Interest rates are falling, the US Dollar is pulling back, and the SPY closed the month at new all-time highs. The dips in crypto are getting bought as the new administration is shaping out to be significantly more friendly to the industry.
NVDA flushed below its 50-day moving average and bounced higher. If it manages to close above 140-141, it will likely recover towards 150 by the end of the year.
The build-up of AI infrastructure continues with full force. The stocks participating in the process keep making higher lows and higher highs – VRT, VST, COHR, NRG, ANET, etc.
AMZN also bounced and it is setting up near its all-time highs. Anything e-commerce did well in November – SHOP, GLBE.
Disclaimer: Everything I share is for educational and informational purposes only and it should not be considered financial advice. Read my full disclaimer here.
There have been three distinct themes after the elections. Anything crypto-related has been the clear market leader. Financials is the second best-performing group. Some might say that crypto is part of the financial sector. Lastly, mega-cap companies are notably underperforming, with Tesla being the exception.
Bitcoin reached 100k. MSTR, COIN, HOOD, BITX, and MARA had another strong week. If you don’t own any crypto directly, those five have been the main ways to have some exposure. Some say MSTR is in its parabolic phase. I’m not so sure about it. It will have its violent 30-50% weekly or even daily moves for the rest of the year. This will only make it a more popular trading vehicle among short-term speculators.
Financials had the biggest gap after the elections. Then, they went sideways for a couple of weeks. They finally followed through last week. The market expects deregulation which is good news for an industry that likes to take excessive risks with other people’s money. We are not here to judge. We are here to trade what’s working.
For the first time in a while, tech megacaps are underperforming. Nvidia had its best quarter in history and it still pulled back slightly because of soft guidance. It’s somewhat logical. The best-case scenario has already been priced in. It’ll take a huge earnings surprise to change expectations. I’m not saying this is the top for Nvidia, far from it. Higher prices are coming but the rate of ascent will not be anywhere close to what we saw in the past two years. I’m not even sure it will be much better than the S&P 500. It’s natural to see some of the hot money leave the stock and seek higher returns in more speculative areas of the market. Full disclosure – I still own some NVDA.
Google had a tough week, dropping about 5%. The odds of splitting the company into two are high. I don’t know why the market thinks this deserves a lower valuation. It has been under pressure and we have to acknowledge that. Amazon, Microsoft, Apple, and Meta haven’t fared much better. The only mega-cap that has done exceptionally well after the elections is Tesla. It added to its gains last week. If it clears 360, it is likely to test 400.
Disclaimer: Everything I share is for educational and informational purposes only and it should not be considered financial advice. Read my full disclaimer here.
The post-election rally didn’t last long. Most of the gains were quickly reversed over the past week. The main exception to the rule has been anything related to crypto which added to its gains last week – COIN, IBIT, BITX, TSLA, MSTR, etc. Miners like MARA pulled back from their post-election highs but showed relative strength on Friday.
Some will say the reversal signifies that Trump’s victory was priced in. Others can opine that the market has already had two solid back-to-back years and it is normal to see some profit-taking in the face of some uncertainty that comes with the new administration. Both of those reasons could be true or wrong. The reasons are not that important. The rise in volatility is. Maybe we became too accustomed to the low-volatility rally that lifted most boats in the past two years. Maybe, we are entering a new market regime that will be a lot more volatile and the indexes will test their 50-day moving average more often. An environment in which compounding short-term swing is likely to work much better than position trading and buy-and-hold.
Semiconductors – the top leader of 2023 and the first half of 2024, have been under heavy pressure lately. SMH is not far from testing its 200-day moving average gain. NVDA reports earnings next week – an event that could save or break the sector. NVDA is not a sure bet anymore. Their biggest client, SMCI is about to be delisted from the Nasdaq stock exchange for non-compience. NVDA beat earnings estimates three months ago and still dropped 20%. The decline coincided with a weakness in the general market but was significant. It has managed to recover to near all-time highs since then but it’s anyone’s guess how the market will respond to its earnings. People tend to look for reasons to sell during choppy, corrective tapes.
Disclaimer: Everything I share is for educational and informational purposes only and it should not be considered financial advice. Read my full disclaimer here.