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The major indexes (QQQ, SPY, IWM) are still stuck in a range below their 50 and 20-day moving averages. For me, this means being less aggressive with swing trades and being more nimble in general. And yet, under the surface, many market leaders are acting constructively – breaking out or setting up for a potential breakout. This is an important development because market leaders tend to lead the averages. Two big trading themes are standing out:
- The market seems to be pricing in a second COVID wave. Anything related to social distancing has been outperforming notably – software (DDOG, CRWD, TEAM, NOW, SPLK, OKTA, ZS, FSLY, AVLR, UPWK, MDB, TTD, WDAY, HUBS, PLAN, PCTY), work and leisure at home (PTON, TDOC, LVGO, DOCU), diagnostics (NVTA, NTRA, DGX, QDEL,etc.), social media (TWTR, PINS, SNAP). If the same theme persists, we are likely to see online retailers wake up as well (AMZN, BABA, SHOP, JD, ETSY, JMIA, etc.).
- Clean energy – this is not just politically-related. It’s a major world trend that might persists for a long time. Solar (VSLR, RUN, SPWR, FSLR, NOVA, DQ, CSIQ, JKS, ENPH, SEDG, etc), electric cars, fuel cells, charging stations.
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