Infrastructure Bill and the Momentum mania

Here are the market observations for today

1. A Bullish market can absorb bad news without much pain. It’s the mindset that counts.
2. On Nov. 3, the US Fed stated it would begin tapering asset purchases starting later this month, with a monthly reduction of $10 billion in Treasuries and $5 billion in mortgage-backed securities. Taper tantrum?
3. Here’s what S&P500 did – Interpreted the same news as good news. It also got 2 good news: 1. Strong Jobs data; 2. The passage of Infra Bill.  
4. The House passed the Infrastructure Investment and Jobs Act, known as BIF. The bill provides $550 billion in new funding for infrastructure projects like bridges, broadband, and EV charging stations. It’s good news for Clean energy and material stocks.
5. The momentum that matters – Smallcap index. IWM breakout run continues
6. Earnings do count. 89% of S&P 500 companies have reported third-quarter results, and 81% of these exceeded Wall Street’s estimates for earnings per share ~ Factset
7. Two stocks – CLF and US Steel X trading higher on the Infra bill but they have always been tough to trade.
8. You cannot stop an idea whose time has come. I am talking of the Hydrogen economy and stocks like Plug Energy, Bloom Energy, and FCEL.  I recommended adding BE on Friday and the stock has not disappointed. All 3 stocks are great stocks to ride the current run.
9. QS is turning out to be a big winner as EV adoption gains momentum
10. Bitcoin mania continues and we have great stocks like HUT and SI to ride the theme. 
11. I like when stocks Gap up on any fundamental news flow and then pull back to fill the Gap and rally again. SSYS has done the same
12. Three stocks on my watch list due to earnings gap up 1. BigCommerce BIGC; 2. TradeDesk TTD and 3. Coty
13. When the market love affair stops with the stock, then this is what happens. Everybody seems to be dumping Peloton PTON stock. With the covid pandemic behind us, more Americans would prefer to work out in a gym. PTON earnings just confirmed this hypothesis.
14. US Fed now preparing the market for higher interest rates. Bloomberg reports: Fed Vice Chair Richard Clarida says the “necessary conditions” to raise the U.S. central bank’s benchmark lending rate from near-zero will probably be in place at the end of next year. Anybody worried?
15. Focus on the price action and not random thoughts. Trading requires patience and discipline. I know it sounds simple but very hard to practice.

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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