Author: Ivanhoff

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The same trends persist – the majority of stocks continue to edge higher; Interest rates too as inflation expectations are rising. The U.S. Dollar is still under pressure. Cryptocurrencies keep getting more popular. The only things that change often are the leading sectors. While some of the high-flyers (cannabis, 3D printing) pulled back last week, money rotated into semiconductors and software stocks. 

There are more SPACs, IPOs, secondary offerings. The supply is growing but the bull market is still intact. In fact, we saw a significant spike in speculative moves last week compared to the previous. It’s anyone’s guess how long it is going to last but when you have so many sectors making new highs and setting up for potential breakouts, it is better to stick on the long side. Granted, there have been the occasional hiccups lately – the number of false breakouts and intraday shakeouts have increased but this is a normal part of any bull market – bull markets correct through sector rotation.  

Quite a few sectors are setting up for potential breakouts: metals (XME), financials, (XLF), industrials (XLI), even the so called recovery industries like airlines and casinos are looking constructively.

Clean energy is still strong. It seems a different EV stock is popping up 20-30% every day of the week. It is certainly a sector with a lot of hot money and movement: TSLA, NIO, LI, GOEV, AYRO, FSR, etc. Solar also stocks continue to set up.

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The charts in this video are powered by MarketSmith

Last week was a mirror image of the previous – the highly-shorted meme stocks crashed and the rest of the market went to the moon. There were so many  20-30% bounces in momentum stocks that pulled back to and below their 50-day moving averages in the previous 2 weeks. 

Sentiment was so gloomy entering last week that it seems for a moment we had forgotten that dips are buying opportunities in bull markets. Pullbacks to 20 and 50dmas are normal and even desired because they provide good risk/reward entry points and keep the FOMO (fear of missing out) in check. Such shakeouts are needed because they create anxiety and doubt. No trend can continue without skeptics because otherwise there would be no one left to buy.

There are currently so many underlying trends:

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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

The past few weeks have been one giant short squeeze and everything accelerated last week. The size of the squeezes has been unprecedented and they have led to liquidations in other areas of the market. All major market indexes closed the month below their 20-day moving averages for the first time since October of last year and are currently in a pullback mode. 

What is currently quite fascinating is that we are in the midst of a new earnings season and no one is paying attention to earnings reports. All the attention is focused on stocks like GME, AMC, BB, NOK, and other highly shorted assets which are now negatively correlated to the major market indexes. The short squeeze bets have been so one-sided that they have led to liquidity crunch in some brokers. 

There’s another concern on the market’s mind right now. All those new Covid mutations and new restrictions around Europe have inspired a new life in Covid-related stocks. Most vaccine stocks were on fire last week – NVAX, MRNA, BNTX, VXRT. Covid testing stocks also showed notable relative strength after HOLX and ABT crushed market estimates.

Try my new 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 50 list of market leaders, and much more. See some of the recent testimonials.

PERFORMANCE

Here’s a Google spreadsheet tracking all closed option 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.