Ivanhoff Capital

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For a brief moment last week, I thought that the meteoric surge of the so-called meme stocks like AMC, GME, BB, BBBY, DDS, etc. will “break” the market. The last time we saw similar short squeezes in late January of this year, the main indexes had a swift 4-5% pullback. They have held a lot better this time. The QQQ bounced near its 20-day EMA. SPY is close to new all-time highs. Small caps (IWM) are acting constructively. 

We are back in the phase where bad news for the economy is good news for the stock market because it means that the Fed’s injections are not going away. The stock averages had a decent rally last Friday on the back of weaker than expected employment numbers. 

Crude oil and oil stocks had one of their best weeks in years. Major breakouts in the entire space. The oil and gas exploration and production ETF  – XOP, went up 8%.

Steel stocks are holding well and digesting recent gains: CLF, X, STLD, NUE, SID

Car makers are reliving a renaissance. The push towards electric vehicles, the chip shortage, and the change in supply/demand dynamics because of COVID, have been a boon for the shares of Ford, GM, Toyota, and many others. So many new 52-week highs in the space. Chinese EV stocks are also waking up – NIO, LI, etc.

It’s not just inflation-related sectors that are perking up. Tech has stabilized and we are starting to see the emergence of appealing setups. Quite a few semiconductor stocks are setting up for potential breakouts: SMH, AMAT, LRCX, TSM, XLNX, HIMX, UCTT, etc.

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The charts in this video are powered by MarketSmith

The S&P 500 is consolidating in a tight range near its all-time highs. The Nasdaq 100 is not too far behind. The small-cap index, Russell 2000 is back above its 50-day moving average. In other words, the market is hitting on all cylinders. For the most part, everything is rising. This is a notable change of pace compared to the last two months which were characterized by frequent sector rotations – when basic material and financial stocks went up, tech suffered, and vice versa. The one thing that has remained the same is the short-term nature of most moves. We continue to see a lot of intraday fading. It seems institutions are still not interested in chasing breakouts but they eagerly scoop up pullbacks. 

The most shorted stocks were the big gainers of in the past week or so. The so-called meme stocks that went crazy in late January, had a second round. Some of them even exceeded their January levels. AMC, for example, went from $10 to $35 in two weeks. All other meme runners were also on fire – GME, DDD, SPCE, FUBO, etc. 

The U.S. Dollar’s weakness is reincarnating interest in emerging market stocks. Brazil and other Latin American ETFs had major breakouts last week. Quite a few Chinese tech, biotech, and financial stocks are perking up and setting up. There’s notable strength in other areas of the market as well – industrial metals, gold, silver, oil, semis, medical devices, cannabis, even some software stocks are trying to push higher.

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

The main stock indexes – S&P 500, Nasdaq 1000, Russell 2k finished last week where they started. In between, they had a hiccup and several mini sector rotations. 

Many of the best-performing stocks from 2020 have been major laggards in 2021 – solar, EVs, SPACs, software, etc. Those same 2021 laggards finally woke up last week and started to perk up. The most shorted stocks shone the brightest which is a sign of returning risk appetite. Curiously, it coincided with a rout in the crypto space. It’ll be interesting to see if this development will continue. In the meantime, many of the leaders of 2021 – homebuilders, metals (copper, steel, aluminum, gold, silver, etc.), retailers, financial, oil stocks pulled back, mostly to their rising 20 and 50-day moving averages.

To conclude, last week was a mean-reversion week and the choppy range-bound action is still dominating. One positive development is the emerging markets in several growth stocks like RBLX, UPST, PATH. The list is not long but at least it is not non-existent. The tech sector has stabilized and we are starting to see some positive consolidations in the space – FB, GOOGL, AMAT, ASML, NVDA, etc.

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.