Ivanhoff Capital

MarketSurge powers the charts in this video.

As the Nasdaq 100 consolidates near its all-time highs, the small-cap Russell 2k index is close to its 200-day moving average. It is a true market of stocks, led by a small group of stocks. 

AI -related stocks had a big comeback, led by semiconductors – AMD, ARM, ALAB, CRDO, INTC, QCOM, etc. Software stocks did not have the best close on Friday, but from a bigger-picture point of view, they continue to consolidate constructively. IGV has been stuck in a 100-110 range for multiple weeks. 

Outside of tech and select biotech/diagnostic stocks, market breadth is horrific. Rising yields have hit utilities and consumer staples. Who needs a 3% dividend and low growth when you can get 4% in 1-month Treasuries? Biotechs are also starting to get under pressure – XBI had a false breakout above its 50dma, only to get slammed. Financials remain one of the weakest sectors, as the flattening 10-2yr yield curve is squeezing margins. Basic materials are in the doldrums because of a strong US Dollar. Consumer discretionary and stocks are breaking down left and right due to higher-than-expected inflation. Industrials, homebuilders, and transportation are below their 200dma. Energy is holding a bit better than most, but there is a lot of headline risk with the constant Iran news that impacts crude oil. Healthcare remains in an uptrend, and as we all know, it is probably one of the most defensive sectors. In the meantime, Treasuries continue to dig a hole in the ground. TLT is super extended below its 200- and 50-day moving averages – a quick snapback bounce could alleviate the pressure on stocks.

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The theme last week was the comeback of AI-related stocks. Semiconductors are now among the leaders in an otherwise weak market breadth environment outside of tech. 

CRDU +42%, 2x long CRDO. Lagging semiconductor stock that had a big 2-week bounce after a 50% drop from its all-time highs.

LABX +42%, 2x long ALAB. Semiconductor stock firmly back above its 50dma and starting to bull flag.

IONX +33%, 2x long IONQ. Quantum computing stock that is back above its 200dma.

FLYT +33%, 2x long FLY. Beaten-down space stock with what will likely turn out to be a dead-cat bounce.

RKLX +29%, 2x long RKLB. Beaten-down space stock.

QCML +27%, 2x long QCOM. Ever since it recovered above its 200dma, it has been finding support near its rising 20EMA.

INTW +26%, 2x long INTC. Another AI semiconductor stock.

FBL +26%, 2x long META. Meta released its AI agent Muse and is back near all-time highs. The dips to its 20EMA are likely to be bought until its next earnings report.

AMDL +26%, 2x long AMD. One of the price leaders in semiconductors.

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

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.

Last week began with a big downside gap in anything AI-related after comments from Anthropic’s, OpenAI’s, and SpaceX’s CEOs that the progress in AI should probably slow down because of safety concerns. Those gaps were quickly bought and erased by the end of the week. In many cases, some of the AI stocks even had a strong green week – DELL, AMD, SNDK, MU.

Software, on the other hand, started the week with a big breakout, followed by sideways consolidation. Cybersecurity led the way – CRWD, NET, FTNT, ZS, PANW, OKTA.

Crypto had its mid-week shakeout. First, the Clarity Act didn’t pass the House. Then, the Fed raised rates on Wednesday. By Friday, all major crypto assets and stock proxies were back near their multi-week highs – ETHA, IBIT, SOLZ, ZCSH, PURR, MSTR, COIN, HOOD, etc. The SEC rolled out a 5-year exemption for tokenized stock trading, which lit up the entire space.

From a big-picture perspective, small caps keep losing ground. Russell 2k is not far from testing its 200dma. Large and mega caps continue to show incredible resilience and keep the indexes afloat. Going higher on bad news (rate hikes) is typically bullish, especially if we see follow-through next week. The volatility is likely to remain elevated ahead of the Midterm elections. The results from them can have a significant impact on who the next leaders are. A democratic sweep will probably put many AI-related stocks under pressure, as it would make the development and operation of data centers more tightly regulated.

My subscription service includes a Discord room and private X feed with options 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. See how my ideas/alerts performed.

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.