Yesterday we debated the bounce vs rally question.

Today we saw a stronger, more broad rally with tech participating and many growth stocks getting up off the mat.   

The S&P 500 has broken that negative channel we talked about yesterday.  

Omicron seems to experience some resistance from the vaccines.   

We'll see what happens from here, but I remain bullish in the week-week and month-month time frame.  

We're not going to panic in the day-day, the market will do that for us. 

It's very volatile right now, but if we stick to the facts, we can remain calm with a plan.

The S&P 500 has maintained a negative trend and even with today's bounce doesn't seem to be making a convincing rally. 

However, there are several other indicators that give me the impression the bottom is in. 

If we look at the S&P 500 equal weight it looks like there is a very clear inverse head and shoulders pattern that took place on the 5 week chart indicating a bottom is in, and a strong upward move is coming. 

In addition, many energy stocks seem to be forming upward channels, and they were the hardest hit by Omicron and corona, beginning their sell offs weeks ago. 

These are technicals, and we're not a technicals channel, but they do back up our fundamentals.

I did not initially want to record a video today. I didn't record one yesterday.  

I felt that this week was being driven by nonsense - Omicron and a very well anticipated/telegraphed Fed tapering.  

I just wanted the volatility to shake out, and for us to stick to the facts and make it to the other side.  

Today was quite dramatic, so I felt the need to make another video.  

We've seen energy under preform throughout the year when virus concerns are high.  

Today it out preformed.   

I view that as bullish, and a sign that the market is preparing to stabilize.

The market has been hit with three negative forces: the Delta wave, the Omicron wave, and moving up the taper.

The Delta wave has been going on for some time already in Germany and Australia, both of which have been at ATHs in cases for over a week now.  

Then Omicron comes on the scene.

It spreads faster but preliminary data suggests it's less deadly. So much less deadly that in South Africa it hasn't caused a single hospitalization. The American case recovered within two days after diagnosis. If it spreads faster, then we should expect this very mild virus, that isn't sending anyone to the hospital, to become the dominant strain.

The fed taper was expected.

Why panic?

If you go back to the earliest videos of this channel, the day before the March 2020 sell off began (in February) you'll find a IG Live video posted on this YouTube channel.

In that video, I was asked about my philosophy on the market.

I noticed how with the S&P hitting new ATHs, but the Russel 2000 not, and coronavirus looking funky over in China, there was a good chance we'd see a "20% chance at a major downturn or a recession."

That ended up occurring, and today it looks like we may be seeing the opposite.

However, today we may be on our way to exiting the coronavirus pandemic given that Omicron may be less severe.

In addition, if you remember -$37 oil, it occurred on a day that contracts were expiring.  That day is occurring again today.

Later this week, we get OPEC news, and there's a good chance they pause supply increases, as discussed further in this video.

The ultimate path of the virus is to trend towards being less severe with more undetectable spread.

However, the market did not react as if that were the case. 

The market reacted as if this means we're headed back to a March 2020 situation.

However, this does not seem to be the destination.

The vaccines are likely to be effective against this variant, as they were for Delta before it.  It also appears this variant may be less severe.

With each covid wave and variant, we've seen less and less of an impact on the economy.

We have to stick to these fundamental facts and invest accordingly.

We'll see what happens as we get more complete Omicron data.

It looks like the market is having a tide change with regards to how it handle's Covid.

We have avoided analyzing covid too much, at least much less than the founding of this channel (in anticipation of a covid downturn, just prior to the covid sell of beginning).

However, it appears the market is beginning to have a tide change towards rationality, or at least an increase in pharmaceuticals available to treat covid.

Today we're seeing vaccine stocks up big.

We're also seeing oil stocks up and rates rising comfortably, with covid beneficiaries down.

This wholistic picture shows me, and maybe us, that the market is now assigning a high value to covid treatments and vaccines.  It may be unlikely that reopening beneficiaries get an emotional hit because of covid, and that covid beneficiaries get a boost because cases are rising.

We're seeing the opposite today in the ladder. They may now be judged based on their underlying performance regardless of Covid, like Zoom beating earnings today.

We'll see what happens.

The price of oil is down on this last trading day of the December contract due to concerns around Covid.

Specifically, Austria deciding to institute a national lockdown.

That's a scary headline, but according to Goldman, the move in Oil is only justified if we were to take 4m barrels/day off the market.

When we put Austria in perspective, it becomes clear this is not the case, and therefore, as Goldman says, this selling is "excessive."

I very much agree with this take.  In addition, WTI is still far from it's 200DMA, as are several notable stocks like the XLE ETF and XOM.

I am adding on this dip to already large positions. We'll see what happens.

In the absence of any chaos, oil is rallying.

Yesterday we had a lot of noise, and big oil declines.

However, none of those seem to have any impact or are coming to fruition, thus a day later, we see some recovery. The Biden administration needs to be seen as getting this oil situation under control.

However, when looking at the fundamentals, that seems to be out of reach.

The way we see it, headlines tend to have a short term impact, as they have the last couple weeks, and then the market rationalizes and goes back to its fundamental trend, which right now is an oil deficit with rising prices.

Almost to a T, the recent rally has carried on since the 2020 presidential election.  

That may be a coincidence, as the global economy also began to recover around that same time (and vaccines were announced days after), but there are certainly forces the current administration has enacted which have aided in Oil's rise. 

And one of those forces has been walked back: drilling on federal lands.  As of earlier this week, the federal government is now auctioning off 80m offshore acres to any takers who want to invest money in the land and the equipment. 

The only question is, why would they?  Producers are making lots of money right now, but it doesn't seem like this will be the case forever. 

Theres a massive green push, and the current hostile administration is coming after them for what we believe are false allegations of price gouging.  Why invest all that money in this current environment when the future looks almost certain to end in prices close to 0? (won't be 0 because of plastic, roads, and many other goods derived from Oil).

This whole situation could have been avoided if the administration took a less hostile approach, but alas, they have not, and here we are.  

We break it all down in this video.