Author: Ivanhoff

The charts in this video are powered by MarketSmith

The main stock indexes – S&P 500, Nasdaq 1000, Russell 2k finished last week where they started. In between, they had a hiccup and several mini sector rotations. 

Many of the best-performing stocks from 2020 have been major laggards in 2021 – solar, EVs, SPACs, software, etc. Those same 2021 laggards finally woke up last week and started to perk up. The most shorted stocks shone the brightest which is a sign of returning risk appetite. Curiously, it coincided with a rout in the crypto space. It’ll be interesting to see if this development will continue. In the meantime, many of the leaders of 2021 – homebuilders, metals (copper, steel, aluminum, gold, silver, etc.), retailers, financial, oil stocks pulled back, mostly to their rising 20 and 50-day moving averages.

To conclude, last week was a mean-reversion week and the choppy range-bound action is still dominating. One positive development is the emerging markets in several growth stocks like RBLX, UPST, PATH. The list is not long but at least it is not non-existent. The tech sector has stabilized and we are starting to see some positive consolidations in the space – FB, GOOGL, AMAT, ASML, NVDA, etc.

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The charts in this video are powered by MarketSmith

CDC announced new guidelines last Thursday. Fully vaccinated people don’t have to wear masks outside or inside and can basically go back to their life before the pandemic. This woke the so-called back-to-normal stocks up. Retailers ETF was up 4% on Friday. Airlines, cruise lines, hotels, car rentals, entertainment stocks were on fire. So were oil stocks, which are at the intersection of back to normal and rising inflation expectations. How long is this theme going to last? It could be a few days or a few weeks. A lot has already been priced in but even the most optimistic among us didn’t believe that we can go back to normal so soon. This is why I think this theme has room to run and anything related to travel and leisure is likely to outperform in the near-term. 

In the meantime, SPY tested its 50-day moving average and as it usually happens, the first test led to a quick bounce. QQQ and IWM are still lagging. Both are still below their 20 and 50dma. There’s a good chance of more choppiness ahead. All we can do is focus on setups and find themes that are currently in favor.

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.

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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

Markets are cyclical. It feels like it’s 2006 all over again. Crocs is at all-time highs and basic material stocks are one of the hottest assets to own right now. If NFTs, doge coin and other cryptos didn’t exist, people would be talking about steel stocks all day long. 

 Lumber is up 130% year-to-date, lean hogs are up 60%, corn is up 50%. The list goes on and on. Inflation expectations continue to rise and as we all know very well, expectations can impact the reality. Soros defines that as reflexivity. The Fed keeps saying that inflation is not a threat right now but at some point (usually when it’s too late), the market action will force its hand. There’s a reason the market is called a leading indicator. 

The S&P 500 and the Dow Jones closed the week at another new all-time high. In the meantime, many former tech and biotech darlings are severely underperforming. Some are even down 40-50% from their 52-week highs. If you haven’t invested or traded before 2009, you have never seen a market like this. Tech was the undisputed leader for more than a decade while commodities and emerging markets were perennial dogs with a bad reputation. It seems the tables have turned this year. There is a clear paradigm shift. And while it might not mean that tech stocks will be dogs for the next few years, the price action alludes that the market might not be willing to pay 30-50x Sales for Saas companies anymore just because of their impressive sales growth. 

All the hot money from tech has moved into crypto now. There are over 5000 different cryptocurrencies right now and more popping up every day, so it’s funny to think that they are a hedge against the Fed and deficits. Bitcoin is the OG and it’s here to stay as a rare asset. 99.9% of the altcoins though are worthless or will become so at some point, so treat them as pure speculation and have an exit strategy. In the meantime, I don’t see why Ethereum’s market cannot exceed Bitcoin’s at some point in the foreseeable future. All interesting apps and use cases are built on Ethereum right now. 

Back to the boring, old stock market. The leaders remain the same. They are all related to rising inflation expectations (metals, oil, gold, silver, potash) or the recovery trade (retailers, car markets, infrastructure, auto parts, etc.). Semis are also trying to bounce. If SMH retakes its 20dEMA, we might see some hot action in AMAT, LRCX, NVDA, 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.