Navigating Fear and Elevated Index Levels

Here are the market observations for today.

1. How can one be bullish when economic growth is peaking, stock valuations remain elevated and price action is choppy? 
2. Fact: SPY has staged a stunning recovery from lows. Should one still be scared about the market?
3. What makes Bulls comfortable: Small cap index is now trading above Sep 15 levels. This is a very positive development.
4. There is a recovery move happening in Airlines and Cruise stocks. Should one buy? Nope
5. Nobody can deny that there is fear among market participants. There are lots of things to worry about from the debt ceiling to China’s economy to the real supply chain disruptions.
6. Nike warns that supply chain issues will hurt sales next quarter. Nike stock is down 6%. Gap down on earnings 🙁
7. All footwear stocks getting hammered. One would be better off getting rid of any such names. Example: DECK, Crox, Skechers, Foot Locker
8. Breakout to a New High trade is working quite well for CIDM. Here’s how it looks on the chart
9. Alight ALIT breakout has got support right when it needed it. The stock is a buy if you don’t have it and hold if you have it.
10. Alight Solutions offers an employee benefits portal. The company has launched Alight Verify to help employers manage vaccine requirements and leverage data in driving business continuity decisions. With Alight Verify, employees enter their vaccination data and upload their vaccination cards.
11. Uber Trade is working very well. Gap up on fundamentally bullish report does work. Here’s how
12. When a stock makes a Gap up move on an earnings report, it leads to strong follow-through moves. Such stocks deliver strong gains over the next 8 weeks.
13. Palo Alto Networks PANW gapped up on a strong earnings report on August 24.  I covered that day: Read Point no. 15. The trade is now up 10.25%. See how it happened. 
14. Lending Club was another Gap up on strong earnings report trade. I recommended it back in August. Here’s how it has played out so far
15. AEHR is turning out to be a trade of 2021. A picture-perfect move that I could not ride due to bad experiences of the recent past.
16. I recommended Veriton yesterday afternoon, and the large candle momentum seems to be working. The company got a big order from ViacomCBS.
17. China bans cryptocurrency and mining. It’s having an impact on stocks like CAN and SOS. 
18. There is sudden trading interest in all EV stocks and it’s helping stocks like RIDE, QS, and Canoo GOEV. Charts are in a state of mess but intense chatter in WallStreetBets.
19. Marin Software MRIN did a revenue share agreement with Google. There seems to be a lottery trade developing in it. An extremely speculative move happening.
20. A big source of worry right now: What if China does something stupid this weekend and the market panics again? The answer nobody knows
21. “Forget your pride and ego; the market doesn’t care what you think or want. No matter how smart you think you are, the market is always smarter.” William J. O’Neil

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