Ivanhoff Capital

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Last week was the closest I’ve seen to a “market of stocks” environment in a long time. While the S&P 500 and the Nasdaq 100 pulled back on large volume, there were plenty of current and former momentum stocks that pushed higher.

Seasonally, the third week of September (next week) is the weakest in the entire year. It should not be a big surprise if we see more turbulence. It would be normal if QQQ tests its August highs near 370 which coincides with its 50-day moving average. 

The S&P 500 hasn’t spent more than one day below its 50-day moving average so far this year. This might be about to change next week. From a big picture perspective, there is no reason to get overly bearish yet. If you look at a chart of SPY, you will notice that every swing low has been above the previous swing low while every swing high has been above the previous swing high. This is the definition of an uptrend. SPY is still in one until it closed below 436.

It is interesting to see so many FANG stocks under pressure – AAPL, GOOGL, FB, NVDA, etc. I don’t know if it’s the market worrying about new anti-competitive practices in Big tech or simply people freeing up some cash to enter smaller-cap, more speculative growth names. If it’s the latter, we should see the small-cap index Russell 2k (IWM) and growth/momentum ETFs like ARKK and FFTY start to outperform. If all of a sudden there’s a  spike in correlations, meaning small-cap IWM breaks below 220 and high-momentum stocks start to drop on big volume, then we might be in for a bigger correction. 

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The charts in this video are powered by MarketSmith

September came and volatility has picked up with it.  Last week we saw quite a few breakouts reversing and good setups breaking apart. It’s about time some would say. We have become so accustomed to the slow grind higher than even a 1% down day seems like a big selloff. It’s all about perceptions. Pullbacks are a normal and even desired part of the cycle because they make every trend more sustainable and provide much better risk/reward entry points. We should not be afraid of them. We should welcome them. 

The S&P 500 seems on its way to test its 50-day moving average for the 8th time this year. Guess what happened in the previous occasions. Just when most became comfortable with the short side, SPY bounced fiercely and made new all-time highs. This behavior won’t continue forever but as of right now there’s little reason to believe that dip buyers won’t show up again. QQQ is still above its 20-day moving average. The semiconductor ETF – SMH made new all-time highs on Friday, albeit it finished weak near its lows of the day. The industrial metal ETF – XME, also tried to break out but ended near the lows of its daily range. Most importantly, we continue to see a strong market reaction to earnings reports. AFRM, LULU, MDB, ICUI, RH are just some of the big breakout examples from the past two weeks. The market sentiment is still bullish and dips are likely to remain buying opportunities. With that in mind, I am holding a large cash position and will focus on quick short-term trades for the time being.

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

Most of last week’s price action can be summarized in one sentence: tech stocks continue to outperform the rest of the market while cryptos are outperforming the tech sector. 

Semis are hovering near all-time highs – SMH, NVDA.  AMD, AMAT, and LRCX are setting up for a potential breakout. 

Software stocks have been extremely strong – not only cybersecurity but also application and infrastructure software names – IGV, SKYY, ZS, OKTA, S, NET, MDB, WDAY, TEAM, U, SNOW, CRWD, BILL, SHOP, LSPD, etc.

The payment stocks – PYPL and SQ are both working on new bases. PYPL seems ready to close its earnings gap and push towards 300. SQ is setting up for a breakout near 275.

Covid-related stocks are perking up again. The mRNA vaccines – MRNA and BNTX finished on a high note last Friday. The testing stocks like DGX, TMO, HOLX, QDEL, have been slowly climbing as well. Health pass stock YOU is also setting up for a potential bounce.

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.