MarketSmith powers the charts in this video.
SPY and QQQ closed at all-time highs but we are in a stock picker’s market, not a wave that lifts all boats. The tape has been rather choppy with many fades and frequent changes of direction – not easy to navigate.
There was a quick rug-pull on Wednesday (Jan 17th) – most stocks gapped down. A large number of tech stocks and ETFs tested their year-to-date volume-weighted-average price on that day and found support there – QQQ, FNGU, SOXL, META, AMZN. The real leaders like NVDA and AMD didn’t even blink during that pullback for the indexes.
Then, on Thursday (Jan 18th), Taiwan Semiconductors (TSM) crushed earnings estimates and confirmed that the recession in semiconductors is over, mostly due to an enormous demand for AI-related chips. All semiconductors stocks gapped up lifting most of the tech sector with them. On Friday (Jan 19th), Super Micro Computer (SMCI) beat estimates and raised guidance, staging an acceleration in anything AI-related.
The bulk of earnings season is still ahead. So far, we can say that AI remains the major theme in the market and the main source of growth. This is why stocks like AMD, NVDA, INTC, and many others are rising in anticipation of their earnings reports.
Small caps ETF, IWM tested its 200-week MA where it found support. It’s all about interest rates here. IWM has been almost perfectly negatively correlated to the 10-year yield in the past six months. If rates resume lower, small caps are likely to quickly catch up with large caps.
Try my subscription service which includes a private Twitter feed with option and stock ideas, emails with concise market commentary, real-time market education, the Momentum 40 list of market leaders, and much more. See what subscribers say about my educational service.
Check out my free weekly email to get an idea of the content I share with members. How my ideas/alerts did.
I published a new trading book recently (2023). Check it out on Amazon.
Disclaimer: Everything I share is for educational and informational purposes only and it should not be considered financial advice. Read my full disclaimer here.
