Market Notes:
Let’s slow down and look at the numbers.
First, understand this, it doesn’t matter what you believe. It matters what the market believes. The market is the collective thinking of millions of people betting trillions of dollars on what they think will happen next.
Since the COVID-19 pandemic began there have been over 5,000 variants recorded. And that report is from June 2020 … About 18 months ago. So I believe it’s safe to estimate there are at least 10,000 variants out there today but in reality, it’s more likely to be at least 20,000 to 50,000.
Of those 10,000+ variants eight (8) have been, at one point, labeled “Variants of Interest” by the World Health Organization (WHO). That includes the “Mu” variant that briefly popped up on our radars only to disappear into obscurity.
The Omicron Difference
The next level up are “Variants of Concern.” The WHO designated a new one, “Omicron,” on Friday morning. Here’s what you need to know about these five (5):
Considering the fact that there are only four (4) historical data points to go on there’s a lot of uncertainty. What we do know is 75% of the previous “variants of concern” turned out to be nothing … at least as far as the market’s concerned.
There’s a 3rd label most haven’t heard of. A “Variant of High Consequence” has yet to be identified. The WHO says for one to fit this category it must evade the “prevention measures or medical countermeasures” currently in use.
It’s Comes Down to Risk and Reward
Every day after the market closes I run a scanner that filters out over 7000 stocks from my view. I’m left with 10-20 tickers.
From there I review each chart and select the stocks that meet my criteria and add them to my watchlist. The stocks that make my watchlist have a higher likelihood of making a big move in the coming days.
But there are no guarantees. And every trader needs to understand the risk and reward associated with the market … And you must have a plan for your trade to work and not to work.
The omicron variant is on a watchlist. It’s not guaranteed to do anything.
The knee-jerk reactions we see happening around the world are based on the fact that the WHO add omicron to its watchlist. All the world leaders remember that delta was added to this list and ended up causing problems.
In my view, the bets (decisions) being made at the highest levels of our organized diplomatic world are being made for much of the same reasons degenerate stocks traders chase after whatever Elon Musk, Cathie Wood, Michael Burry, or Bill Ackman fount as the great stock.
Are they right sometimes? Of course! That’s why we pay attention to the headlines.
But savvy traders know they can also be wrong.
The Play
There could be another international shutdown. And economic activity could grind to a halt. And the market could crash as a result … So I want to place a bet that it will.
But I also plan to make a bet that this whole thing will blow over and it will become as forgotten as the “Mu” that you already forget I mentioned two minutes ago…
Watch your inbox. I’ll send out a note when I place my trades. Just remember there’s risk involved. I plan for one of these bets to go to zero.
For today I’m risk off and waiting for the next shoe to drop…
Futures are recovering some, but not enough to convince me bulls are in charge.
I’m also monitoring Bitcoin. It’s back above its 50-day moving average after refusing to break down over the weekend.
Watchlist:
*ISPC is on watch
*TRT watching for a setup above $10.50
*BFRI is on watch
*PTPI has support at $4
CARS has support at $15.75
PLIN has has resistance at $2
OTC Stocks, no levels:
TIIAY, SMURF, ENZC