Technical Bounce

Financial markets are an endless stream of opportunities, so one should never have a feeling of missing out on any stock. There is always an opportunity.

Here are the observations for today

1. A week back, everything looked shaky and bearish and IWM Small cap index was near the 200 dma/support line.
2. In a bull market, traders buy the dips. A strong technical bounce has happened on all indices. IWM bounce from 210.
3. NASDAQ and S&P500 also have bounced back strongly and made new highs. The indices look overstretched with NASDAQ at 15K and S&P 500 near 4500.
4. What about Taper Tantrum fear? The market keenly awaits the Fed Chairman’s speech at the Jackson Hole symposium tomorrow morning.
5. The intra-day action today ahead of the meeting is bearish. S&P 500 saw a sudden decline around 9:24 am EST and the selling has persisted since then. Is this profit-taking ahead of the event?
6. U.S. economy grew slightly faster 6.6% pace in the second quarter, new GDP figures show
7. The yield on the 10-year Treasury note has risen to 1.34%. This has been the reason behind a rally in banking stocks. XLF, the ETF that tracks large-cap financials is back to highs.
8. Salesforce makes a huge gap-up move today on strong earnings growth. I covered the stock as Ready to run play a week back.
9. The NFT craze is driving DLPN to new highs. Will the momentum sustain? The experience over the last few months has been terrible when it comes to trading such speculative names. 
10. Canadian Bitcoin mining play ANY Sphere 3D Corp seems to hold well above $4. The stock is now at 4.45. I covered it last week.
11. One speculative momentum name that looks juicy on the chart: Pixelworks PXLW. Will it rally?
12. The big fear right now: Will this be a short-lived bounce in stocks outside the index?
13. When a large-cap stock breaks out to a new high with a large candle, then one should add the stock and forget about it for the next 8-12 months. Investors looking for an investment idea can consider Medtronic at the current market price.
14. Medtronics MDT, a medical device maker, is an earnings momentum play driven by the robotic surgery business. The company came out with a brilliant set of earnings numbers and raised its full-year earnings outlook. It’s a great long-term investment play.
15. Another medical device maker MiMedx Group MDXG which I have covered in the past is making a move post-breakout to a new high.
16. IPO Breakout on move: 1. EVCM and 2. SentinelOne. I initiated coverage when they started making the move.
17. Will the mask come off? At least outdoors yes. Coty, a leader in cosmetics and the company that makes Hugo Boss and Burberry perfumes, expects to post full-year sales growth for the first time in 3 years. The stock is up 14% today. Should one buy? I will say it’s too early to make that call.
18. Science of Stock price action Lesson: When a stock does gap down, it’s an indication that there is big trouble in the business. It is usually the start of a big decline. Here’s one example of why one should never hold a stock when there is a gap down.
19. You never know what the market would not like. That’s why pay attention to the stock prices and price action.
20. Dollar Tree earned $1.23/share for the quarter against expectations of $1.01/share. The share should have rallied right. Here’s what happened. Why? Sales only grew 1% 🙁
21. The factory shut down in Vietnam due to covid spread is impacting all apparel stocks. Everything is down from Macy’s to Gap. Does it destroy the investment thesis for Macy’s? I will say no for now.
22. There are many ways to make money in the market but only one way to lose: it’s by letting losses get out of hand.
23. When it rains, look for rainbows. When it comes to trading, be +ve and always look for new opportunities.

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