Author: Ivanhoff

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There are four trading themes that are currently shaping out the price action in the U.S. stock market:

1. The discounting of a second Covid wave continues. Most social distancing stocks were on absolute fire last week. Software stocks are building new bases: MDB, OKTA, FIVN, NOW, etc. Online marketplaces are perking up or acting constructively for the most part. Granted, the tech selloff on Friday could put temporary pressure on many momentum stocks. For the most part, the narrative remains in place and pullbacks are likely to be buying opportunities.   
2. Anything related to clean energy has been outperforming handily in the past few months. Last week, we saw an acceleration of this trend. Biden has promised to make zero-emission a top spending priority if he wins the elections. The world in general is going it that direction.
3. Homebuilders ETF, XHB closed at new all-time highs on Friday. Record-low interest rates couples with plenty of liquidity have and expectations of serious infrastructure spending and rising inflation have created the perfect environment.
4. Small caps gained 4% last week and outperformed significantly for the first time in a long time. It might be the renewed hopes for a second stimulus package. Sooner or later, it is coming, no matter who wins the elections. Or it might be just another temporary sector rotation. No matter the cause, when small caps rally, there are some excellent trading opportunities. 

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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 major indexes (QQQ, SPY, IWM) are still stuck in a range below their 50 and 20-day moving averages. For me, this means being less aggressive with swing trades and being more nimble in general. And yet, under the surface, many market leaders are acting constructively – breaking out or setting up for a potential breakout. This is an important development because market leaders tend to lead the averages. Two big trading themes are standing out:

1. The market seems to be pricing in a second COVID wave. Anything related to social distancing has been outperforming notably – software (DDOG, CRWD, TEAM, NOW, SPLK, OKTA, ZS, FSLY, AVLR, UPWK, MDB, TTD, WDAY, HUBS, PLAN, PCTY), work and leisure at home (PTON, TDOC, LVGO, DOCU), diagnostics (NVTA, NTRA, DGX, QDEL,etc.), social media (TWTR, PINS, SNAP). If the same theme persists, we are likely to see online retailers wake up as well (AMZN, BABA, SHOP, JD, ETSY, JMIA, etc.).
2. Clean energy – this is not just politically-related. It’s a major world trend that might persists for a long time. Solar (VSLR, RUN, SPWR, FSLR, NOVA, DQ, CSIQ, JKS, ENPH, SEDG,  etc), electric cars, fuel cells, charging stations.

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.


The charts in this video are powered by MarketSmith

SPY and QQQ closed below their 50-day moving averages for the first time in a while. Historically, the week after September quad witching is the weakest for stocks. From a statistical and technical point of view, next week might bring further downside pressure for stocks in general. Curiously, this weekend I see more and better risk-to-reward long setups than last weekend. Biotech, clean energy, social distancing stocks, many small caps, in general, are acting in a constructive manner – breaking out or setting up. There are great opportunities on both the long and the short side.

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.