We’ve been waiting on some actual good news this week. And with only half an hour to spare before the closing bell, we finally got it…
The Food and Drug Administration came through with emergency authorization of the Pfizer vaccine for children ages 5 to 11. This will improve workforce participation rates — especially for women — which have not improved relative to pre-pandemic levels in many months.
Participation rates for women fell in September as child-care responsibilities disproportionately fell to them. External care costs skyrocketed, and labor shortages affected just about everything.
The biggest impact of the Pfizer children’s vaccine is that it will help reverse that trend to some degree, setting up what could be a surprise ramp-up of consumer activity into the holiday season.
To that end, consumer confidence numbers reported Friday morning were in line with expectations, despite what clearly appears to be increasing inflationary pressure on consumers.
Apple Inc. (Nasdaq: AAPL) and Amazon.com Inc. (Nasdaq: AMZN)’s third-quarter supply chain woes — as well as a big pullback in our small-cap energy space — were ultimately what weighed on markets. There were enough positive catalysts alongside the Pfizer children’s vaccine, however, to essentially keep markets flat.
Moves Outside the Impact of the Pfizer Children’s Vaccine
The biggest move on our watchlist this past week was clearly our short China play — the Direxion Daily FTSE China Bear 3X Shares (NYSEArca: YANG) — which was up 6% on the day and 14% on the week.
As I’ve tried to say consistently, the right play from a portfolio perspective is always to sell a little of what’s up — or to sell a lot when it’s WAY up — and buying a little in whatever is down.
Our watchlist’s biggest correction this week was in natural gas, which finally pulled back around 10% in the past two sessions after its torrid run up above $6 per mmbtu.
We noted on Wednesday, when the United States Natural Gas Fund (NYSEArca: UNG) was hitting new highs, that it was a good time to sell a little. In this case, covering China and buying a little natgas, CONSOL Energy Inc. (NYSE: CEIX) or Arch Resources Inc. (NYSE: ARCH) — which reports on Tuesday — were the best plays on the board.
Both ARCH and CEIX still have positive one- and three-month momentum, despite the BTU-led correction in coal prices — sorry again on that one, folks… I wish I could win ’em all. But that plays well as we head into what should be a solid CEIX earnings call.
And if natural gas is down again on Monday, it may be time to get into a new position.
Weather may be mild in fall… but winter is still coming.
All the best,