“Following the norms” rally

Here are the market observations for today.

1. Historically, the market gains during the last five trading days of December and the first two of January.
2. This is what precisely the market is doing. SPY intraday chart. SPY is an ETF that’s a play on the S&P 500 Index, is up 27.5% this year, and now trading at an all-time high.
3. The Small-cap index IWM ETF traded sideways for the year but it does not capture the damage that has happened in the broader market
4. U.S. retail sales jumped 8.5% (for the period Nov 1-Dec 24) from last year, the highest in 17 years, and is up 10.7% from the pre-pandemic 2019 holiday period ~ Mastercard report.
5. New Bullish narrative: US Consumer health is strong to withstand US Fed hawkish stand.
6. The US central bank plans to buy $60 billion per month of bonds in combined Treasuries and agency mortgage-backed securities starting in January, down from $90 billion in December and 120 billion from the start of the pandemic through November. 
7. FCEL, the Clean Energy stock came out with disappointing earnings and the stock has sunk to a new low.
8. Micron Tech has done well since its earnings. Will it close at the new 2021 high?
9. Western Digital WDC shares are trading sharply higher on news that Samsung has reduced production at its NAND memory chip plants in Xi’an, China, because of new restrictions in the region relating to a spike in Covid-19 cases.
10. Will XXII take off? The price action looks encouraging
11. It has been a bad year for Emerging market EEM ETF and you can blame China and Brazil for it. Here’s how Brazil ETF has done in 2021.
12. Chinese stocks are getting hammered today be it Nio, Didi or Chinese Internet ETF 
13. Stop Loss matters no matter how much you believe in the stock. See Alibaba Price Action
14. The truth is that you’ll go through losses again and again and again. This is the reality of trading. The only thing that will save you is Stop Loss.
15. The bad news is we don’t control the market. The good news is we don’t need to control the market, just our process, and behavior.

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