Momentum Monday – Are Financials Ready to Lead?

The charts on Momentum Monday are powered by MarketSmith

The large-cap stock indexes, SPY and QQQ keep making new all-time highs. The small-caps are laughing behind but IWM is certainly looking for constructive above its rising 20 and 50-day moving average.

With the exception of China and biotech, all sectors are looking strong and breaking higher – consumer discretionary, financials, transportation, tech, gold, etc. Strong market breadth coupled with rising long-term inflation expectations and a Fed willing to cut short-term interest rates is a bullish combination.

The new earnings season kicks off tomorrow. Financials are typically first to report. Many of them have already started to break higher in expectations of strong results.

P.S. Check out my last two trading books. Both are super practical, packed with actionable information that can be put to use right away:

Swing Trading with options – How to Trade Big Trends for Big Profits

Top 10 Trading Setups – How to find them, how to trade them, how to make money with them.

Financials are setting up for a breakout

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With interest rates on the rise again, financials stocks are starting to break out or are setting up for a potential breakout. Take a look:

P.S. Check out my last two trading books. Both are super practical, packed with actionable information that can be put to use right away:

Swing Trading with options – How to Trade Big Trends for Big Profits

Top 10 Trading Setups – How to find them, how to trade them, how to make money with them.

Momentum Monday – Dip Buying Continues to Work

The charts on Momentum Monday are powered by MarketSmith

There are two technical trends that stand out in the current market:

  1. The dips continue to get bought. The bear flags in software momentum stocks keep resolving higher. TTD, ZEN, TWLO are a few recent examples. 
  2. Sector rotation is dominating the tape – while one sector is pulling back, another steps up to take the lead. For example, late last week we saw some weakness in biotech but the general market closed strong as tech and financials shined.

P.S. Check out my last two trading books. Both are super practical, packed with actionable information that can be put to use right away:

Swing Trading with options – How to Trade Big Trends for Big Profits

Top 10 Trading Setups – How to find them, how to trade them, how to make money with them.

Momentum Monday – Bull Markets Correct Through Sector Rotation

The charts on Momentum Monday are powered by MarketSmith

Bull markets often correct through sector rotation. We saw one of those rotations last week. While many tech momentum stocks were in a pullback mode and tested their rising 20 and 50-day moving averages, we saw some notable breakouts in biotech, building materials, gold, and semiconductors.

Last Friday, we even saw financials breaking out. All major banks passed the stress test and now are likely to return some of their cash to shareholders. This could lead to anther sector rotation next week.

P.S. Check out my last two trading books. Both are super practical, packed with actionable information that can be put to use right away:

Swing Trading with options – How to Trade Big Trends for Big Profits

Top 10 Trading Setups – How to find them, how to trade them, how to make money with them.

Momentum Monday – Back near all-time highs. Now what?

The charts on Momentum Monday are powered by MarketSmith

The S&P 500 is back to the 290-300 level that has been acting as resistance several times in the past couple of years. What can be the catalyst that can push it above 300?

Already low interest rates coupled with relaxed Fed can be a recipe for appreciation in multiple assets – stocks, gold, crypto, bonds are all breaking out and trading near multi-year highs while the U.S. Dollar is starting to crack.

We continue to see mostly constructive price action in various sectors and market capitalizations. Even mega-caps that had significant pullbacks earlier this year like FB and BA are setting up above their 50-day moving averages.

We also covered the current price setups in AVLR, CMG, AAXN and other.

P.S. Check out my last two trading books. Both are super practical, packed with actionable information that can be put to use right away:

Swing Trading with options – How to Trade Big Trends for Big Profits

Top 10 Trading Setups – How to find them, how to trade them, how to make money with them.