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Morning Commentary

HIGH HOPES 2021

By Charles Payne, CEO & Principal Analyst
1/4/2021 9:25 AM

Question of the Week

What are you expecting from the market in 2021?

Post your answer below.

The market finished 2020 on a decidedly more cautious note than it spent most of the year that saw mind-boggling gains for the NASDAQ, strong gains in the S&P 500, the Russell 2000, and pedestrian gains in the Dow Jones Industrial Average (DJIA).


The market finished the year with the greatest number of winners. Still, nearly 40% of the market closed down for 2020. But the trend improved in the last quarter and the average gain took off, and that is very encouraging - 302 winners with an average gain of 31.6%.

But 2020 was a tale of two markets before and after March 23. 

Measuring the market from the March 23 lows, it was one of the best rebounds ever. Add in sizzling investment niches and themes,  it felt like there were fireworks each session, especially in the public offering arena.

My Beautiful Balloon

It was up, up, and away for the Initial Public Offerings (IPOs) market (traditional and Special Purpose Acquisition Companies (SPACs)). Most stumbled into the end of the year, and that’s great news. 

Still, it was interesting that some of those hot storylines cooled ahead of the Times Square Ball’s lonely descent, including those sizzling IPOs.  

There is no doubt these names got ahead of themselves, but the question remains: which IPO names will regain equilibrium and turn higher, especially with another batch of hot new issues in the queue?   Several high-profile or super-hot offers slumped into the end of the year, well off their highest level.

One moral of the story is do not chase these bad boys unless you are nimble. The more important development is that some are moving into a fresh long-term investing range.

Earnings releases will inform from here on out, in addition to individual challenges, like beating back short attacks, as several names are under the microscope with calls for massive declines (see Fubotv (FUBO)).

Out with a Whimper

2020 High

2020 Close

2020 % Change

Airbnb (ABNB)

$174.97

$146.80

+116%

DoorDash (DASH)

$195.50

$142.75

+40%

Palantir Tech (PLTR)

$33.50

$23.55

+225%

Unity Software (U)

$174.94

$153.47

+195%

Snowflake Inc (SNOW)

$301.56

$281.40

+135%

C3Ai Inc (AI)

$183.92

$138.75

+230%

Lemonade Inc (LMND)

$137.30

$122.50

+322%

Fubotv (FUBO)

$62.29

$28.00

+180%

 

There was a niche of hot IPOs that got very little media coverage despite science and discovery being a hallmark of 2020. Biotechnology and Health Care IPOs rocked without any fanfare while representing great hope for improved wellness for mankind.

I admit finding biotech winners is tough for me, as there are factors unique to the sector.  Without a doubt, it’s the hottest area in the market that never gets discussed. There is a race on Wall Street for the best names, resulting in monster payouts to analysts with tight relationships with companies going public or looking to raise money.

That was one of the characteristics of the tech bubble. While I am not saying this is a repeat when it comes to excesses, perhaps too many folks are focused on Snowflake (SNOW).

Seer, Inc (SEER)

195%

Olema Pharmaceuticals (OLMA) 

153%

Codiak BioSciences (CDAK)

115%

Kymera Therapeutics (KYMR)

210%

Sigilon Therapeutics (SGTX)

167%

Praxis Precision Medicines (PRAX)

190%

Pulmonx Corp (LUNG)

263%

Aberdeen Standard Cash Creation (ABCC)

101%

Silverback Therapeutics (SBTX)

121%

Targa Resources (TARS)

158%

Greenwich LifeSciences (GLSI)

534%

908 Devices, Inc (MASS)

185%

Alterity Therapeutics (ATHE)

101%

Eargo, Inc (EAR)

149%

PMV Pharmaceuticals (PMVP)

242%

Oncorus, Inc (ONCR)

115%

 

Investable 2021 Themes

I outlined these themes in my special 26-page Payne’s Perspective (ask your rep for a copy or research@wstreet.com).

Data

·         Communication services (XLC)

·         Software (Software-as-a-Service (SaaS) and Salesforce (CRM))

·         Semiconductors

Drones

Environmental, Social, and Corporate Governance (ESG)

·         Electric Vehicles (EV)

·         Solar

Industrial Metals

Farm Economy 

There are other hot areas in the market, including Bitcoin, but these require nimbler investment abilities and wider tolerance for risks and volatility.

Portfolio Approach

We are fully vested in our Hotline Model Portfolio.

Today’s Session

The markets are starting the New Year with some of the same themes as 2020.  The futures are pointing to a positive open.  The greenback is down again. Momentum continues, and Tesla (TSLA) is rocking on news of record Q4 deliveries. 

Expansion in manufacturing is continuing around the globe.  Here are home, we will get IHS Markit Manufacturing data at 9:45a ET and Construction Spending at 10a ET.


Comments
market higher

RICH mouser on 1/4/2021 9:51:22 AM
I expect phenomenal growth in trend sectors- EV, Blockchain, Biotech, AI, and alternative energy. Normal growth in manufacturing, communications and consumer discretionary until we see a complete reopening of the blue states. I see the market as a stock picker's market and you Charles are one of the best!
Good luck in 2021.

