Ivanhoff Capital

MarketSurge powers the charts in this video.

The indexes barely sneezed last week, and the high-momentum flyers from quantum computing, nuclear, space, drones, rare earth metals, robots, crypto, and AI pulled back 10-40%. The price action in momentum stocks is often a precursor of what might happen in the general market. Timing it is the tricky part as sector rotations could continue to keep the indexes near their all-time highs. 

The market is currently in a range-bound, choppy mode. In such an environment, breakouts don’t work for more than a day or two and often lead to a reversal. Breakdowns don’t last too long either, as the dips near support levels are getting bought. The market is digesting its recent gains and looking for new catalysts. They are right around the corner.

The new earnings season has just begun. Morgan Stanley crushed estimates and gapped up. Then, lending troubles in select regional banks brought down the entire financial sector, and Morgan Stanley gave back its gap. American Express also reported strong results, gapped up, and finished strongly.

It is a scalper’s tape for nimble traders for the time being, where trading less and focusing on earnings movers makes sense until the next clear swing move. 

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MarketSurge powers the charts in this video.

We are at the stage of the bull market cycle where some assets have gone parabolic – gold, silver, rare earth metals, quantum computing, and nuclear stocks are just some of the examples. I am not saying they can’t go any higher. On the contrary, a good story can carry a stock much higher than most people can imagine. At the same time, volatility is picking up. By volatility, I mean choppiness, reversals, and wider daily and weekly price ranges. Last Friday could be just another shake-out or a warning shot of something more to come. Everyone with some experience in the market knows that at this point, many momentum stocks are playing a game of musical chairs, but no one knows how long it will last; therefore, the most rational thing to do is to keep playing – not recklessly. If you chase extended stocks, use too much leverage, and take too big positions, you are guaranteed that you will be shaken out. Momentum tapes like these require a tactical approach and strict risk management.

Try my subscription service, which 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.

The bull market remains intact. We continue to see breakouts that are following through – DDOG and SNOW are good recent examples from last week. Buying near support is also working well – for example, look at the breakout attempt in ETSY last week, which was followed by a full retracement the next day and then a big bounce again. The pullbacks to major moving averages are also working – take a look at SYM for example, which tested its 20-day moving average a week or so ago and then had a 30% bounce.

Undoubtedly, there’s an element of froth too. The dips in the speculative high-momentum areas are getting bought frequently and eagerly – quantum computing, nuclear energy, AI data center infrastructure, robots, crypto. The one big mistake one can make in a bull market is to chase blindly extended stocks. Such an approach guarantees that you will get stopped on a normal shakeout. It makes a lot more sense to be patient with entries and wait for areas of potential support. Buying range contractions near support allows for small risk entries – if we are wrong, we lose the amount we risked; if we are right, the return is multiples of our initial risk.

Any corrections we have seen in the past few months have been in the form of sector rotation. Last week, we saw small caps outperforming due to declining interest rates. In the meantime, most tech megacap stocks were under pressure. Some are pointing to weakening market breadth and increased volatility in select leaders like PLTR and META, but this is hardly a reason to turn bearish. More cautious – yes, but we are still in a bull market with plenty of mostly bullish catalysts.

Try my subscription service, which 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.