The Disconnected Market

Here are the market observations for today.

1. The market hates unpleasant surprises and loves certainty that it likes.
2. Joe Biden delivered certainty by renominating Powell to the second term as Fed chair. No wonder S&P 500 is higher.
3. The yield on the benchmark 10-year U.S. Treasury note is higher at 1.59%. Bank stocks are moving higher and so do ETF XLF.
4. The real fundamental concern despite bullish market: Surging covid cases in Europe and lockdowns being announced in some European nations. The global economy cannot afford another disruption.
5. The real technical concern: The disconnect between the indexes (S&P500, NASDAQ) and the broader market is at an extreme level now. The index continues to move higher but individual stocks are falling like crazy.
6. Apple confirmed what the market always believed that it will build an electric car with full autonomous capabilities. No wonder the stock is moving higher like crazy.
7. The market loves companies that are working on the problems of the time. The Semiconductor Shortage argument and how it impacted Auto companies was the defining narrative of 2021.
8. Ford announced a partnership with Global Foundries GFS last week on Auto chips. I recommended this stock at 56 and now it got a big upgrade today. Here’s how it looks today.
9. There is renewed interest in Self-driving car technology and this seems to be driving interest in players like Aurora Innovation AUR
10. Earnings momentum took the stock RBLX near $140. I am glad I booked profit at $138.
11. Earnings momentum is taking Qualcomm higher. I like how the stock has shaped up and would continue to ride.
12. Has Bitcoin fallen out of favor – pretty aggressive selling in Bitcoin mining stocks? Should I exit HUT? The Breakout support is at $11.
13. Never buy a stock because it looks cheap. Things get ugly when the trend is down. See Peloton PTON price action
14. When stocks don’t bounce, they sell off with intensity. The case with MQ. Negative sentiment around Bitcoin not helping.
15. The housing market continues to be strong: Existing-home sales are on track to surpass six million this year, which would be the strongest annual pace since 2006
16. Losses hurt because we tend to interpret them in a catastrophic way. Instead, try to read the behavior driving the losses.

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