Jeff Kirk on 1/4/2021 10:15:08 AM
The S&P 500 P/E ratio (Price to Earnings) is now at around 22. The long term average is around 15-16ish. It looks like a reset is in order, probably during this year.

Tom Lynn on 1/4/2021 10:23:06 AM
Expect the broader market to go up in the 8-10 % range

small growth caps higher than that

technology and semi conductors still fly
as well as communications
value stocks will stage a rebound but fizzle out.

overall markets up unless gov't both here and abroad do not get in the way

James Cuff on 1/4/2021 10:25:36 AM
Expect Infrastructure Stock to come alive and exceed all expectations in 2021.

LYLE HOWELL on 1/4/2021 10:31:30 AM
If the Republicans loose power in the senate, You can forget about making money in the old standards, except for the "Greenies".

Mike Moule on 1/4/2021 11:24:54 AM
i think the market will continue to go up despite bidens presidency.trump has put so many great things in motion that unless biden willfully went out and tried to stop it it will go up despite his becoming president..if you look at the actions of the fed and the unemployment numbers for biden to start screwing around would be seen as antiamerican in order to help china..now we know china already has biden in his pocket but this would be the solid proof of it..earnings are coming now off of much reduced numbers and most companies are able to at least comply or beat their outlook....so in closing 2021 should at least be upbeat for the first half of the year

david on 1/4/2021 1:31:57 PM
Remember Clinton's ( Bill) sign over the door way? " It's the economy stupid!" Well President Trump gave us a super economy with jobs, border integrity, excellent improved trade deals, strong military, so now the fickle American left can drive off the cliff for the open border, no defense, make China rich again, green deal! It's amazing we still have a country.

Lorin K on 1/4/2021 2:03:07 PM
Thank you WSS and I intend to make entry soon. The expectation hasn’t been matched by the preparation...Charles and Cecil you’re still the best!

Kevin O. Grier on 1/4/2021 3:18:13 PM
Markets will be down With a liberal government watch out.
I am curious how Gold will do?

S Green on 1/4/2021 9:02:24 PM
My fair share of course!

Joe Mangarella on 1/5/2021 9:42:36 AM
What I expect for 2021 is that it's going to make 2020 look like a good year. In 1776, our Founding Fathers risked everything to begin a country based on representative government, and this election proved that representative government is no longer the law of this country. We are all going to have to get used to the fact that half the country will not accept a Socialist economic system.

Joyce B. on 1/7/2021 2:16:01 PM
How can the market Continue to climb when we KNOW that the Biden economic plan will crush tge middle class?

Nick Romano on 1/8/2021 12:20:59 PM
I am a new member and initially being confused by the terminology and process of buying and selling, but I am here to compliment you on your employee Jason Maeroff. He was able to explain things to me so clearly and expeditiously that I am now ready to move forward with the PPP and maybe even Swing Strategy levels with confidence. Thank you Jason!!!

Cyndi Miano on 1/12/2021 5:10:08 PM
EXCITING, BUT STORMY.

Ed Summerlin on 1/17/2021 12:50:23 PM
I expect the market to continue to search for direction for about the first quarter. Bank stocks should be better with higher interest rates since we all know inflation not far behind. Oil stocks should do well since the prices for oil will continue to go higher. Bitcoin on the other hand is a real question. The nice thing about bitcoin is you don’t have to worry about it reporting a bad quarter or something happening to key personnel.

Emmett on 1/18/2021 10:08:33 AM
Thanks Emmett Banks "should" be better. Oil "could" go higher. Bitcoin "might" go to $1,000,000 like Howard Cosell said that's why they play the game or in this case why they trade markets.  CP

Charles Payne on 1/18/2021 11:03:16 AM
with this administration NOT MUCH.

gregory moore on 1/27/2021 8:52:31 PM
I think the market will move sideways of retreat 10% in 2021.
DAVID

David L HARTZ on 1/29/2021 4:16:39 PM
I'm thinking that the market will grow but not as a product of real growth, quantitative easing and inflation will make the numbers rise, but the values will melt down due to production and energy concerns. Namely, the keystone pipleline shutdown would be a big flag to bears in the market any other year, but not anymore.

Noah on 1/31/2021 6:46:20 PM
I see a downward trend in the overall market as the result of higher taxes and more regulations/restrictions on industry in general. Metals should fair well. A significant increases in minimum wages is expected, and more environmental policy changes impacting will likely have a negative effect on the market overall.

George Thomas Goforth on 2/1/2021 12:09:10 PM
I believe the first six months or so will be good, after that once the Biden effect starts to take hold, the economy will be all down hill.

Craig on 2/1/2021 8:41:37 PM
Inflation. The Dept. of Labor sets the wages for migrant farm workers in N. Carolina at 12.67 and the farmers have to provide transportation and housing. The minimum wage in Arkansas is 10.00.

Karen Marlatt on 2/3/2021 4:14:08 PM
I want to learn how to invest with some knowledge of what I'm actually doing. Therefore, I've signed up for Charles Payne's educational class on this. I hope to make some wise investments with the little money that I have at present. Of course, before the end of the year 2021 I would like to see some profit on the investments I ultimately make with the advice from my studies. If not 2021, then definitely2022.

