Ivanhoff Capital

MarketSurge powers the charts in this video.

The tape made a mockery of the so-called efficient market theory again. A stock left for dead, belonging to a bankrupt company went from 4 cents to 4 dollars within a week after a random Twitter account posted a drawing made by a five-year-old on X. Granted, that stock had a small 37 million shares float and 97% of it was short. The perfect recipe for a short squeeze. This is what attracts people to financial markets – the potential and opportunities are endless and no other work in the world compares.

The short squeezes and volatility we saw last week might be an indication of what’s to come in the following few months or they might be a warning sign for a rug pull just around the corner. The market tends to surprise the majority and go against mainstream expectations. 

While price action has become a bit frothy as of late, we remain in a strong bull market with various sectors participating. Energy has been on fire lately. Uranium has been the clear leader in the past few months, URA broke out from a long base last week. Coal has been in a pullback mode since March. Crude oil has made lower highs since April – let’s see if this will change next week. Solar has been among the worst-hit sectors since 2022. FSLR was a ray of shine last week as it continues to make higher lows and higher highs.

Nvidia reports earnings next week, on May 22nd. All eyes are on them. Expectations are high and it is not an accident that the stock tried to rally ahead of earnings. I have no idea how the market will react. My thinking is that any sizable gap (more than 4%) will be faded – upside or downside.

We are entering towards the end of this earnings season. The last to report are retailers, so it’ll be curious to see what the state of the consumer is and how the market reacts there.

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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.

Most stocks are still in an uptrend. You still need to play the market smart. When stocks are up a few days in a row and then we have an upside gap, the odds are that this will be used for profit-taking and you might get the proverbial rug-pull if you chase. This is what we saw on Friday morning with the indexes. We saw a similar behavior in many popular stocks that gapped up after strong earnings this quarter – GOOGL, MSFT, to mention just a few.

In the meantime, the dips are getting bought. We are back to the “what’s bad for the economy might be good for the stock market: environment. It seems we have been in that same environment for a long time. It’s almost as if the market likes to play a contrarian role. Unemployment claims came above estimates last week. We saw an initial selloff in the pre-market which was quickly gobbled up to new highs. 

We are in a market of stocks environment. There’s something for both the bulls and the bears. 

Restaurant stocks are having their best period in a long time. One would think that rising minimum wage will impact their profitability but their earnings continue to grow. Look at SG, CMG, CAVA, TXRH, DPZ, WING. They are all extended right now if you are looking for a fresh swing.

After a brief consolidation, gold and gold miners broke out again. Other metal stocks are also looking appealing – FCX and TECK, for example, have built humongous bases.

The semiconductor space remains among the leaders. The biggest chip maker in the world, TSMC reported a 60% year-over-year and 20% month-over-month increase in sales for April. NVDA, QCOM, AVGO, and MU are among the constructively-looking setups in the space. 

Try my subscription service which includes a private Twitter 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.

I published a new trading book recently (2023). Check it out on Amazon.

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.

By now it should be clear to everyone that the Fed doesn’t have a specific plan for when they will cut rates this year. Powell keeps saying they are taking the data one month at a time and adjusting their view. This is why stocks rallied when the jobs number on Friday came well below estimates. A weakening jobs market improves the prospects for an earlier rate cut.

We are already starting to see some easing. The pace of the Fed’s balance sheet reduction is slowing down. The Treasury plans to start buying $2Bn worth of Treasuries weekly. This is why the dips in the stock market are likely to continue to be bought.

We are still in the midst of earnings season. Two trends stood out so far – upside gaps often faded while downside gaps followed through. These are both bearish reactions. And yet, the indexes are holding relatively well. SPY, QQQ, and IWM have made a couple of higher lows and higher highs in the past two weeks. Small caps are firmly back above their YTD VWAP. SPY and QQQ rallied to their 50-day moving average. Going above their Friday highs will likely lead to FOMO chasing as many market participants are underinvested. Losing Friday’s low will likely lead to a quick gap close. 

In the meantime, Chinese stocks had a second strong week in a row. Sentiment towards Chinese names has been extremely bearish for a long time. For me, they remain short-term trades and not investments. I played this move via PDD Calls, which went from 1.30 to 10. I sold early but still captured a decent size of the move.

We are in a market of stocks environment. The popular, well-known stocks have had some troubles this earnings season. They either gap up and then quickly close their gaps or gap down. The earnings winners this season are lesser-known names that are not widely known by institutions – HWM, PI, TMDX, ASPN, CVNA, SNAP, PRCT, TNDM, PRDO, CRS, ENVX, TWST, LIVN, SFM, etc.

Try my subscription service which includes a private Twitter 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.

I published a new trading book recently (2023). Check it out on Amazon.

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