for humanity. That is my focus today, but I am on the hunt for some put selling opportunities. When the dust settles midweek, I believe we'll have a great feel for the longer-term outlook associated with the news. One day doesn't make a trend, but by day three, we'll have a better idea as to the potential staying power of today's initial rally.