It’s also important to be aware of “technical trend gap-downs” on security prices. The fact that markets are betting on fundamentals should also be taken with caution and fundamental deteriorations will only be magnified on the way down.
Rotations out of ‘hyped-up’ sectors
As a team, we do not suggest a complete market selloff, but we are calling for rotations out of drug and pharmaceutical stocks and other sectors that are too ‘hyped up’. Margin shrinkage is likely to occur in healthcare companies, specifically drug companies.
Hillary Clinton managed to drive biotech stocks right down with a single tweet, after which she embarked on a war against big pharma that would create a bear market for this industry. The Trump administration wants to eliminate some of the value of patents which will affect IP-heavy industries the most.
We see positive expansions of multiples and continued revenues in the rebuilding of physical structures and in technology. We also see expansion in spending when it comes to security and other factors related to the safety of the American population.
