Market Recap

The U.S. Stock Market Hits new highs on trade deal Reports between China and the U.S. The pressure behind meeting the December 15 tariff deadline was putting tension on both parties. The market was holding some reserves in defense in the event that the deal would not be made prior to the cut off date.

Shortly after the market closed today in New York at 05:00 pm (EST) an agreement on Phase 1 of the trade deal was made public. The market immediately sees U.S. Futures rise up in joy towards the resolution of the trade conflict.

The Trade deal will cancel the next round of tariffs planned to take place on $156 Billion worth of Chinese goods. In addition some details regarding protecting intellectual property theft have been addressed. Both sides have agreed to refrain from using the information to intentionally manipulate the value of their currencies.

The foreign exchange market has been experiencing an increase in trading volume in the last 24 hours. Pairs have been moving with great momentum with some pairs pushing over 400 pips in under a few minutes. The volatility in the market currently is extremely high and long term investors should ensure to control risk factors effectively.

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A Trader’s World

In today’s market the traders are making the plays. The market is moving faster than ever before primarily due to the increased access that the internet has provided. Market can not be traded from around the world instantly from devices ranging form desktop computers to personal cell phones.

With there having been so much uncertainty the market has been extremely choppy. Long term investors often experience assumed gains and losses during long term positions as there are peaks and valley in the market which are short lived.

Due to the market being extremely volatile and being so vulnerable to manipulation from news event and global conflict it is the active trader that is flourishing in today’s market. The fast and quick moves in the market allow for traders to enter and exit the market precisely.

Traders are extremely organized and disciplined when it comes to their investing strategy. They analyze all factors present from the news, fundamentals of the market and the technical aspects of the price. Traders understand that the market is emotionless and that they are not trying to fall in love with a specific stock to hold on to for years at a time in hopes of growth.

Traders must define their risk and profit goals before entering a trade. They are not biased during their research and are simply digesting the information for what it is.

Being that we have just received some incredible news of the Trade war being resolved for the first phase lets take a look at some of the major companies that were negatively affected for potential reversal trade ideas.

Aviation Stocks

The aviation industry was one of the first to be affected by the conflict that arose with the trade war. Manufacturing companies experienced issues in sourcing raw materials from China. Cargo Airlines noticed a decrease in freight being delivered via air as many organization used ships to reroute cargo through different ports to avoid paying the tariffs on imported goods.

Service companies experienced a decrease in operations from airlines in locations that received heavy traffic from Asia which resulted in slowing revenue. Now that we have seen a deal be made the stocks can start to recover from the losses. Many of the companies have reached a yearly low due to the Trade War. Now that we have created a new support level we can make our next move towards the upside.

Atlas Air Worldwide Holdings (AAWW)

Atlas Air Worldwide was one of the top gainers in the Aviation Industry today. The news of optimism around the trade war will mean more cargo to be transported by Atlas and their fleet of B-747. Atlas has been bringing on board many new pilots and flight attendants for the airlines they own.

Atlas Air Worldwide Holding Company is the owner of Atlas Air, Southern Air and Polar Air Cargo. Understanding how they organized and operate their business is key in determining their growth. They currently own the aircraft in their leasing company and then lease the aircraft to each airline that they operate individually.

So in terms of the overall picture of the company they are able to show that they own the assets of the aircraft and are generating revenue on the use of the aircraft.

Over the last few weeks their stock has dropped to lows for the last 52-weeks. Having created a support zone near the $25 price range we have seen a recent push upwards from this level. Price has not only pushed up above the zone level but it has tested and continued to show strength in its price action.

Moving in the final weeks of the year as we enter the holiday seasons optimism towards more last minute cargo flights before the end of the year are very possible.

Investors will need to wait till Feb 20th till the next earnings release. Until we have any change in the market than we will continue to look towards a bullish move.

FedEX (FDX)

On the same note of cargo airlines FedEx is one of the largest carriers based in the United States. We recently covered an article discussing the new Cessna SkyCouriers which FedEx has signed to be one the launch customer for the aircraft.

This model is schedule to be start deliveries in 2020 and the application for this aircraft will enhance their ability to make on time deliveries to smaller regional and general aviation airports.

FedEx is currently ramping up their operations towards getting ready for the holiday season as this is considered their peak time of year. During this time of year due to their increase of traffic they are forced to subcontract other cargo carriers to assist with the volume.

We have been watching FedEx over the last 6 months as they have been in a sideways to downward trending direction. In the last few weeks we have been able to see a support level be created. As we switch from a downward bias towards a sideways trending channel, this is a key zone to watch for a potential break out of the channel.

Once we are able to confirm the direction for FedEx waiting for a confirmation will be a key element prior to rushing into a trade. Although we have had confirmation towards trade deals and growing economy, each individual stock operates on its own terms.

Moving forward we will watch FedEx with a bullish bias with controlled risk towards the potential of the stock continuing on a sideways/down trend.

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