Ivanhoff Capital

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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.

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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.

The charts in this video are powered by MarketSmith

Neither Covid nor rising inflation or Fed’s plan of tapering is scaring investors off. The large-cap indexes – SPY and QQQ, hit new all-time highs. The small-cap Russell 2000 had one of its strongest weeks in 2021 and closed above its 50-day moving average. The stock market is hitting on all cylinders in the midst of what is supposed to be a seasonally weak period for stocks. I guess we should not be really surprised by all that strength and relentless dip-buying. Money supply has gone up 40% in the past two years alone which is the fastest pace of increase in U.S. financial history. There’s so much money in the system and so many new millionaires (56MM by the last count) that pictures of rocks are selling for millions of dollars as NFT digital art. The world has invented entirely new asset classes to speculate on.

Covid cases, hospitalizations, deaths, and restrictions are rising but it seems financial markets are looking past this threat and betting on a recovery six months or so from now. At least, this is how I read the recent price action in airlines, hotels, and department store stocks. Most of them took a sizable haircut during the summer and are now starting to stabilize and even look constructively. I am staying away from them for now but keeping a close eye on the development in the space. 

The negative correlation between tech and the so-called recovery stocks (mostly old-economy sectors like retail, financials, homebuilders, industrials) appears to be breaking. Both groups are now rising in unison. The software ETF- IGF closed at all-time highs. So did the semiconductor ETF – SMH. Financials and homebuilders are not too far behind.

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.