The stock market has kicked the seasonal pattern in high gear since the early October low. It is marching on regardless what’s happening in the real world, good or bad. This is what a melt-up market does. It obliterates all doubters by hurting the daring shorts and keeping the sane investors who are afraid to chase out of the raging market.
The weekly cycle low has been confirmed on 10/01/2021. This new weekly cycle is controlled by the seasonal pattern that will cause the weekly cycle to rally into year end as minimum. Typically the seasonal pattern can last from October to April. We have to see if it can go all the way into April 2022.
Below is the weekly NASDAQ chart. The upper channel line is the price target in Q1 2022.
Under the hood, the hyper growth stocks are not participating in this rally. ARKK ETF is still down 11% this year. When the hyper growth stocks not participating general market rally phenomenon happens, the market is demonstrating late cycle behavior, meaning only the high quality stocks rally as the hyper growth stocks are typically considered riskier with weaker balance sheet.
PLTR is a hyper growth stock and will report earning on Tuesday morning. PLTR knows how to put a conservative guidance before hand and will typically beat earnings. The stock has been very quiet, meaning no big price swings lately. We suspect the stock will probably rally a little considering the very bullish general market, but we believe that this little rally will not start a new breakout trend. A true new breakout trend in individual stocks will sync with the general market, meaning it’s not possible for PLTR to start a new trend while the general market is at all-time high. A new breakout trend in individual stocks can be trusted after a general market selloff.
75% of the stocks trade in the same direction of the general market. The general market exerts an enormous influence on individual stocks.
That being said, we might liquidate some PLTR shares after earnings and will try to buy it back in Q1 2022.
We also have opened VOSO position, in anticipation of WEJO SPAC merger to happen on November 17th. We probably will sell WEJO if it rallies significantly because of the excitement with SPAC merger. If it doesn’t rally hard, we are Okay to hold WEJO shares since we got in a little below 10, that is what the institutional investors have paid.