In the last issue, I suggested I'm in a holding pattern for the most part when it comes to making our portfolio mix even more bearish-oriented; something I still think is coming. And yesterday was a good example of why I'm hesitating. The breakout vs. fake out "debate" remains tilted — remarkably — in favor of the former.
And that is despite interest rates surging anew . . . the dollar's rebound . . . still-hot inflation . . . and the idea that the Fed's so-called "terminal rate" may be closer to 6% than to 5% by summer time or so. With an assist to Atlanta Fed President Bostic (who yesterday charged the bulls up anew by suggesting he thinks 25 bps hikes are appropriate; not 50 bps as a couple of his colleagues have suggested) the stock market yesterday logged an important technical day.
This was an "outside day." That means, both the low and high for the day on the S&P 500 exceeded the marks of Wednesday, with the close likewise above Wednesday's high. Often times that marks a change of direction, at least near-term: and notably now, as the trend line I have highlighted several times in recent days holds.
If Airtest can keep up with what seems likely to be much more brisk demand for its offerings, it seems that the healthy quarter-over-quarter revenue that should ensue will foster a continuation in the share price rebound.
A few months back, I discussed the arguments some of the bulls are making today, in comparing the present days with the inflationary 1970s. From their bear market bottom in 1974, stocks more than doubled even as inflation perked up and interest rates were belatedly raised.
This era, though, had commodities going up at a FAR faster rate than the broad stock market, the fun for both ending only after Paul Volcker sent rate increases into overdrive.
Granted, in the summer of 1974 stocks were fundamentally cheap; quite unlike today. Then again, central banks back then hadn't yet discovered Quantitative Easing, as today, adding zillions of dollars of liquidity to the mix, often rendering fundamentals fairly meaningless. Especially when you consider what I pointed out about Japan last issue (and more on that is coming next issue) it shouldn't be a shock that stocks have continued to do better than some of us thought would be the case. And this all bears watching, as some chatter is cropping up that the Fed is about to lose control of things yet again.
My recent "giving up" on a couple more chronic laggards is happily being outweighed by nascent comebacks elsewhere for good companies finally realizing long-awaited milestones:
Airtest
The share price for ATI AirTest Technologies Inc. (AAT:TSX.V; AATGF:OTC). has been rebounding a bit, but as THIS WEEK'S NEWS suggests (and as I discussed recently in another update) business is going to be even more so roaring higher.
In addition to getting the long-awaited official "blessing" for subsidized installation of its IAQEye™️ Demand Control Ventilation (DCV) solution in shopping malls in (to start) Ontario, Canada, the company is also seeking the same "Good Housekeeping Seal of Approval" in California as THIS NEWS from Feb. 21 reports.
This is another huge potential market for AirTest and--especially with the potential added subsidy here as well--makes the company's energy-saving offerings a no-brainer.
If the company can keep up with what seems likely to be much more brisk demand for its offerings, it seems that the healthy quarter-over-quarter revenue that should ensue will foster a continuation in the share price rebound.
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1) Chris Temple: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: ATI AirTest Technologies Inc. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company currently has a financial relationship with the following companies mentioned in this article: None.
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