Ivanhoff Capital

MarketSurge powers the charts in this video.

Did you know that before last week, the small caps Russell 2000 index was flat year to date? This changed last week, as IWM had a massive rally. Inflation reports remain below estimates, improving the odds for one or more rate cuts this year. Lower rates are good news for companies with a lot of debt and no earnings. This is why laggards were among the top performers last week.

Keep in mind that historically the stock market pulls back after the first rate cut. Don’t be surprised to see a buy-the-rumor, sell-the-news scenario. This would mean a rally in anticipation of a potential rate cut/s and then a selloff after the Fed announces the first cut. This is just one way things can play out. The reasons behind it make sense – the Fed is considered too slow to move, so when they finally cut, it is usually because there’s undisputed proof that the economy has slowed down significantly. Being the contrarian and forward-looking beast the market is, I wouldn’t be surprised to see a selloff after the first cut is announced. There’s time until then. The next FOMC meeting is July 31. After that, Sept 18.

The new earnings season has just begun. As usual, financials rallied ahead of their earnings report and now are seeing lackluster reactions after the reports. I am more interested to see the reactions to tech earnings. NFLX, ASML, and TSM are among the first to report next week.

I recently published a few children’s books. Check them out if you have kids or friends who have kids: Investing for babies, Trading for babies, Meditation for babies. You can find my other trading books on Amazon here.

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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 new quarter started last week but not much has changed. 

Mega-cap stocks continue to outperform. META, GOOGL, MSFT, NFLX, AAPL, AMZN, and ARM made new all-time highs. Even laggards like TSLA and AMD had a big bounce. TSLA rallied from 180 to 250 in less than two weeks. AMD had a big range expansion last week and is now setting for an even bigger breakout if it can clear 175. You can bet that options players will be all over this week next week. 

Gold and silver woke up from their slumber and began the quarter with a strong rally. The pullback in the US dollar helped but is not the only reason.

The one notable market divergence from last week was the weakness in Bitcoin. It might be related to Mt. Gox’s distribution of $8.2 Billion worth of Bitcoin. It is expected that the receivers of the coins will sell them as they are up 85x compared to 10 years ago when the exchange collapsed. The market tends to anticipate such events and makes its moves ahead of them. Bitcoin dropped to the VWAP since its rally began in October of 2023 (to around 54k). The last time that VWAP was tested was in January 2024 and led to a 90% rally afterward. 

In the meantime, small caps remain relatively weak. They sold off when rates were rising. Now, they can’t rally when rates are falling. There’s no reason to be a hero and try to force trades where they don’t exist and where there’s no momentum.

The new earnings season starts next week. As usual, financials are the first group to report.

I recently published a few children’s books. Check them out if you have kids or friends who have kids: Investing for babies, Trading for babies, Meditation for babies. You can find my other trading books on Amazon here.

Try my subscription service which includes a private X feed with option 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. How my ideas/alerts did.

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.

Bull markets correct through sector rotations. This is exactly what we saw last week. While the semiconductor leaders pulled back to consolidate recent gains, other sectors bounced. 

It has become typical for financials to rally ahead of earnings and then sell off after the reports. Can we see a repeat?

Software and Internet stocks had a big week led by Google, Amazon, Meta, and Datadog.

The PCE inflation came within estimates last Friday – 2.6% year over year. Small caps gapped up on the news but then tapered. They continue to underperform significantly. Unless interest rates really crash, this is not likely to change.

There are many eyes on biotech. If XBI manages to go above 95, we might see another rotation. 

Overall, it has been a choppy tape to trade lately. Many of the breakouts would last one, maybe two days, and then they would fizzle and reverse. There have been great opportunities but you had to be fast to take advantage of them because they didn’t last long. 

I recently published a few children’s books. Check them out if you have kids or friends who have kids: Investing for babies, Trading for babies, Meditation for babies. You can find my other trading books on Amazon here.

Try my subscription service which includes a private X feed with option 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. How my ideas/alerts did.

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