Author: Ivanhoff

MarketSurge powers the charts in this video.

    The Nasdaq 100 has printed two back-to-back bullish reversal weekly candles. Seasonality is turning bullish. Higher-volatility momentum stocks like HOOD and PLTR are starting to outperform again. All of these factors might lead to a relief bounce. I can see QQQ testing 490. If it goes above 490, it could test 500.

What is the bearish scenario? Another failed bounce attempt near 485 and then a quick break below 473 that could lead to another leg lower to 450. There are enough arguments for the bearish scenario as well. MU, FDX, and NKE beat estimates and gave warnings about their future earnings potential due to global uncertainty and tariffs. I suspect many companies will use the same excuse when their time comes to report earnings. In the meantime, the Fed kept the rates the same last week. They continue to expect only 50bps buts for the entire 2025. This won’t change unless the economy slows down significantly which means that the Fed is not going to be proactive.

The tape has been choppy lately. Trending moves haven’t lasted for more than a day or two for many stocks. I’ve adjusted my approach by taking quicker profits. It would be a nice pace of change if we see longer trending moves, so we can capture multi-day swings.

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Disclaimer: Everything I share is for educational and informational purposes only and it should not be considered financial advice. Read my full disclaimer here.

MarketSurge powers the charts in this video.

The S&P 500 and the Nasdaq Composite are down 8% and 11% since their all-time highs. This is nothing alarming. The average SPY’s annual drop is about 14%. And yet, the declines in momentum leaders have been substantial. TSLA is down 50% from its all-time highs. At some point last week, NVDA was down 30% but managed to recover ⅓ of that. PLTR is down 30%, HOOD -41%, APP and RDDT are down 44%. VST is down 40%, VRT – 44%. GOOGL, AMZN, AAPL, and MSFT are down about 20%. MSTR and COIN are down about 45% from their 52-week highs. These are numbers that you typically see after prolonged corrections. The current one is only four weeks old. The drop has been steep and quick as tariff wars threaten growth, employment, and inflation. Without the Fed stepping in or the White House providing more clarity on their economic policy, the market will probably get spooked even more. If I had to choose, I would rather see another leg lower because this would set up the foundation for an epic bull market later this year or maybe next year. The more likely scenario is that calmer heads will prevail and we will see some form of a rally.

In the meantime, gold broke out to new all-time highs. Gold miners ETF, GDX is close to making a new multi-year high. Chinese stocks continue to gain ground. Most of the momentum stocks setting up above their 50-day moving average are currently Chinese ADRs.    

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You can find my trading books on Amazon here.

Disclaimer: Everything I share is for educational and informational purposes only and it should not be considered financial advice. Read my full disclaimer here.

MarketSurge powers the charts in this video.

The correction continues with full force. It might sound funny to some that we are talking about a correction while the S&P 500 is down just 2% year-to-date, but the damage in many market leaders from last year has been substantial. One by one, all momentum bastions have been taken out. Last week, we talked about the relative strength in financials. It didn’t take long for that to change. Financials also dived lower. Looking at earnings reactions, almost all major upside earnings gaps were completely closed. This is a bear market price action. QQQ and SPY are right at their rising 50-week moving average. Historically bear markets live under the 50-week moving average. The indexes are at a pivotal point. 

With all that weakness, some might be wondering if there is any strength left in the market right now. There is, but typically, it is not a good idea to chase it. Telecoms like TMUS and VZ, fast food stocks like MCD, healthcare stocks like JAZZ, GILD are still near their 52-week highs and up on the year. Such rotation into typically defensive sectors happens when the market expects an economic slowdown. Outside the US, we see notable strength in European and Chinese equities. Gold is near all-time highs. Gold miners ETF, GDX is setting up for a potential breakout to new multi-year highs.

The markets don’t like uncertainty. The new administration has brought uncertainty with frequent direction changes regarding tariffs, trade policies, and political relationships. More uncertainty means more volatility. By now, the market has accepted that volatility will be elevated for the foreseeable future. All eyes are now pointing towards the Fed. The Payroll numbers were below estimates. Unemployment is ticking up, while hourly wages are growing below estimates. The Fed is typically too patient and slow to act, but soon they might have enough arguments for more rate cuts. 

We remain in a corrective market where it is essential to keep drawdowns small and if possible, even increase our capital with select tactical hits. What works in this tape is not what worked for the better part of 2024. The current tape requires different tactics and willingness to change our market view often. All types of markets – bull, bear, range-bound provide good trading opportunities, but they require a different approach.

Try my subscription service which includes a private X 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.

You can find my trading books on Amazon here.

Disclaimer: Everything I share is for educational and informational purposes only and it should not be considered financial advice. Read my full disclaimer here.