Category: Uncategorized

MarketSurge powers the charts in this video. They are currently running a great special.

Last week, we discussed that QQQ and SMH are more than 10 ATR (average true range) above their 50dma, which is very unusual. When an index or a stock becomes very extended, they tend to correct either through price or time. A price correction is a pullback. A time correction is a sideways action, while the major moving averages catch up with the price. It seems we are seeing more of the latter lately. 

Well-diversified indexes, such as the S&P 500, can often continue to rise or remain sideways while the actual correction occurs beneath the surface through sector rotation. We saw a glimpse of it last week. When semis pulled back, software showed relative strength. Energy rose while consumer discretionary declined. Solar stocks broke out while metals and biotech went lower. 

Interest rates are near new multi-year highs, and the latest inflation readings came well above estimates. The market doesn’t seem too worried about it yet. The market is a voting machine in the short-term, driven by fear, hype, and sentiment. The market is a weighing machine in the long-term, driven by value and growth. The rates and inflation matter. They are at the basis of everything, so eventually the market will care. The current behavior might be due to the new Fed chair, who is expected to be complacent and lenient. When you pour alcohol on fire, the rational behavior of the market is to actually buy certain stocks and asset classes because they are the best protection of purchasing power in the midst of rising inflation.

Sign up for my premium service to read the rest of my market view and ideas.

My subscription service includes a Discord room and private X feed with options 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. See how my ideas/alerts performed.

You can find my trading books on Amazon here.

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

INTC joined the Momentum 40 list 9 weeks ago, on March 13th, when it was still working on its base. The stock just exited the list after a 138% again. The exit might be too early. Its slightly out-of-the-money $50 May-15 Calls were trading around $3 at the time and ended the period near $59, reaching $80 on May 11th. I didn’t buy the Calls, but it is good to be aware of how much the options of strong trending stocks are capable of.
Every week, the Momentum 40 list highlights 40 of the current market leaders – typically high-growth stocks with high relative strength and powerful technical setups. The Momentum 40 list is an excellent idea generation tool for long-term trend-followers, position traders, and short-term swing traders.
I’ve been posting the Momentum 40 list since 2010. Every Friday, I would send the changes an hour or so before the market closes – which stocks are leaving and which are joining. It’s basically a trend-following system that requires action once per week. The losers are cut as quickly as possible, and the winners stay as long as needed.

My subscription service includes a Discord room and private X feed with options 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. See how my ideas/alerts performed.

You can find my trading books on Amazon here.

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. They are currently running a great special.

Bull markets tend to correct through sector rotations. When one leading group pulls back, others step up and break out. This one is not any different. When semiconductors took a breather last week, software stocks rallied. Breather is the correct word because the dips in semis are quick and shallow before they make new all-time highs. SMH is currently trading at 11 times its average true range from its 50-day moving average, which has never happened before. The Nasdaq 100 (QQQ) is at 10x its ATR from its 50dma. Needless to say, both are extremely extended, and a consolidation through time or price would not be a big surprise. It is actually something that way too many are anticipating and trying to front-run but so far with little success.

It seems the market has started to differentiate between software stocks that can benefit from AI and those that are likely to get their margin squeezed. The previous week, we saw TWLO gapping up. Last week was strong for DOCN, DDOG, FTNT, CRWD, etc. The bull market remains strong, and it is expanding. We know that nothing can go up every week forever, and there will be shakeouts. They are a normal part of any cycle. 

Sign up for my premium service to read the rest of my market view and ideas.

My subscription service includes a Discord room and private X feed with options 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. See how my ideas/alerts performed.

You can find my trading books on Amazon here.

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