- The market hates uncertainty. It can price in a negative event and move on. What it cannot price – a developing story.
- The Fear: Coronavirus has a potential to damage Chinese and Global economy if it continues for few more weeks.
- The entire market rally over the last few weeks was fueled by optimism around the U.S.-China trade deal and a rebound in global growth. Rebound in global growth…hmm
- Emerging Market was all set to rally big in 2020. But 🙁 Emerging market EEM is down 6.5% in just 5 days.
- Were is the support for EEM? On Charts – it looks like 41
- There is nothing guaranteed in the market. A small virus can make you sick and disrupt all your plans.
- The Year of the Rat has not started well for the Chinese. Will FXI Chinese ETF find support at 38?
- There will always be some companies benefiting even from uglier and scary situations. Example: Lakeland Industries, the company that makes Hazmat suit and protective gears. Are they good investment? Nope…just some short term momentum volatility.
- One more stock that has rallied on Coronoavirus scare – Alpha Pro Tech APT. The company makes protective clean-room suits, infection-control gear and the air-filtration face masks. The stock is already up 100%.
- There is also tremendous bullish interest in companies that can develop Vaccines like Novavax NVAX and Moderna MRNA.
- The US market sold off pretty sharply yesterday after a big Gap down. It was one of the worst days in months, and not a pretty situation for individual stocks. Such sell off makes everyone humble.
- What can you buy when you are bearish on the US market: Inverse ETF like SPXS. It is 3x bearish trade on S&P 500.
- The panic always generates demand for safety assets. The US 10 year Treasury yield plunged and is now trading near 1.58%. They do make relative Valuations attractive
- Two of the best-performing tech stocks are set to report results today: AMD and Apple. Can they surprise?
- Good Earnings + Large Bullish Candle move ~ Buy on declines. Will Intel find dip buyers soon?
- The stock that has made a big comeback in Jan 2020: Beyond Meat BYND ~ Up 55% from the levels of 80
- A good stock to buy during current panic situation.
- What is getting aggressively sold in the current market environment – Places where people have to meet each other like Coffee shops [Luckin Coffee, Starbucks] + Airlines + Casinos.
- China is the biggest buyer of metals and no wonder during last few days – the metals and metal stocks have been hit the hardest. Example: FCX Freeport-McMoRan the world’s biggest Copper producer
- Crude Oil continues to sink to new lows. Deflationary pressures + abundant supply ~ XOP Oil producing companies ETF sinks to new low
- The Sell off in Exxon Mobil continues…near all time low. Dividend Yield +5% but no takers for the stock
- Bad Boys for Life is the first $100 million movie of 2020. This is good news for Sony SNE investors
- Even in times of panic, watch what the stock is doing. Example: AMCOR holding Line of support is a good bullish sign
- FOMC Meeting: Jan 29 Wednesday 1:00 PM CST
- The best way to deal with volatile times: Be light so that you can deal with all the crazy ups and downs without losing your mind.
- We know what can happen. We don’t know it will happen 🙂
Probabilities tell you what’s LIKELY to happen, not what’s GUARANTEED to happen.
— Trading Composure (@TradingComposur) November 15, 2019
Please share your comments on what you think of market observations, market and trading in general
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. 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
Super sharp analysis.