Focus on the reaction and not the news

Here are the market observations for today:

1. It is not the news but how the market reacts to the news that matters. The price action helps you understand this important thing.
2. Inflation is for real and you should be prepared to pay higher prices for everything next year. The companies have pricing power because there is a shortage of everything and consumers have too much cash.
3. The most significant bullish thing that has happened this month: Breakout in Small-cap index ETF IWM
4. Large-cap stocks are under pressure today as the morning strength has been sold into.
5. There is a sudden interest in Marijuana stocks on rumors of Marijuana legalization at the Federal level and its driving interest in Tilray TLRY. 
6. Hydrogen economy stocks are in correction mode today be it FCEL, BE, or PLUG.
7. The stock I added today to the trading portfolio: MTTR. Why? It broke out above 24.75.
8. Whenever stocks gap down, then chasing fundamentals (low PE, High dividend yield) is a bad idea. Take an example of AT&T
9. I don’t like Gap downs. It means the market is very worried. Splunk announced that its CEO is stepping down and this has been the market reaction.
10. When stocks start rallying on good earnings, they run a distance. I mentioned ARRY on Friday and it’s running today too
11. Will Biden virtual summit cool off tensions around Taiwan and Semiconductor space?
12. The semiconductor sector has demonstrated strength and that makes Global Foundries GFS an interesting play. One can buy at the current market price but I am not adding on the trading sheet.
13. I am booking profit in QS.
14. I like when stocks move like this. I would love to buy Coco on declines near 16
15. In the short term, you are as good as your intensity. In the long term, you are only as good as your consistency. This is so true in trading.

Trade Sheet:

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