Navigating a volatile month

Here are the trading notes for today. I am adding a new feature in the daily dose: trading journal

1. Surging inflation and supply chain disruptions are hampering the global economic recovery from the coronavirus pandemic ~ IMF 
2. The volatility is now killing the trader’s enthusiasm. There is no clear direction. It’s impacting the volumes. 
3. Who says a sideways market cannot be a chaotic messy market. Look at IWM Small cap index ETF
4. Value destruction is happening across the board. No matter what you buy: 1. High dividend Yield stocks; or 2. Low PE stocks. The end result is the same
5. AT&T and Verizon are in free fall. Is the market losing confidence in its dividend-paying capacity? Verizon can decline to $49
6. Lots of low PE stocks are breaking down even after underperforming for a long period of time. Example: Micron Tech
7. The market never remains the same. It keeps changing with time and one should always keep looking where the next bull market might be emerging.
8. Higher Oil and Gas price is driving interest in 3 categories: 1. Clean Energy (CLNE/GEVO); 2. Solar Energy (TAN) and 3. Alternative energy (Bloom Energy, Plug, and FCEL). I made the argument for such stocks yesterday.
9. Ford posted a sequential improvement in sales for the month of September and announced a big-ticket investment in the new EV factory. This has triggered a rally this month and the stock is heading towards resistance.
10. Uranium is another space where traders appear excited. Most of the Uranium stocks are bouncing from support. The best way to play this is with ETF URA
11. The new stock to buy: MGM. Most of the casino stocks have suffered due to Covid and exposure in Macau, but MGM Resorts is different. It still derives the bulk of its revenues from US operations and the company is well-positioned to benefit once covid scare recedes. Today the stock has broken out. I will be a buyer at the current market price.
12. Uber announced last month that it will become profitable in the current quarter. The stock did a gap up and closed at $44. The stock is on its way to $52
13. Affirm is turning out to be the trade of the year. It doubled in less than 2 months. It was a great buy at $64 and any price above $120 was a sell. Now at Resistance
14. Earning seasons starts now and everybody will looking at margins. It can bring in additional volatility
15. A wise trader knows that winning periods never last… but so too do losing periods.

Trades:

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