Ivanhoff Capital

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The S&P500 and the Nasdaq 100 had a  minor 2-3% pullback but finished the week on a high note. Inflation-sensitive stocks fell because of the latest Fed minutes revealing discussions about tapering later in the year. The reopening stocks were under pressure because of the rising Covid cases around the world. In the end, the market was saved by another sector rotation – this time in tech, especially large-cap tech stocks. 

One would say that this is the same tape as in the middle of last year when anything tech outperformed in the face of lockdowns and restrictions, especially considering the recent rally in grocery stores and discount stores like BJ, COST, KR, ACI. The difference this time is that department store stocks were also strong – M, JWN, KSS.

In the meantime, many cryptocurrencies jumped higher – boosting crypto-related stocks like MARA, RIOT, SI, MSTR, COIN. At some point last week, I thought that the speculative frenzy in crypto will siphon capital from software stocks but this didn’t happen. Most of them held well and are looking higher – IGV, MDB, ZS, etc.

Overall, the decline last week has built some good risk/reward setups in strong stocks that held above their 20-day moving average. We picked up some last Thursday and Friday and I share below others to consider. 

I am leaning bullish for the first half of next week but I also don’t think it’s a time to be overly aggressive. Currently,  the bearish scenario involves the major indexes (IWM, SPY, QQQ) losing their lows from last Friday. The small-cap ETF – IWM, is still looking the most vulnerable –  making lower highs below its  50-day moving average.  If it loses  211, it can drop quickly to 205.

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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

The price action is still dominated by frequent and fast sector rotations from inflation to tech and high-yield names and back. 

Housing names had a strong week – we bought NAIL at 88, sold some near 92, holding the rest for a potential move to 100.

Industrial metals showed notable relative strength with breakouts in steel, copper, aluminum names. We capitalized on that with X and FCX calls. Some of them are still looking attractive going into next week but if declining interest rates can be a headwind.  

Falling interest rates are positive for richly valued high-growth stocks – typically software and semis. We saw a strong earnings reaction in many software stocks this quarter. U and PLTR broke out. SNOW followed. PLTR is looking promising for the next week if it can clear its highs from Friday. The same can be said about TEAM and ZI.

Small caps are still weak and that won’t change until IWM goes above its 50-day moving average. Oil, clean energy, and reopening stocks like airlines and hotels. It seems the market is still worried about Covid.

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

Bull markets correct thorough sector rotations. While one group of sectors is pulling back, another rises until the roles reverse. This has been the market pattern for most of this year so far. When the market was worried about inflation, the small caps went up while tech pulled back. When the market was worried about Covid and deflation, capital went into tech stocks while small caps were under pressure. Last week, we saw a little bit of both. First tech and other Covid-related stocks rallied. Then, later in the week, interest rates perked up boosting financials and industrial metals.

In the meantime, crypto-trading is hot again. Ethereum has rallied 75% in three weeks spurring speculations in smaller cryptocurrencies and crypto-related stocks like MSTR, SI, MARA, RIOT.

Gene editing stocks have shown notable relative strength as of late – EDIT, NTLA, CRSP, FATE, BEAM.

Market breadth has been lacking with more names selling off than rallying. This can change if the small-cap ETF – Russell 2k rallies above its 50-day moving average near 225. It’s actually setting up. If financials continue their rally, IWM is likely to break out. 

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.