Trap or Opportunity?

Here are the market observations for today.

1. The market makes a move to deliver enormous pain, irrespective of how you are positioned [Fully Invested or Have Cash]
2. This is how SPY ETF has moved over the last 10 days. Up, down and crazy. 
3. The market has a new pattern: Volatility and Choppiness. The moves are random with no directional conviction.
4. Good news? – Third-quarter U.S. gross domestic product (GDP) was revised higher in the latest estimate to show a 2.3% annualized increase in economic activity from the 2.1% rise previously reported.
5. The real bounce came in the oversold small-cap index Russel 2000. See the IWM chart
6. When the market rallies everything looks fine but remember why the market sold off in the first place and has that problem gone away. [Inflation, Supply Chain constraints]
7. What stock does over a period of time matter? Example: Ford is trading sideways – Eventually the stock should move higher.
8. General Motors investors were not so lucky. The stock hit the resistance and sold off. 
9. Omicron Variant is not causing people to cancel travel plans. As per TSA, people are flying in record numbers. No wonder JETS Airline ETF has bounced a lot from lows.
10. Peak pessimism trade has worked in favor of Carnival Cruise. The stock is up 28% this month. But who would have known?
11. The analysts forecasted that Carnival Cruise Corp would lose $1.28 per share despite taking in $1.34 billion in revenue during the last quarter — but here’s what the company did – Less revenue($1.29 billion), and a huge loss of $2.31 per share.  Yet the stock is up 28% this month. Why – Fundamentally this is rock bottom business performance and things look up ahead.  
12. One common pattern during this relief rally – Double Bottom bounce from peak pessimistic levels. See the Uber recovery
13. Pfizer made a Gap up move in Nov and sustained it for a couple of days. It has resulted in a 25% trade over 1.5 months.
14. Micron MU came out with brilliant earnings yesterday and has formed a similar chart. The stock is a momentum buy.
15. Is Blackberry finally turning around after earnings? A close above $9.5 will make the stock a buy?.
16. 2021 turned out to be a terrible year for Brazil. Just look at the index.
17. Breakout Investing sometimes tests your patience like crazy. See Alcoa as an example.
18. Cleveland stock despite posting solid fundamental results made no progress in 2021. The stock has a good base at 19.2
19. Stocks can fall a lot with no pullback. See Robinhood stock
20. Never trade if you cannot execute Stop Loss. Remember – “To kill it in the stock market, you have to not get killed.”

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