Author: Ivanhoff

MarketSurge powers the charts in this video.

We saw a ping-pong price action in most stocks last week. First, Powell said that rate cuts are still on the table later this year despite rising inflation numbers lately and stocks rallied on the news. Then, Kashkari, who is a non-voting Fed member, opined that maybe there should not be any rate cuts this year. and stocks were slammed. Obviously, cutting rates this year matters to the market and the more the Fed waits, the more anxious and volatile the market is likely to become.

In the meantime, inflation expectations are rising. Gold, silver, and crude oil accelerated their ascent. Yields, economic activity, employment numbers, and wages are also perking up. 

Volatility has increased bringing more false breakout and breakdown attempts. Volatility tends to rise at turning points so I wouldn’t be surprised to see more of it as we are entering a seasonally weak period for US stocks. Granted, seasonality hasn’t played a big role so far this year and we certainly should not base our decisions solely on it. It is just something to be aware of. If enough market participants believe in it and take action, it can become a self-fulfilling prophecy. 

The tape has become choppier overall, offering great intraday trading opportunities and making swings more challenging outside the basic material space. I plan to remain nimble and focused in this tape. This is certainly not an environment where I want to be on margin or even fully invested overnight. The market is hot a few times of the year when almost any breakout works immediately. These are the times when it pays to be extra aggressive because they can easily account for 95% of our annual gains. We are currently not in such a market but things can change quickly.

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I published a new trading book recently (2023). Check it out on Amazon.

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.

Bull markets often correct through sector rotation. We saw another rotation last week. While most of the tech stocks lagged, other sectors came in play – healthcare, biotech, homebuilders, retailers, financials, gold and other metal miners, energy, etc.

The new quarter starts next week. It’ll be interesting to see if small caps can follow through and continue to outperform. This would create a great environment for short-term swings. Or we will see another rotation into megacaps. A lot will depend on the direction of interest rates. They pulled back last week and helped small caps to shine.

People have been complaining about the lack of wider participation in this rally. The past few weeks proved this concern wrong. As money is leaving the perceived safety of the megacap stock, it has been pouring in a wide variety of industries and smaller-cap stocks. This market breadth expansion is positive. You will always find a reason to be concerned. After all, bull markets tend to climb a wall of worry. What is really important is playing the odds. I’ll say again what I said two months ago. Do you want to miss on a strong bull market just because you are trying to perfectly time the next 5% market pullback? The odds continue to favor the long side. Dips in strong stocks keep getting bought. Any corrections so far have taken the form of a sector rotation. We have to be doing what the market is doing – rotate out capital into sectors that are currently in favor instead of complaining our tech stocks are not rising anymore.

Try my subscription service which includes a private Twitter 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.

I published a new trading book recently (2023). Check it out on Amazon.

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.

Quite a few tech stocks were getting weaker going into the FOMC meeting last week. The premise was that higher inflation might be back and the Fed will likely be more hawkish in their remarks. None of that happened. The Fed confirmed its plan to reduce interest rates by 75bps this year and more in the next year. Stocks had another significant bounce, led by small caps, financials, and retailers.

Semiconductors also had a decent bounce but for a different reason. Micron (MU) crushed earnings estimates and inspired a rally across the board. NVDA quickly recovered from its dips to its rising 20-day EMA and it is back near its all-time highs. Ditto for QCOM. COHR bounced near its 50dma and it is also looking constructive. Ditto for AVGO. Semiconductors remain the leading sector. The dips in chips continue to get bought. 

The second best-performing major sector year-to-date is financials. All the talk about nightmare drops in commercial real estate prices and financials didn’t even blink. So much strength across the board – JPM, GS, etc.

Earnings season is basically, over. Typically retailers are the last to report. It has been a mixed picture there – while LULU, NKE, DG sold off, others like WSM, ARHS, TGT, GPS gapped up and followed through. Tech stocks are the ones having issues with following through lately. Look at MU, ORCL, DELL, IBM, CRWD for example. Those gaps were used by some to take profits.

The IPO market is finally back in the news. RDDT and ALAB were the crowd’s favorites. I am not chasing any of them. I rather wait a few weeks or even months and see if they set up properly. This is what I did with CAVA and CART and it worked out well.

Try my subscription service which includes a private Twitter 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.

I published a new trading book recently (2023). Check it out on Amazon.

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