Ivanhoff Capital

MarketSurge powers the charts in this video. They are currently running a great special.

Bull markets tend to correct through sector rotations. When one leading group pulls back, others step up and break out. This one is not any different. When semiconductors took a breather last week, software stocks rallied. Breather is the correct word because the dips in semis are quick and shallow before they make new all-time highs. SMH is currently trading at 11 times its average true range from its 50-day moving average, which has never happened before. The Nasdaq 100 (QQQ) is at 10x its ATR from its 50dma. Needless to say, both are extremely extended, and a consolidation through time or price would not be a big surprise. It is actually something that way too many are anticipating and trying to front-run but so far with little success.

It seems the market has started to differentiate between software stocks that can benefit from AI and those that are likely to get their margin squeezed. The previous week, we saw TWLO gapping up. Last week was strong for DOCN, DDOG, FTNT, CRWD, etc. The bull market remains strong, and it is expanding. We know that nothing can go up every week forever, and there will be shakeouts. They are a normal part of any cycle. 

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Every week, the Momentum 40 list highlights 40 of the current market leaders – typically high-growth stocks with high relative strength and powerful technical setups. The Momentum 40 list is an excellent idea generation tool for long-term trend-followers, position traders, and short-term swing traders.

Some of the notable movers this year include VIAV +101% in 12 weeks, INTC +147% in 7 weeks, AEHR +118% in 4 weeks, AAOI +245% in 10 weeks, BE +190% in 17 weeks, MRVL +92% in 8 weeks, VRT +114% in 18 weeks, LWLG +127% in 4 weeks, and many others between 50% and 100%, a whole lot more with losses under 10%. MU was on the list for 189% in 26 weeks, then it was sold. It was bought back 3 weeks ago, and it is already up another 59%.  

I’ve been posting the Momentum 40 list since 2010. Every Friday, I would send the changes an hour or so before the market closes – which stocks are leaving and which are joining. It’s basically a trend-following system that requires action once per week. The losers are cut as quickly as possible, and the winners stay as long as needed. It’s a system that works, and it has outperformed significantly over the years. Year-to-date (as of May 6, 2026), the list is up 63%, if we assume an equal-weighted allocation of 2.5% for each stock. The list had many other strong years of 30%+. It was up more than 80% in 2020, but I haven’t seen such a strong performance so early in the year. It is probably not sustainable. This post might end up being a contrarian indicator in the short term. There’s always room for improvement. For example, if every loss is kept at 7% and there’s a simple market timing element like keeping a higher cash position when the indexes are under their 50 or 200-day moving average, the results can be even better.

My subscription service includes a Discord room and private X feed with options and stock ideas, concise market commentary via email, real-time market education, the trend-following system for market leaders, Momentum 40, and 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.

MarketSurge powers the charts in this video.

Last week, we discussed how extended semiconductor stocks are from their 50-day moving average and how likely it is for them to pull back. They tried to pull back earlier in the week. SMH and QQQ didn’t even test their rising 10-day simple moving average, and they shot back to new all-time highs. The V-shaped recovery has left many underinvested, and now they are eager to buy every small dip. This is what creates the so-called lock-out rally – if you are patiently waiting for a good entry, you might miss the first 30-50% of a move. 

If you are a retail trader, it’s always better to be on the sidelines wishing you were in than to be in wishing you were on the sidelines. The situation is entirely different if you are managing other people’s money. Missing a rally is the biggest professional mistake you can make. This is why the dips are so tepid, and the buying is impatient. The strong earnings reports are making the FOMO even stronger. Semis continue to crush estimates. SNDK is expected to earn $160 per share in 2027. They made $3 in 2025. Megacaps AAPL, AMZN, GOOGL also beat estimates and the market reacted favorably. Even select software stocks are gapping up to new 52-week highs on better than expected earnings – we hadn’t seen that in a long time. SBUX and COCO broke out last week, too. So it is not just AI-related stocks getting all the inflows. The market rally is expanding into other areas. 

Don’t get me wrong. I am not suggesting we drop all proper risk management guidelines and start chasing. There will be dips. Even in the strongest tapes, there are dips. Even if they are to a rising 10 or 20EMA, it’s better to enter on a pullback with a tight stop than to mindlessly chase extended stocks. We saw it last week. AAOI, AXTI, AEHR dropped 20-30% in a few days. They found support near their rising 20EMAs and bounced back 30-40% in a few days.

Sign up for my premium service to read the rest of my market view and ideas.

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.