Speed Bump on Bullish runway

1. There are decades where nothing happens; and there are weeks where decades happen. What a January we have seen!!!
2. Bullish Thesis at the start of CY2020: US China trade deal means speedy Global economic recovery in CY2020.
3. First Speed Bump – US Iran Geopolitical conflict, which the market negotiated quite successfuly; but the second speed bump has been quite abrupt: Coronovirus scare. Can it derail Global economic recovery?
4. In Dec 2019 – lots of people turned super bullish on Emerging market thanks to breakout and US China trade deal but two speed bumps have derailed this trade.
5. The Good news: Global markets have always comeback stronger after these health epidemic scares. As per one study of 13 outbreaks since 1981, analysts found that the Global index returned an average of 0.8% over a one-month period following an outbreak and 7.1% over a six-month period.
6. History can give you comfort but there is no guarantee. You can have good returns or predictable returns. Never both
7. Yesterday, the US market staged a nice recovery. Some called it a Buying Opportunity while some treated it as dead cat bounce. I see it as Trend interrupted.





8. When volatility spikes, people tend to watch the market from sidelines. No wonder yesterday rally happened on lower volumes.
9. Super Bullish News: Corporate America continues to deliver good news on earnings. Apple posted very strong earnings of $4.99/share +19% from a year ago and beat analysts expectations by wide margin





10. Today is a big News day. US Fed will announce its interest rates policy. No rate change expected.
11. The 10 year yield now trades at 1.65%. This makes relative valuation of equities very attractive.





12. You cannot stop an idea whose time has come. Carbon Neutral is the new Bullish theme.
13. The market does not like bad earnings report. This is Pfizer stock after posting disappointing earnings report




14. 3M also came out with bad earnings report due to slowdown in demand in China and Asia. 3M makes adhesive tapes, Post it notes, Air Filters
15. When a stock breaks out post earnings report, then it usually runs a distance. Will this stock breakout today?
16. Marijuana stocks seem to be exhibiting extreme bullish interest for now. Is there any short covering trade here?





17. Gold has reacted quited negatively to Coronavirus scare because Chinese are the biggest buyers of Gold. Chinese Govt has extended the lunar new year holiday to Feb 02.
18. M&A: BorgWarner has made an offer to purchase Delhi Tech in a $3.3 billion all stock deal. Delphi once upon a time was a General Motors company and giant in auto components space.
19. A good stock to buy during current panic situation.
20. One segment that has done very well this year: Housing construction stocks. Keep an eye on these stocks to buy on declines
21. SLACK a collaborative and communication platform company, stock has not done well since its IPO. The market is worried about competitive intensity but the stock is trying to take support at 20 here





22. One out of every three smart TV sales in the U.S. last year was a Roku TV. No wonder Roku stock rallied from $40 to $160 in 2019.





23. The trillion is the new Billion. Congressional Budget Office sees US budget deficit of $1.015T in FY2020
24. It’s hard to keep up with news. Iran has released ransomware SNAKE which is threatening Industrial Control system. Hmm Cybersecurity space to look out for
25. Live Life 🙂

"One day you will die" ~ This is not a forecast. This is statement of fact. Most of the professional pessimists (intellectual/Ph.D. types) talk like this.

You are much better off in the company of people who give you HOPE and motivation to live a better life before you die.

— Deepak Singh (@smarket) December 20, 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