The smallcap Russell 2000 continue to rally and is up 1.7% today to new all time high
Reddit Short Squeeze saga over As the normalcy returns, the pressure to exit from high flying names intensifies. No wonder, stocks like Gamestop GME, AMC, Blackberry, Nokia and Express under considerable pressure. The only stock in the list that has good fundamentals: Blackberry
Where is the support for Blackberry?
Blackberry gave an attractive buy signal around $5 first and then at $7. It is a good stock to hold in 2021.
What should one do with Clover?: I don’t like the word FRAUD. I can take overvaluation any day over it. Clover Health is now under a serious cloud and it needs to be seen what happens next. As a safety measure, it would be better to reduce exposure and liquidate 50% of the holdings, if the stock does not recover and close above 13 by end of the trading day.
Fraud allegations and the stock reaction: Remember Nikola NKLA. A similar report came out and the stock tumbled with a gap down near $40. In the following few weeks and months, the stock crashed to sub $20 levels. I am in no way suggesting that it might happen with Clover too. It all depends on how they respond.
Positioning for Biotech rally: There is considerable interest in Biotech stocks. I like Sorento Therapeutics SRNE and VBIV. One can hope that they will take off sooner than later. Example: VBIV a large bullish candle and three days of quiet consolidation.
Waiting to buy on declines: Two Biotech stocks I would love to buy on declines: 1. MNKD and 2. AMRN.
Qualcomm QCOM: It is not the earnings but how the market reacts to the earnings that matter. QCOM came out with fairly decent earnings report but the market does not seem to like it. There are concerns about chip shortage. If that’s not enough, Citigroup downgraded the stock and the reaction is there for everyone to see. When a stock does a gap down, then just avoid it, rather than buy the falling knife.
CIDM – A stock that gave starting trouble: The trouble with trading penny stocks: I covered CIDM at 1.35 with a view that the stock is building a base at 1.3. The market volatility created uncertain conditions and the stock tumbled to 1.2 but only to build a base for a strong rally to 1.8 and it seems the momentum will continue. Will Genius Brand GNUS take some inspiration 🤔
The EV Electric Vehicle Portfolio: RIDE + WKHS. WKHS has rallied 14% today and the stock is now at a new high. RIDE stock has a resistance of 31-32 to clear. Both stocks continue to be hold. Having said that, in a rule-based trading, one should always follow their profit booking rulebook.
State of recommendations
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purposes. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers
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