Daily Brief for December 16, 2021

Daily commentary for market and investment insights

What Happened in the Markets?

Stocks rallied broadly following the Federal Reserve (Fed) announcement to tighten monetary policy and bond-buying.

The overall US borrowers leverage has increased to an average of 5.2 times debt to ebitda, which is a peak level of pre-pandemic era. Investors claimed that the low level of interest rates supporting the higher debt loads.

Jared Dilian in Bloomberg and Robert Armstrong in FT discussed the downward trend of breadth, which has been an indication of large corrections or bear markets. Mr. Armstrong argued that statistically weaker breadth didn’t result the potential market drops.

US Equity Breadth 20211215
Source: FT.com

On Tuesday, investors assessed lower prices as an opportunity. Today, eliminating vanna levels may create possible tight-range trading levels. The market gamma levels are positive, and the supply of liquidity confirms the gamma levels.

SPY Total Gamma 20211215
Source: BrightHedge

The Securities of Exchange Commission issued four proposals, including regulating swaps and enhancing fairness and transparency in the stock market. The proposed restrictions also cover front-running insider trading transactions.

Reddit filed for an initial public offering with the U.S. Securities and Exchange Commission. The company is one of the most popular social media tools that Wall Street investors follow in their daily moves.

Meme stocks analysis does not pay much attention to traditional Wall Street advice. Maybe considering meme stocks and having less of these in the portfolio are rational moves.

Total Risk of Meme Stocks

Meme Stocks Total Risks 20211215
Source: BrightHedge

Risk/ Return Matrix of Meme Stocks

Meme Stocks Risk / Return 20211215
Source: BrightHedge

Disclosure: This article expresses my own views, and I wrote the article by myself. I am not receiving compensation for it. I have no business relationship with any company whose security is mentioned in this article.

Sources: FT.com, WSJ.com, Bloomberg.com

Important Information

The investment information, comments and recommendations contained herein are not subject to investment advice. The comments and recommendations contained herein are based on personal views. These views may not fit your financial situation and your risk and return preferences. For this reason, based only on the information contained herein, investment decisions may not have the appropriate outcome.