The market rally: Skeptical or Complacent?

We know what can happen. We don’t know it will happen.

Here are the market observations for today.

1. Has the market rally changed the mood of the market? We will know in a few day’s time. 
2. The market rallied on Monday with strong breadth but it seems there were more skeptics than believers. The volume was very low.
3. The most positive aspect of the rally was a surge in a small-cap index. IWM ETF is now at 221. Catch-up rally?
4. The thing that sparked the rally in the market was a view that the Covid appears to have possibly peaked in hard-hit regions. Seven-day moving averages of new infections have, for now, stopped rising
5. No wonder Airline, Casino, and Hotel stocks are rallying. Airbnb is up today with a large bullish candle. Here’s the chart.
6. The market is navigating between overbought indices and oversold broader market. It is this divergence that’s making people confused and nervous about the market.
7. There seems to be a short squeeze happening in Chinese Internet stocks. The ETF KWEB is up 9% today. The big beneficiary seems to be Alibaba which has bounced from $152 to $170 within 24 hours.
8. Will bullishness in Emerging market internet stocks drive up prices of Coupang CPNG as it sits at line of support?
9. Coupang is a South Korean Amazon. It’s a true growth stock. The company’s revenue grew 71% last quarter to $4.48 billion, marking the 15th consecutive quarter of 50% year-over-year revenue growth. It did its IPO a few months back. 
10. Brazil ETF is up 4% today.
11. The earnings gap up in Palantir PLTR seems to be holding up well. PLTR is a good stock to hold as long as it does not breach 23.4 on the downside.
12. The economy-sensitive stocks like Oil names and material stocks are doing well. This is one segment that has been extremely volatile. The stock that I like in this space is CLF.
13. Earnings momentum is driving trends in many stocks like Lowe’s, Macy’s. Earnings Gap up has delivered the best gains in Upstart Holdings UPST. The stock is up 27% now post-gap up.
14. When it comes to earnings gap-up move, the stock I like: Lending Club LC
15. Today, Palo Alto Networks PANW has come out with brilliant earnings and the stock has opened with a gap-up move. PANW is a buy with a stop loss below 410.
16. Cybersecurity as a group seems to be rallying. Crowdstrike is also up 8%. There is a speculative stock in the group SentinelOne S that has broken out. The stock can surprise on the upside.
17. Two Bullish sectors that seem to be quiet today: 1. Biotech; and 2. Semiconductor stocks
18. The stock I am following/bullish: AMD, CLF, NOK, LC, M, U, AFRM, AMRN, TSM, ANY
19. The underlying economy continues to be strong. Sales of new U.S. homes rose in July for the first time in four months.
20. The Future is always uncertain. I do not help you find the next best trade. I help you think clearly about the market as they stand today

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