Momentum Monday – Stock Picker’s Market

The charts on Momentum Monday are powered by MarketSmith

It is a bull market out there but the bullishness is not equally distributed. This is why we call bull market stock-picker’s markets. Three industries are in favor at the moment – biotech, homebuilders, and semis (5G related). This can change next week and other industries might step up and shine but as of right now these are your leaders.

Bull markets often correct through sector rotation. While QQQ and SPY keep making new all-time highs, there are still quite a few stocks that are struggling – take a stroll in the retail universe and you might be surprised how much relative weakness there is: NKE, RH, LULU, MCD, CMG, SHAK, etc.

We saw some crazy earnings-related moves last week: PINS tested their IPO price at 19 where it bounced. ANET was completely obliterated after substantially reducing revenue guidance. MELI and ETSY took a hit – in a matter of a few months they turned from market leaders to several market laggards. FB and BABA could not muster a rally despite strong earnings reports. On the other side, we saw strong earnings breakouts in semiconductors and building-related stocks. Overall, there is a mixed message from the reactions to earnings reports. My thesis is that many stocks will continue to chop in a range under the end of earnings season and after that we will see them break out and sustaining an uptrend. 

P.S. You can now subscribe to my private Twitter feed and follow my options and stock ideas and commentary in real time.

$99 monthly