The New Market: Random and Volatile

Here are the market observations for today.

1. The market won’t always give you what you want. Sometimes it only puzzles you in what it wants to do.
2. Monetary and fiscal policy are beginning to normalize and it means the end of the bull market for hopes and dream stock.
3. ARKK Innovation – the play on hopes and dream stocks is now down 48% from the highs. Do not buy the dips here.
4. The force driving the market this year: Rising 10 Year Yields and declining NASDAQ. Every rally is being sold into.
5. The market has begun to focus on things that have real earnings value right now. No wonder stocks like Ford and Pfizer have rallied.
6. Emerging markets are not sinking with the US stock market. It’s decoupling from the US stock market. Here’s EEM over the last 10 days.
7. Valuation hasn’t mattered for the past couple of years, but as interest rates rise this year, valuation will matter more to investors. It means stocks like Viacom CBS at 8 PE will see buying versus high flying stocks like Roku/Netflix.
8. The market has changed and it favors stocks like Intel. Just see Intel stock over the last 10 days. But will I buy – Nope. There is no buying frenzy here.
9. Some stocks have perfected the art of disappointing investors. IBM is one such stock. UBS downgraded the stock to Sell today with a price target of $124.
10. When moves are random, it’s hard to trade. A few days back – Steel stocks CLF, X were flying higher and now declining like no tomorrow.
11. Brent Crude is near $80 and it’s helping all the Oil and Gas stocks from RIG to OXY to MRO
12. I love when stocks Gap up on strong earnings reports. It sets the stock for decent upside. I will buy ILMN at $408. Illumina is a global leader in DNA sequencing
13. Tilray TLRY stock seems to be making a move post-earnings. Can this stock fly?
14. The market always loves companies that are becoming leaders in their space. Lucid Motors is one promising luxury EV stock where there is huge institutional interest. The stock has solid support at 35. It’s hard to buy anything in the current market environment.
15. Time and again, the market shows us that the control we believe we have is purely illusory.

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

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