MarketSmith powers the charts in this video.
Stock prices change when expectations change. The market expectations for interest rates have changed drastically over the past month. This is why we have seen such a tremendous rally in many stocks. The most sensitive to interest rate changes groups are the best performers since October lows – software, biotech, regional banks, biotech, etc.
The move in software and Internet stocks hasn’t been based on dreams and anticipations for a better future. Almost every major software company that reported earnings this quarter, crushed estimates and raised guidance. Most of them also gapped up and continued higher as a result. Just from last week, we saw that in ESTC, PATH, SNOW, ZS, CRWD, WDAY, etc. The software space has been extremely hot.
Small caps finally broke out above their 200-day moving average and all hell broke loose. Stocks with high short interest squeezed higher – UPST, AFRM, AAOI, COIN among many others. The speculative frenzy is on. FOMO is back in full force. I hope you have been able to participate properly.
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Disclaimer: Everything I share is for educational and informational purposes only and it should not be considered financial advice. Read my full disclaimer here.