TRACKRECORD DAILY
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TRACKRECORD DAILY

The spread continues but fear is not rising…

the market is likely to remain sanguine even if the spread continues.

Despite the rising number of Omicron cases around the world, the market is not responding with the fear it did a few weeks ago. It could be because most investors have reduced risk coming into the last trading week of the year.

It could also be that the market is getting better at dealing with bad news on this front. As long as the Omicron strain does not prove to be deadlier or more severe that the previous strains, the market is likely to remain sanguine even if the spread continues.

In fact, the lingering uncertainties of Covid is likely to give policymakers a reason to not remove policy accommodation in a hurry.

TRADING TIP

When should you give up trading?

This question has probably gone through the minds of many traders as they faced seemingly unbearable drawdowns and repeated periods of losses. Well, sometimes trading is indeed that difficult and draining.

If you are ever going through such periods, take a break from trading and work out what went wrong with your trades and adjust your trading process accordingly.

However, if you are not able to work out what went wrong, you just might not have the humility or mental dexterity required for trading. And if you are not able to develop these qualities, perhaps trading is not a suitable endeavour for you after all.

DAY AHEAD

Nothing noteworthy today.

TRADING PLAN

1. Currencies:
Keep short USD against CNH. USDCNH remains stuck in a narrow range and likely to remain so till the new year starts. Stay short and earn the positive funding interest.

2. Commodities: Uranium & Energy — Stay long.

3. Equities:

Equity Index: Long Nasdaq futures. Stay long.

Single Stocks: The stocks we have in our TrackRecord Model Portfolio are starting to grind higher as risk sentiment is stabilising. Stay invested!

Key risks: Inflation news on various fronts, and news of the Omicron strain remain a focus too.

WHAT HAPPENED YESTERDAY

Market Movements As of New York Close 28 Dec 2021
  • The U.S. Dollar Index increased +0.11% to 96.20. In the Treasury market, US 2-yr Treasury Bond yield fell 2 basis points to 0.74%, while the 10-yr yield rose 1 basis point to 1.49%.
  • S&P 500 decreased -0.1% on Tuesday after setting an intraday record high above the 4800 level early in the day. The Nasdaq (-0.48%) and Russell 2000 (-0.7%) underperformed in negative territory, while the Dow Jones Industrial Average (+0.26%) rose modestly.
  • The session started with a carryover of positive momentum, with some attributing updated COVID-19 guidance from the CDC as a supportive factor. The public health agency shortened the recommended isolation time for asymptomatic people with COVID-19 to five days from 10 days.
  • The crypto markets exhibited some weakness yesterday. The weakness was probably due to the impending expiration of options for Bitcoin. Bitcoin was down -6.2% while Ether was down -6.0%.

HEADLINES & MARKET IMPACT

Omicron infection appears to protect against Covid delta variant and could displace it, South Africa study finds

Notable Snippet: People infected with the heavily mutated omicron variant of Covid-19 may have increased immune protection against delta, a new study says.

As a consequence, omicron could displace delta, according to the small study published by South African scientists this week.

The findings could have significant implications for nations such as the United States where omicron infections are rapidly increasing but the delta variant, which has caused an increase in hospitalizations, is still widespread.

If omicron displaces delta and proves more mild than past variants, “the incidence of Covid-19 severe disease would be reduced and the infection may shift to become less disruptive to individuals and society,” according to the scientists’ findings.

WHAT WE THINK: If this finding continues to hold true, risk sentiment is likely to improve and it is likely that we will see risk assets perform better next year.

For more actionable content with our levels and views, sign up for our Membership to get the full length version of our Dailies.

People reinfected with omicron variant had fewer symptoms, small CDC study finds

Notable Snippet: People who had Covid-19 and are later reinfected with the omicron variant may experience fewer symptoms than they did during their initial bout with the virus, a small study from the Centers for Disease Control and Prevention suggests.

The study, published Tuesday in the CDC’s Morbidity and Mortality Weekly Report, looked at six people in a single household with confirmed cases of the highly contagious variant, five of whom were previously infected with other strains of the virus. One reinfected person was fully vaccinated, but had not received a booster.
The CDC study comes one week after Scottish researchers reported preliminary findings suggesting the rates of reinfection with the omicron variant are much higher compared to delta.

Overall, the findings suggest “a shorter incubation period and a clinical syndrome similar to or milder than that associated with previously described variants in persons who have been vaccinated or previously infected,” the researchers wrote.

The CDC study adds to growing evidence that the new variant may be less likely to cause severe disease, particularly in those who have already been infected.

WHAT WE THINK: Another positive news on the omicron front. Hopefully this milder variant is the dominant strain we are hoping for with less severe symptoms, allowing the reopening of economies around the world to continue unabated.

For more actionable content with our levels and views, sign up for our Membership to get the full length version of our Dailies.

U.S. and Russia agree to security talks on Jan. 10 amid growing tension over Ukraine

Notable Snippet: U.S. and Russian officials will hold security talks next month amid an alarming Russian military buildup on its shared border with Ukraine.

The Jan. 10 meeting will focus on arms control agreements, NATO and Russian military activity as well as rising tensions over Ukraine. The meeting will be held as part of the Strategic Security Dialogue that President Joe Biden and Russian President Vladimir Putin announced during their June summit in Geneva.

WHAT WE THINK: Developments on this front needs to be monitored closely as tensions between the 2 powers will have an impact on risk sentiment.

For more actionable content with our levels and views, sign up for our Membership to get the full length version of our Dailies.

SENTIMENT

FX

STOCK INDICES

Best,
Phan Vee Leung
CIO & Founder, TrackRecord

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