Market Notes:
After Monday’s bounce, markets have given up most of yesterday’s gains in the premarket session. Markets are showing to be extremely sensitive to the news cycle at the moment.
But have yet to pick a direction…
One outlook is bullish. Yesterday before the market opened, hedge-fund manager Bill Ackman tweeted that a “more transmissible” variant causing “mild to moderate symptoms” is “bullish for the [stock] market.”
The market seemed to generally agree with his sentiment. The Nasdaq rallied nearly 2% while the S&P 500 and Dow gained 1.3%, and 0.7% respectively.
But the bulls were unable to bring the whole market along for the ride. The Russell 2000 closed in the red. So I’m not ready to buy into a rosy outlook just yet.
The bear of the day is Stephane Bancel, the CEO of Moderna, Inc. (MRNA). He told CNBC to expect “a loss of vaccine efficacy.” Overnight the markets dropped after Bancel issued a warning. Reuters reported that Bancel said, “We need to wait for the data. But all the scientists I’ve talked to . . . are like ‘this is not going to be good.'”
Right now we have very limited data on the new “Omicron” variant and how the vaccines will affect it. So things could go either way. I expect volatility in the coming weeks.
Yesterday’s rally may have been a dead cat bounce. I’m not convinced of anything yet … So I’m betting in both directions.
In case the new variant proves to be a huge problem I’ve bought calls for VIX and puts for USO.
But if Ackman’s predictions come true I have puts for PFE and calls for TGI.
All of these are expiring in January, which by then I believe we should have a much better idea of what the variant and the market will do.
I’m intentionally vague on the exact positions because I don’t want to encourage anyone who doesn’t understand options and their risks to follow me. Please manage your risk and understand that anything can happen. I expect two of these positions to go to zero and become completely worthless.
I remain risk off at the moment. I’ve got the hedges open that I mentioned above. And I’m holding my swing trades for the time being. I’m not opening any new positions for now.
Stay safe!
Watchlist:
*ISPC key level is likely around $20
*PTPI has resistance at $5
*PPSI is on watch
*CPIX is on watch
PLIN has support at $2
CARS is on watch
OTC stocks, no levels:
TIIAY, SMURF