Investors assess Omicron risk and Santa is recovering

Good morning!

We have green futures everywhere from Europe to Asia, to the US. Investors assess the Omicron risk and take the unknown from the equation, therefore the market has a chance for recovery into the year’s end. Everyone is still on edge with regards to the variant and new restrictions, but vaccine companies assure they work against severe cases, especially if a booster is added to the mix, therefore the weapons against Covid are in place. It is no different from yesterday’s situation really, it is just the adjustment the market has made with regards to the macro news. Everything has been absorbed and calculated in, therefore if the levels in the main indices hold we should have a recovery in the markets.

$SPY Chart

The $SPY has been quite weak yesterday and it played with the 100 day EMA, at $451.14, but it managed to close well of the lows. I did not get overly invested overnight, as now we have a gap to fill, up to $458.06. In pre-market as I am writing this piece the $SPY is close to this level. Technically there was no reason to load up overnight, only maybe for an oversold bounce. If you are light coming into today like I am do not start buying because you have FOMO. Wait for the market open and price discovery in order to see if this move up holds and if it is the real beginning of an active sequence. If $459.17, which is the 50 day EMA, is also surpassed this may give way for the $SPY to get closer to the moving averages, which are all the way to $463. Do not rush into buying things, wait and see.

https://www.tradingview.com/x/mdYiPopG/

$QQQ Chart

The $QQQ was in a similar situation with the $SPY, with the biggest difference being that the tech sector managed to post a green candle yesterday. I bought a very small position in some calls for January, in case we are recovering from this area. I did not get invested in other tech stocks since technically there was not reason to do so. Today if the $QQQ gets above the 50 day EMA $387 and even better to the 21 day $390.75 I will be buying heavily stocks like $AAPL, $MSFT or $GOOGL. Again, I don’t want to rush in case it is a fake move and I waiting for the market to prove itself strong.

https://www.tradingview.com/x/yy0UgZ5L/

Fortunately the $XBI worked yesterday, as expected, and we did make a nice profit in the call options bought, along with stock profit in some small bios. This sector still has a long way to recovery so trim into strength and buy into weakness as long as the levels hold. Today don’t rush to make all the money for the month just because we have green futures, as they may fade towards the market open and you may actually lose rather than make a profit. Wait for market discovery and if the signals are correct dips should be buyable. Remember if we have an active sequence there are always buyable dips, there is no need to chase things. Don’t let your lows get too low or your highs get too high. Buy into weakness and sell into strength. I know I sound so cliche but actually these are the most useful mantras for a trader, and you should have them printed in your mind. Stay tuned to our Twitter updates for market sentiment and our Daily video!

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