WHACK-A-MOLE MANIA – New Year Same Fears
Hey trader,
As I’ve said thousands of times, markets aren’t good or bad…they just are what they are. Trading opportunities are available
in up, down or sideways markets with the right trading tools and discipline.
There can be rising stocks in Bear markets and falling stocks in Bull ones. Trading with the larger overall stock market trend is one thing, but doesn’t limit opportunities
The start to 2022 has riled up the usual doubters, even after new record highs in the DOW and S&P 500 last week. This uncertainty and angst happens before earnings season brings fundamental facts back into focus.
The fireworks start Friday to remind us how profitable corporations are in these extraordinary times.
Every profit taking pullback in market history has been followed by new highs and there’s no reason to think it is different this time.
Even if the Fed raises rates 4 times as Goldman Sachs predicts, the total of the hikes brings short term interest to a whopping 1%. This has been the most telegraphed and talked about central bank action ever.
So, 1% rates are not a worry to me, though Tech has tumbled 10% in the New Year after another epic rally run.
Volatility is Opportunity…
A handful of 10% drops from the top in Tech over the last few years have all been erased when smart money buys in as sellers get scared.
The Fear Factor indicator has seen 12 years of mostly lower highs and every VIXplosion was quickly met with the whack-a-mole selling. The corresponding market action has been a big stock burst every time.
In fact, last week when the S&P made new highs, the $VIX still had 20% to fall just to get to the June one year lows. Simply speaking, more downside in $VIX and more upside in stocks.
Nothing is new here, reflation of super depressed 2020 prices has propped them back up to pre pandemic levels.
Fears of the rate of change from the pandemic crisis lows of 2020 is unfounded, as deflation was the greatest in modern recorded economics.
Oil has jumped from NEGATIVE $30 a barrel to near $75 norm of the last decade.
Friday earnings kickoff is what we need to stabilize stocks once again…
Stay tuned if you want to learn more about how I find the opportunities in this wild market.
Happy trading,
Alan Knuckman