Momentum Monday – Earnings Season and Game of Thrones Are Back

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The current bull market continues to correct through sector rotation. While money is flowing into financials, semiconductors, energy, and software, healthcare and biotech have been under pressure as of late.

Will Disney+ disrupt Netflix or the new online streaming service is not a big positive for Disney and neutral for Netflix. We will know a lot more about how the market perceives it after Netflix’s earnings on Tuesday.

We also cover athleisure stocks – NKE and LULU are consolidating near all-time highs.

Momentum Monday – New All-Time Highs Ahead?

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Bull markets often correct through sector rotation. When many leading enterprise software stocks were hit last week, the market averages didn’t skip a beat. The money just rotated into other sectors – semiconductors, energy, financials, retailers, biotech.

The dips are still welcomed as buying opportunities by many. The S&P 500 and the Nasdaq 100 are less than 2% below new all-time highs. The U.S.-China trade deals seems to be priced in. In other words, expectations going into the next earnings season, which starts next week, are high so companies better not disappoint.

Check out my latest two trading books:

Swing Trading with options – How to Trade Big Trends for Big Profits

Top 10 Trading Setups – How to find them, hot to trade them, hot to make money with them.

Momentum Monday – Market of Stocks

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The dips continue to get bought for the most part. The major large-cap U.S. stock indexes, QQQ and SPY spend the last couple of weeks in a tight consolidation and are potentially getting ready for another leg higher.

Market breadth is still healthy. We see strength in restaurant stocks like CMG and MCD, fashiology names like LULU, NKE, and AAPL, digital payments, biotech, emerging markets, China, etc.

One of the main warning signs right now is the continued underperformance of small-caps. Russell 2000 is still struggling below its 200-day moving average. The other worry is the coming massive wave of supply via new monstrous-size IPOs like Lyft, Uber, Pinterest, and others.

Check out my latest two trading books:

Swing Trading with options – How to Trade Big Trends for Big Profits

Top 10 Trading Setups – How to find them, hot to trade them, hot to make money with them.

Momentum Monday – Inflection Point?

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The yield curve is flat. The 10-year note is currently yielding as much as the one-month treasury. This is the bond market’s way of forecasting a potential recession down the road. Was Friday the day the stock market woke up and started to discount the same? It is too early to say. One down day doesn’t make a trend.

Small caps are looking ominous with that high-volume reversal off their 200-day moving average on Friday. Many tech momentum stocks are quite extended and also vulnerable to quick 5-15% pullbacks.

Check out my last two trading books:

Swing Trading with options – How to Trade Big Trends for Big Profits

Top 10 Trading Setups – How to find them, hot to trade them, hot to make money with them.

Momentum Monday – The Dips Continue To Get Bought

All charts on Momentum Monday are powered by MarketSmith

Dip buyers continue to dominate the tape. The tech sector is leading again. Enterprise software, semiconductors, the FANGs are all looking strong, breaking out or setting up for a potential breakout.

Emerging markets are also starting to wake up. We are seeing notable relative strength in India, select Brazil and Chinese names. It’s usually good news when the more sectors join the market rally.

We continue to trade in a market of stocks environment, where stock picking matters.

Check out my latest book: Swing Trading with Options – How to trade big trends for big returns.