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Omicron-Induced Volatility Creates Epic Pullbacks to Fade

by | Dec 17, 2021

How did you wrap up your week?

For a fleeting moment Friday morning, we got some epic pullbacks in quality names — and therefore some epic dips to buy on this Friday, Dec. 17, 2021.

Literally everything on our watchlist was red for a hot minute, providing us a great entry into Thursday’s BONUS TRADE on the iShares U.S. Home Construction ETF (NYSEArca: ITB).

This week’s FREE TRADES on RH Inc. (NYSE: RH), PVH Corp. (NYSE: PVH) and Coinbase Global Inc. (Nasdaq: COIN) were also down…

Post-earnings shares of growth-oriented electric SUV- and truck-maker Rivian Automotive Inc. (Nasdaq: RIVN) were down around 10% as Wall Street worries about “early bumps.”

But were any of these moves down on serious bad news? Did anything fundamentally change with the companies?

Of course not. Prices go up… and then they come back down, seemingly for no reason at all sometimes.

Met coal producer Arch Resources Inc. (NYSE: ARCH) was down close to $70 per share just a couple of weeks ago.

Friday, it touched $90.

Has anything changed about Arch’s 2022 production increase, or have prices collapsed?

Of course not. Prices go down… and then they go back up.

Omicron Creates Dips to Buy on Dec. 17, 2021

The media would have you think that all this volatility is because omicron variant cases are spiking. But Thursday, markets (except the Nasdaq) were up and they ran scary omicron headlines right next to very un-scary ones.

And now, of course, the sky is falling… again.

Source: CNBC

There’s a word for all this: noise…

I suggest you tune it out and pay attention to which watchlist dips you should buy.

If the market’s going to crash, it’s not going to crash 6.3% in slow motion from all-time highs like it has these past couple of weeks.

Source: Bloomberg

It’s going to go down 10% all at once… and then some.

And we’ll have some warning signs beforehand. Volatility won’t just break out in equities.

It will break out in Treasurys… in corporate bonds… in credit… and in currencies.

You can easily see it back during the overnight repo crisis in September 2019, and during the COVID-19 crash of 2020.

Source: Bloomberg

While we do have a little bump here, it’s all fading.

Could that be a warning sign of something yet to come?


But this ain’t the “something” to come.

So for now, we just keep doing what we’re supposed to do.

Buy the damn dips and sell the damn rips!

Go get ’em!

All the best,

Matt Warder

Fortune Research

P.S. Wall Street just issued the warning…

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Joy of the Trade’s Jeff Zananiri is preparing for the biggest overnight turnarounds of the century… 

These opportunities don’t come often… join Jeff before it’s too late.

WRITTEN BY<br>Matt Warder

Matt Warder

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