Barbara Buchanan on 2/3/2021 5:23:24 PM
Hello Barbara, Nobody is going to work harder then I will and the team is always ready to help.  I am honored and ready to do my best, help you filter out the negative noise and share what I've learned.  CP

Charles Payne on 2/3/2021 5:40:55 PM
Expecting big things from GameStop. Their press release from today, 2/3/21, indicates a big bright future. They just acquired some serious hires from the likes of Amazon AWS Chewy...
Millions of new investors might want to know this:
GameStop Appoints Chief Technology Officer Announces Two Additional Executive Hires to Support Transformation
https://news.gamestop.com/news-releases/news-release-details/gamestop-appoints-chief-technology-officer

Newbie Investor on 2/3/2021 6:27:13 PM
i expect the cruise line stocks to soar and fuel stocks to go up and all at a slow cautious pace of course

JOHN on 2/5/2021 12:14:12 PM
I think the bull market will continue as long as earnings do well and continue to grow and the Fed continues to keep interest rates low. Problem is no one knows what Biden is going to do, many jobs lost already and Biden has no clue about how to grow economy.

Richard Collins on 2/5/2021 2:53:05 PM
While stock prices may rise the dollar will erode and inflation will rise. Just go to the store and see how the prices have gone up on everything.

Pat f on 2/5/2021 2:57:56 PM
Big gains this year if the DEMS don't screw it all up.

brad cowen on 2/5/2021 3:42:09 PM
massive money 'bubble' will cause ECONOMIC CRASH soon.

Rennie Young on 2/7/2021 9:17:23 AM
I feel that with Biden's green initiative cancelling drilling on Federal land, oil will be up. With the surge of illegal immigration from the south, unemployment rates should rise as they take jobs from folks here legally I believe. I am surprised the market hasn't made a big correction already with all the negative actions from Biden's executive orders

George Farkas on 2/8/2021 1:04:57 PM
Charles, I listen to your 2PM show everyday for insight into the market as well as potential investment opportunities. Your guest list and your knowledge have been helpful in my stock picks for this year thus far. I am hoping that the rally continues as I have a short term goal that I am looking to achieve. With your comments I think I will get that done. Thank you

John Annetta on 2/11/2021 3:08:21 PM
I just cheer seeing drivers fly past me burning the gasoline supply. I knew Joe's policies would increase the price of oil. My oil stocks provide great dividends for this old guy to live. The gains were just a bonus. Like CBD, Sports gambling, health, autos and holding some spacs and leisure/travel for the potential upside in late year. Finally I see minerals needed for batteries all to be good in future. Need your insight and picks in thes areas. Thanks for all you do for you regular watchers.

Brooke Laggner on 2/16/2021 9:59:29 PM
Travel stocks and energy stocks will rise. I’d rather play in Vegas than bet on other sectors!

Tom Johnson on 2/18/2021 2:22:36 PM
I do expect industrial spending to increase due to a lack of spending last year due to COVID19. I also expect travel and consumer/recreational spending to increase for the same reason. I am concerned about inflation but assume the Fed will keep interest rates low.

Glen on 2/24/2021 1:10:57 PM
I am expecting UNSTOPPABLE PROSPERITY, just like in 2020!

Vern Heeren on 2/25/2021 1:16:51 AM
The coordinated and comprehensive efforts to dismantle America as we know it by the radical left will negatively impact us. Making money in the stock market will be difficult and will probably end up being the least of my concerns moving forward.

David Demask on 3/3/2021 9:19:06 PM
I expect a huge correction! I’m ready to buy!!!

David Leach on 3/4/2021 4:55:31 PM
Major banks look good on wider interest rate spreads; economic renewal companies - especially travel; some favored techs on major sell offs of 30% plus from highs

Victor Taylor on 3/5/2021 3:10:31 PM
From my rank amateur investor perspective, I feel that this will be a time where political commentary will have a significant affect on the market, especially since the marketing arm of the socialists, the main stream news outlets, are all in and have abandoned nearly all pretense of being journalists. My expectation is that the market will stay bullish while diminishing into a bear market as the realization starts to sink into the heads of people who can snap out of the woke/cancel culture/ and general divisive mongering cold 'civil' war, long enough to lament the fact that we have a senile individual in the driver's seat who is propped up by a cabal that is bent on driving the world's greatest economy to the edge of the cliff and could potentially do some self-serving things with access to one of the world's still premier military powers. Marshall Law anyone? Even if the midterms can tamp down on some of the radicals, it still looks bleak.

Edward Lacovara on 3/15/2021 7:38:07 AM
I get where you are coming from but I look at history and I also look at the America I know and there is always a moral majority that doesn't get its views represented on TV or in movies etc...the loud and obnoxious are moving the needle but we are a long ways from that American you are worried about.  That doesn't mean we should not push back but I am not giving up on owning great stocks and especially on this greatest nation.  CP

Charles Payne on 3/15/2021 7:46:00 AM
 

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