Momentum Monday – Melt-up Mode

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The speculative juices are running high. The small-cap index, Russell 2k broke out from its 8-month long base and it hasn’t looked back. Maybe, this explains the resurrection of the so-called meme stocks  – CAR, GME, AMC, BBBY, etc. 

The Nasdaq 100 keeps making new all-time highs, led by semiconductors (NVDA, AMD, SMH)  and mega-caps like TSLA, GOOGL, MSFT, AAPL, FB. Even AMZN and SHOP which missed earnings estimates are rising and acting constructively. All news is good news in a bull market.

The S&P 500 is also moving up. Pfizer’s antiviral pill news fueled a rally in reopening industries – leisure, travel, entertainment. We saw big jumps in ABNB, LYV, JETS, LYFT, UBER, SBUX, DIS, BA., etc. In addition, the infrastructure bill finally passed Friday night and might stir some upside action in steelmakers like X, CLF, NUE, equipment manufacturers like CAT, GE, the entire construction space, and some clean energy stocks like BLNK, CHPT, WBX, FCEL, BE, etc. The question is how big will those names gap up on Monday and will we see an initial “sell the news” event?

To top it off, even the perennial dogs, cannabis stocks woke up on Friday. MSOS, GRWG are two ways to play that move.

The FOMO is palpable. One can make the argument that there’s some element of froth in the current tape and complacency often leads to a rug pull. Don’t rush too much with contrarianism. Remember that bull markets correct through sector rotation. This means the indexes can continue higher or dip very little while select sectors and stocks have a more sizable pullback.

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