Ivanhoff Capital

MarketSurge powers the charts in this video.

The post-election rally didn’t last long. Most of the gains were quickly reversed over the past week. The main exception to the rule has been anything related to crypto which added to its gains last week – COIN, IBIT, BITX, TSLA, MSTR, etc. Miners like MARA pulled back from their post-election highs but showed relative strength on Friday.

Some will say the reversal signifies that Trump’s victory was priced in. Others can opine that the market has already had two solid back-to-back years and it is normal to see some profit-taking in the face of some uncertainty that comes with the new administration. Both of those reasons could be true or wrong. The reasons are not that important. The rise in volatility is. Maybe we became too accustomed to the low-volatility rally that lifted most boats in the past two years. Maybe, we are entering a new market regime that will be a lot more volatile and the indexes will test their 50-day moving average more often. An environment in which compounding short-term swing is likely to work much better than position trading and buy-and-hold.

Semiconductors – the top leader of 2023 and the first half of 2024, have been under heavy pressure lately. SMH is not far from testing its 200-day moving average gain. NVDA reports earnings next week – an event that could save or break the sector. NVDA is not a sure bet anymore. Their biggest client, SMCI is about to be delisted from the Nasdaq stock exchange for non-compience. NVDA beat earnings estimates three months ago and still dropped 20%. The decline coincided with a weakness in the general market but was significant. It has managed to recover to near all-time highs since then but it’s anyone’s guess how the market will respond to its earnings. People tend to look for reasons to sell during choppy, corrective tapes.

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MarketSurge powers the charts in this video.

Most stocks accelerated their ascent after the election results. Not surprisingly, the top performers were related to crypto—COIN, MSTR, MARA, WGMI, BITX, and Elon Musk’s TSLA. COIN and TSLA will likely be the top momentum movers for the rest of the year, and dips there will be welcomed as buying opportunities. 

Almost everything gapped up after the election. Small caps (IWM, TNA) and regional banks (KRE, DPST) had the biggest gaps but haven’t been able to follow through so far. Their near-term future will depend on interest rates. If rates finally start to pull back, we will likely see a more sustainable move in those two groups. The same could be said about biotechs. XBI finally broke out of a multi-month base on Friday. Let’s see if it can add to its gains or this will be another headfake. 

The strength was widespread last week. Even energy stocks gapped up. XLE and ERX are setting up for a potential continuation higher.

Large-cap tech stocks are also faring well after the elections despite fears of rotations and political troubles. AMZN finally broke above 200. Any pullback to 200 for the rest of the year will likely be a buying opportunity. GOOGL bounced strongly, and it is setting up for a potential breakout near 180-182. NVDA is at all-time highs despite potential issues with one of its biggest clients, SMCI.

Try my subscription service which includes a private X feed with option and stock ideas, emails with concise market commentary, real-time market education, the Momentum 40 list of market leaders, and much more. See what subscribers say about my educational service.

Check out my free weekly email to get an idea of the content I share with members. How my ideas/alerts did.

You can find my trading books on Amazon here.

Disclaimer: Everything I share is for educational and informational purposes only and it should not be considered financial advice. Read my full disclaimer here.

MarketSurge powers the charts in this video.

Many say that Presidential elections are irrelevant in the long term. The reality is that they can have a significant impact in the short-term. It is not usually to see a 5% daily move in either direction depending on how the market reacts. By definition, markets are forward-looking and try to discount any major event that could happen in the next six to nine months. Wall Street is convinced that the market has discounted a Republican win. What you should ask yourself is – are we going to see a “buy the rumor, sell the news event” if this actually happens? And what if it doesn’t happen? Obviously, we don’t need to guess. We can make our moves after the elections.

To make things even spicier, the next FOMC meeting is next week. The Fed is expected to cut interest rates by 25bps. Anything different is probably not priced and is likely to lead to a significant reaction. Keep in mind that after the last rate cut in September, rates have gone straight up. For me, this means that another decisive 50bps cut might lead to a reversal in rates. If this happens then small caps, regional banks, biotechs, solar, and housing-related stocks are likely to outperform. I will wait for the market reaction first.

In the meantime, we are still in the midst of earnings season which always brings an extra level of volatility. META, MSFT, and AAPL sold off slightly after their earnings last week. GOOGL gapped up but it gave up its entire gap. AMZN also gapped up near its all-time highs around $200 where it has stalled for now. Closing above 200 can potentially lead to a rally to 220 in November. One of the strongest Mag 7 stocks after earnings this season is TSLA. We saw a significant 2-day rally followed by a 5-day pullback. Let’s see if the earnings gap holds here. It seems the upside gaps in strong stocks have been used to take profits as there hasn’t been much follow-through past the first and second day after earnings.

Try my subscription service which includes a private X feed with option and stock ideas, emails with concise market commentary, real-time market education, the Momentum 40 list of market leaders, and much more. See what subscribers say about my educational service.

Check out my free weekly email to get an idea of the content I share with members. How my ideas/alerts did.

You can find my trading books on Amazon here.

Disclaimer: Everything I share is for educational and informational purposes only and it should not be considered financial advice. Read my full disclaimer here.