Market Notes:
New jobless claims came out on Wednesday and much to the delight of the market the number reached a 52-year low.
Unfortunately, markets have moved on to the next shiny object, the latest variant of COVID-19.
The variant, first detected in South Africa, is the reason Germany and the UK have banned travel from some African nations. The knee-jerk reaction comes despite the fact that “only 59 confirmed cases [of the variant] have been identified.”
Fear over the variant and bans have caused the markets to plummet in the pre-market session. Oil and travel stocks are in freefall, while the indexes all trade deeply in the red. The Russell 2000 is leading the way, down more than 4% at writing. The Nasdaq is reacting the least, down about 1.2%.
Today is “Black Friday” for retail bargain shoppers … and a shortened trading day for the markets. Usually, it’s a boring day without much volume. Not today!
Here’s what you need to know…
The market hates uncertainty. And “predicting how [a virus] might evolve is an extremely difficult and perhaps futile task.”
Generally “viruses do walk a fine line between transmissibility and [severity].” But there are no hard and fast rules, “Ebola, the West Nile virus and the Spanish flu from the 1918 pandemic are all examples of viruses that became more lethal after mutating.”
I expect the appetite for risk to remain relatively high until we know more about the new variant. But that could be a couple of weeks out.
This is the tough part about trading … nothing is certain. Risk management is ALWAYS essential.
If the virus is a nothing-burger today is a buying opportunity for stocks and TVs. But if the fears become founded, today might be a final opportunity to salvage what’s left.
Bitcoin is not immune from the market’s fears. It’s trading well below its 50-day moving average for the first time since October 1st.
There are other pressures on the crypto market too. India is moving to ban PRIVATE cryptocurrencies. That doesn’t help the overall crypto market even though bitcoin’s excluded from the ban.
Today I’m holding. I have no plans to dump any positions or start any new ones. I’ll continue to monitor the markets closely. Monday should provide a clearer path forward.
Day Trading Watchlist:
*TRT has support at $10
*BFRI has support at $5
*ISPC is on squeeze watch
*LIAN has resistance at $16
PLIN has resistance at $2
IMCC has support at $4
DNUT has support at $15
OTC Stocks, no levels:
HMBL, TIIAY, SNPW, SMURF