Author: Ivanhoff

The charts in this video are powered by MarketSmith

One can make the argument that we saw a flight to quality last week. Many of the high-momentum flyers started to break down while capital rotated into large caps. This is not just an inflation story. Capital didn’t go only to tech because of falling interest rates last week. We also saw stocks like Nike and Starbucks pushing higher. 

Mega-cap tech stocks have been running in the 2-4 weeks leading to their earnings reports in the past couple of quarters. It seems we are seeing it again. AAPL, GOOGL, FB, MSFT have been pushing higher. AMZN, NFLX, CRM, and TSLA are also setting up.

I don’t know if the current run into tech will continue. The market might as well decide inflation is a threat again and hit those stocks. But what will happen if this scenario plays out? Money will just rotate into financials and basic materials, which will prop up the S&P 500. Maybe, this is why SPY was up or flat every single day for the past two weeks and every 4-5% dip has relentlessly been bought this year. 

In the meantime, the small-cap ETF – Russell 2000, continues to build a humongous base. It has also been making higher lows since May. If it ever breaks above 234-235, it is likely to have a significant run.

Last week was big for gene editing stocks. NTLA doubled in 5 days. EDIT, BEAM, CRSP, FATE also had big breakouts and are now setting up for potential continuation.

Try my subscription service which includes a private Twitter feed with option and stock ideas, emails with concise market commentary and actionable swing, intraday, and position trade ideas, the Momentum 40 list of market leaders, and much more. See some of the recent testimonials.

PERFORMANCE

Here’s a Google spreadsheet tracking all closed options and stock ideas shared on my private Twitter stream and emails for subscribers.

Check out my free weekly email. to get an idea of the content I share with members.

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

The charts in this video are powered by MarketSmith

Last week, we talked about the plethora of setups in the software space and the weakness in the so-called old-economy sectors – financials and basic materials which caused the S&P 500 to close below its 50-day moving average. A few days later, SPY closed at new all-time highs led by banks, retailers, oil, biotech, and tech stocks. In other words, almost everything went up. Maybe it was the rise in interest rates or the new infrastructure stimulus plan announced by the government but the fear of missing out is back with full force. We can see it clearly in the run in many of the speculative highly-shorted stocks that had 50-80% drawdowns this year alone – SPCE, DDD, FUBO, WISH, PUBM, TTD, ROKU, etc.

In the meantime, the impressive growth in Nike’s latest earnings report confirmed that there’s a huge pent-up demand in the U.S. which is likely to benefit consumer discretionary stocks. Some names to consider include FTCH, SFIX, DECK, etc.

Try my subscription service which includes a private Twitter feed with option and stock ideas, emails with concise market commentary and actionable swing, intraday, and position trade ideas, the Momentum 40 list of market leaders, and much more. See some of the recent testimonials.

PERFORMANCE

Here’s a Google spreadsheet tracking all closed options and stock ideas shared on my private Twitter stream and emails for subscribers.

Check out my free weekly email. to get an idea of the content I share with members.

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

The charts in this video are powered by MarketSmith

For the better part of 2021 so far, value stocks have outperformed growth stocks. The reason – the market was trying to price inflation not seen since the mid 2000s. As a result, the U.S. Dollar and the U.S. Treasuries took a dive while financials and basic materials skyrocketed. In the meantime, almost anything software or clean-tech related lost 30% to 80% in just a few months. It seems the market was woken up to the possibility that the inflation dangers might have been exaggerated or the fact that the Fed is actually ready to step off the gas. 

Starting about two weeks ago, the whole inflation trade has been unwinding. What went up, pulled back. What was under pressure, has been rallying. Financials (XLF) are now down 9% from their 52week highs, basic materials (XLB) are down 6%, industrial metals (XME) are down 14%, homebuilders (XHB) are down 13%. Meanwhile, software stocks have been reborn. Many of them have been on a 30-40% ramp. Now, the big question is can the Nasdaq Composite continue higher while most non-tech sectors are pressured and already below their 50-day moving average. I think it can. Capital is not leaving the stock market. It is merely rotating between sectors and right now it’s tech’s time to shine. How long this is going to last is anyone’s guess. The market is a fickle machine. One day soon, it might decide to assume the inflation narrative again and start another rotation. There’s no reason to guess when. Price action will leave plenty of clues.

Try my subscription service which includes a private Twitter feed with option and stock ideas, emails with concise market commentary and actionable swing, intraday, and position trade ideas, the Momentum 40 list of market leaders, and much more. See some of the recent testimonials.

PERFORMANCE

Here’s a Google spreadsheet tracking all closed options and stock ideas shared on my private Twitter stream and emails for subscribers.

Check out my free weekly email. to get an idea of the content I share with members.

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