Oversold market + Santa Clause Rally

Here are the market observations for today

1. The market has rallied vertically as if nothing happened. Here’s the SPY daily chart.
2. Much of the stock market’s rally this week is due to overdone fears last week and a palpable sigh of relief the selling finally stopped ~ Jim Paulsen
3. Shorting is never easy and that’s why I never recommend leveraged ETFs that work on the short side. Short NASDAQ ETF SQQQ turned out to be a disaster.
4. When will the market start worrying about the hawkish Fed and surging inflation again?
5. Here’s one good news on the inflation front
6. The damage to some markets in 2021 has been quite significant. Emerging market EEM is one example.
7. The market is no longer worried about the Omicron variant as more studies suggest that it has a lower risk of hospitalization. This is good news for Home Away stocks.
8. Is this the end of Covid? – Low risk of Hospitalization + Vaccine + Booster + FDA approved antiviral pill
9. A Classic Double Bottom move in Silver. The bounce looks attractive but will it sustain? Silver has drastically underperformed the broader equity market over the past year. Hence very few people will trust the move.
10. One trading pattern that usually delivers strong returns over 3 month period: Gap Up and Away. Example: Palo Alto Networks
11. Gap Up on Strong earnings was the reason I recommended Micron Tech MU yesterday.
12. This is big news for the 22nd Century Group. It will rerate the stock for big gains. It’s already up 47%. I will wait for the dip.
13. Please do follow the Low Volatility Large Cap Trading Portfolio
14. Survival should be your primary objective while you gain experience, discover what works for you, and build rules around it.
15. Merry Christmas to all

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