All Eyes on GA & UK
Welcome to the Rude Awakening for January 5, 2021!
In today’s video, we’re looking at a premarket open down on the day, after yesterday went down as one of the S&P 500’s 10 worst first trading days to open a new year on record.
When all was said and done on Monday, all three major indices lost more than 1.2% — the S&P and the Nasdaq both dropping more than 1.4%. The Dow went for a wild ride, down 700 points at its worst.
Monday marks the worst opening session of the year for each of the Dow, S&P 500, Nasdaq, and Russell 2000 since 2016. At one point during Monday’s session, all three majors were off more than 2%.
And yet, all three indexes finished the final trading session of 2020 at record highs.
Will we see another selloff today? Well, markets opened slightly higher on the day, so time will tell.
The Markets Watching the Georgia Runoff VERY Closely
With today’s runoff elections in Georgia, the big question is whether or not we will end up with a Democrat-controlled Senate along with our current Dem-controlled House.
If the Dems do take the Senate, we’re likely to see raised taxes quickly into the new Biden Administration.
In other pressurized news, we have another full on lockdown going on in the UK, due to the new strain of the coronavirus spreading. The same strain has now been reported in at least four US states, including New York.
While we do have vaccines rolling out, we are still in an uphill battle to get this pandemic under control.
And as we know, markets hate uncertainty. All of this is weighing heavily on the marketplace.
We are seeing a bit of a topping effect in the market, so I want to focus on some downside hedging strategies. We will look at some specific ways to do that tomorrow.
On the Watchlist Radar…
Carnival Corporation & Plc (CCL) is seeing a lot of activity, with earnings coming out January 8.
Earnings will probably NOT be very favorable. With CCL sitting just above their 50day MA, with sell signals triggering in the technicals, it’s likely to see a downside move post earnings. This one is a bearish play.
Another bearish play, we are looking at one that has been a quarantine darling, Zoom Video Communications, Inc. (ZM).
ZM has gone through the roof this year, shooting up from January 2020 levels around the $73 level all the way up to its October all time high of nearly $589. Currently, after selling off substantially over the past few months, it’s trading at around $360, perhaps a new level of support.
If history is our guide, ZM will not hold this new level. We’re likely to see a break, either down to previous levels or a break to the upside.
Last up we have FLIR Systems, Inc. (FLIR), which is being acquired by Teledyne Technologies Incorporated (TDY).
As you can see on the chart below, this news has pushed FLIR higher, jumping up at the open of yesterday’s session, and keeping similar levels in today’s open.
On the other hand, the acquisition announcement has pushed TDY down in a big way, but the day ended with a bullish candle. This morning, they opened up $10 lower than yesterday’s close.
But, yesterday’s candle is VERY interesting, as it opened far lower, but finished the day higher than it started.
FLIR and TDY are both ones to watch.
That’s it for today, folks!
We’ll be back with you tomorrow to talk about some hedging strategies you can use for downside profits and protection.
Have a great trading day.
See you tomorrow.
Editor, Rude Awakening