Should you buy VIX Fear Index?
I know you must be thinking – fear index now when it’s too obvious. It’s too late but that’s not the reason I would caution against it. It’s way too risky and volatile to play it.
The ETF to ride VIX index: ProShares Ultra VIX Short-Term Futures UVXY ETF. It’s up +12% today and over 50% in the last six days. Here’s the 10-day chart.
One chart that makes me very nervous on the market – The Small Cap Index
We know what happens when there is a Breakout. There is Greed, there is Fear of missing out and everybody is chasing the stock and hence it keeps going higher. The same when happens when there is a Breakdown. The fear takes over and lots of people start dumping the stock without enough people on the buy-side.
The Small-cap index which did well to hold in 2021 has broken down and so it makes me nervous. The market is extremely oversold and it can rally back to 210 level but then who knows. See the Price Action
Why one should pay attention to Ford Price Action
Ford stock has broken out to a new 10 year high above the levels of 18. This is one stock that should be on the investment radar as a buy-on pullback near $18.
Fundamentally there is a reason to be excited about Ford as the company transitions towards EV. All you have to do – is look at advance booking numbers for its F-150 lightning pick-up truck. The company is transitioning from a Value stock to Growth with Value. The price action looks good and hence the stock should find buyers at lower levels. The market chaos will play its role but the stock should do well.
Apple Earnings and Price Action
Apple Inc. is expected to report earnings on 27th Jan 2022 after market close. The report will be for the fiscal Quarter ending Dec 2021.
During the last quarter, which ended on Sept. 25, 2021, Apple generated $38.9 billion in sales from its iPhone segment, representing a 47% jump compared to the year-ago period. iPhone sales momentum is not ending anytime soon. And here’s the best part – over the last 14 years – Apple has built a solid high-margin Services business.
Apple’s services revenue last year: $68.4 billion up 27.3% [Gross margin: +69.7%]
Price Action wise – Apple stock is very close to the support level.
Concern: When the market is nervous and volatile, the stock can sell off for trivial reasons. One minor talk around supply chain issues or slowdown in demand talk due to inflation and you never know what will happen. That’s why it becomes hard to buy companies even when it makes sense.
Earnings Play ~ Will IBM finally make a move?
IBM is one stock that has consistently disappointed its believers. Today IBM posted solid earnings numbers for its fourth quarter and it seems like the company is finally on a growth path. It delivered its best sales growth in a decade. The new CEO strategy might do the trick for the stock bulls. IBM has restructured the business to focus on Cloud, software, and consulting business after spinning off its managed IT services business into a new entity called Kyndryl KD.
I will buy IBM more as an investment play for the current year
In a market where nothing works
There comes a time where you think ok traders are abandoning traditional stocks and so how about Gold/Silver as a hedge but when the markets are volatile nothing works. Silver mining company AG made a big jump a week back and I got excited and recommended it but this too got sold off with the market. It is hanging right at the support and one can hope and pray it would bounce from current levels.
We are in a very difficult market environment right now where you get rewarded for not trading than trading. The best thing one can do – reduce number of trades and buy small.
I will post more updates:
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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