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The Fed is saying that it doesn’t worry about inflation this year. The market has a different opinion. Long-term rates have been rising, pressuring most tech stocks, SPACs, and recent IPOs which went public at elevated valuations. In the meantime, the NFT and crypto space is flourishing. People are spending crazy money on digital art, farts, virtual houses, tweets, collectibles, you name it. A sign of froth and a side effect of too much money in the system some would say. Or maybe it is just the early innings of a new Internet. Only time will tell. The whole mania has been spilled over public markets. Any stocks related to NFT have gone up 2-5x in the past couple of weeks: TKAT, OCG, ZKIN, JFIN, YVR, HOFV, IMTE, etc. Even FB and ETSY seem to be rising based on it. Quite a few blockchain and crypto-related stocks are still setting up – MSTR, SOS, MARA, RIOT, etc.
Watch the 310 level in the QQQ next week. If it is lost, we will see a considerable number of former momentum leaders breaking down from their bearish flags.
If QQQ somehow manages to retake its 50-day moving average and then clears 325, we are back to a FOMO market. I am already seeing some clean energy stocks tightening up which can be a good foundation for a rally.
Basically, the market is in a consolidation mode. It has been choppy and indecisive lately which has required traders to be nimble.
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