Category: Uncategorized

The charts in this video are powered by MarketSmith

The main theme remains fear of tapering and rising interest rates which is pressuring richly-valued stocks – software, Internet retail, biotech. Many are already down 30-50% in the past 2-3 months alone. Can they go down further? Absolutely. It’s normal for momentum stocks to give back 50% to 90% of their gains. Many never recover from such drawdowns. The likes of AMZN, AAPL, NVDA, TSLA, GOOGL that keep climbing higher for many years are the exception; not the rule. 

In the meantime, anything commodity-related is showing relative strength. Many oil & gas stocks are up 20%+ in the past couple of weeks. The metals and miners ETF – XME, is hovering near all-time highs. 

Outside of the basic material space, semiconductors, and carmakers have held the best. The biggest chip producer in the world, TSM broke out to new all-time highs lifting the entire semiconductor equipment space with it – AMAT, LRCX, ICHR, KLAC, ASML, etc. 

The S&P 500 and the Nasdaq 100 are below their 50-day moving average while the small-cap Russell 2k is below its 200-day moving average and close to breaking down from a very long range. The choppiness level in the indexes has increased significantly. We are seeing bigger and more frequent gaps that often get faded and much wider daily ranges. It’s a challenging tape for swing trades but an excellent one for nimble, intraday ideas on both the long and short side.

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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 first week of the new year was all about the market discounting rising inflation expectations. Interest rates spiked and with them, many financials, oil, basic materials, metals, and industrial stocks galloped higher -. In the meantime, most of the so-called new-economy sectors were under notable pressure – software, semis, biotech.

The Nasdaq 100 lost 4.5% in the first week of 2022. The small-caps Russell 2k lowest almost 3%, the better diversified large-cap S&P 500 shed 1.9%. There are obvious distribution signs on the tape. Big intraday sell-offs are followed by shallow bounces. The short-term trend is lower. The only bullish argument in this tape is the sector rotation into old-economy sectors. Rotational corrections rarely lead to big pullbacks for too long. I am not saying to blindly buy the dip here. That would be irresponsible. I am saying to have an open mind that the new earnings season that starts in less than a couple of weeks might lead to another bounce. For us, it doesn’t matter too much. We will find good risk/reward trades in any market environment.  Even last week, when most of the market was under pressure, there were plenty of opportunities on the long side every single day.

Try my 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 40 list of market leaders, and much more. See some of the recent testimonials.

PERFORMANCE

Here’s a Google spreadsheet tracking all closed options 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

Happy New Year! Let’s make it a great one!

I am not going to make any specific predictions. What I am sure of is that the year will be full of surprises and that the crypto markets will continue to be way more volatile than the stocks markets. More volatility means better opportunities for those who know how to manage risk and more headaches for those who don’t. There will be thousands of three-to-five-day 10-20% moves and they will all start the same way.

The last few days and the first two three weeks of every year stand out with big mean reversions. Some of the worst-performing stocks and sectors suddenly wake up and attempt a powerful rally from the bottom of the ocean. We caught a glimpse of this last week. Chinese stocks, which were some of the dogs of 2021, had a big 5-10% jump across the board on Thursday.  More often than not, these end up being “dead-cat” bounces that fizzle quickly but while they last, they can deliver for the prudent short-term speculator.

At any other time of the year, we are better off looking and trading momentum stocks that are close to their 52-week highs. They allow to trade with the established trend (which means trading with an edge) and offer much better risk-to-reward opportunities. But in this brief window at the beginning of the year, the pumpkins can become Teslas and the rockets from the past year can take a break.

Try my 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 40 list of market leaders, and much more. See some of the recent testimonials.

PERFORMANCE

Here’s a Google spreadsheet tracking all closed options 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.