Marc Cuniberti Into the second week of 2022 and the market seems to be continuing its bipolar action, with certain sectors rising one day and then falling the next. The so-called tech wreck that began late in 2021, although not a complete obliterating event, continues to hammer the fans of many technology stocks. Although the latest Covid Omnicron variant is infecting more people than ever, many of the once popular stay at home stocks continue to erode or at least not recover from their late 2021 sell off.
The last time a variant hit (Delta), the stocks that were selling off in hopes of a reopening economy caught a bid because of the fear that more shut downs might be enacted and cause people to once again stay home and use the stay at home technologies. Stocks like Pelaton and Zoom, which skyrocketed during the first part of 2020 when Covid first hit only to get creamed when it appeared vaccines might finally harness Covid once and for all, rose with the Delta variant news, yet did not react as positively when Omnicron arrived. Although Omnicron appears to be more contagious, investors don’t appear to be overly worried that it threatens the reopening trade and continue to hit the sell button on these stay at home technologies.
Either the investing public believes Omnicron isn’t the threat to the economy Delta and the original Covid virus was, or they are just plain tired of succumbing to the handcuffing of the Covid event.
Investors trying to guess which sectors will rise or fall next are certainly not adding more stability to the indexes. In fact, the market direction seems as elusive as ever. Although some of the major indexes continue to reach towards new highs, the average investor may be scratching his head as to why their portfolios may not be acting as robustly.
Investors riding the indexes as a whole may be faring better than those buying individual stocks, which is a change from the stock pickers paradise witnessed when Covid first hit. Since many stocks got obliterated at the start of Covid because they were in industries hit the worst by crowd throttling, buying an index back then, which are large baskets of many stocks, may not have been the most profitable route.
Instead, buying companies that specifically benefited from a virus-induced shut down was likely a better and more lucrative decision. Not so apparently now, as although many stocks are bouncing up and down like proverbial ping pong balls, some major indexes continue to steadily climb despite the volatility.
Will the stock markets of 2022 develop some definitive direction to make negotiating the indexes a somewhat easier and a more predictable endeavor?
Or will the severe daily rotations of stock sectors we saw in 2021 continue to frustrate investors in 2022.Only time will tell.
