TheStreet’s James “Rev Shark” Deporre said that investor angst over Omicron, the new Covid 19 variant, is receding -- but that doesn’t mean investors should rest easy.
“Some of the worries about the Omicron variant declined over the weeks following various comments that it may not be as severe as the Delta variant,” Deporre wrote recently in Real Money. “However, Delta continues to spread quickly, and there is still limited information about Omicron.”
The market's problems go beyond COVID and its variants at this point, according to Deporre.
“The Omicron crisis helped to magnify several problems that have been brewing for a while,” Rev Shark said. “First and foremost is inflation and the Fed's increased hawkishness. Higher interest rates have a greater impact on growth stocks because, in many cases, significant earnings are far in the future. Growth stocks and the big-caps particularly have some valuation issues that much of the rest of the market does not face.”
Another issue the market is facing is technical damage caused by the selling that has hit in the last couple of weeks.
“Currently [as of Friday, Dec. 3], many stocks are being dumped regardless of valuations and future prospects because they are not finding any support,” Deporre noted. “The weakness feeds on itself and is driving more money to the sidelines.”
What the market is really grappling with right now is uncertainty. “There is uncertainty about the omicron variant, there is uncertainty about inflation and what the Federal Reserve might do, and there is uncertainty about what governments around the world might do to address the issues,” Deporre said.
“It’s a very chaotic market environment right now, and volatility is likely to stay evaluated,” he added. “The good news is that some great opportunities are developing, but it will require patience and vigilance to capitalize on them.”