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Some market developments stood out last week:
- Anything related to electric vehicles went crazy. Quite a few EV stocks actually doubled in a week. Solar and other clean energy stocks also showed notable relative strength. Some names that belong to that industry: TSLA, NIO, XPEV, LI, HCAC, GMHI, AYRO, GP, BLNK, SBE, FUV, KXIN, WKHS, KNDI, etc. There’s definitely an element of hubris and exuberance which depending on your perspective and time frame of operation can be good or bad.
- When the news about the first effective COVID vaccine hit two weeks ago, anything related to software and work from home was hit hard. Last week, those same so-called social distancing stocks had a major bounce after more states and cities adopted stricter measures to fight the COVID spread. I expect more rotations between the old and the new economy stocks for the rest of the year.
- Cryptocurrencies continue to make new highs while gold and silver are sleeping for the most part. The reason is not only the proverbial weakness in the U.S. Dollar. The surge in crypto has turned into a momentum move. When it comes to momentum, the major catalyst is price and FOMO.
In other words, while the main indexes are consolidating their recent gains, the bull market continues with full force. Capital is not leaving the market; it is merely rotating between sectors.
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