Ivanhoff Capital

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The price action in the indexes last week was like Christmas lights – red and green days alternating. At the end of the week, dip buyers won again. The large-cap indexes closed near all-time hghs. The small-cap ETF – IWM, closed above its 50-day moving average.

The U.S. Dollar continues to pull back. Naturally, capital is not leaving the stock market; it is just rotating between sectors. Beaten down former momentum darlings in clean energy bounced. NFT stocks woke up. Homebuilders made another all-time high. Biotech is back in the game with quite a few constructive setups in the space – CRSP, MGNX, AGIO, NTLA, HZNP,  etc. The semiconductor ETF – SMH, held its 50-day moving average and now we see some intriguing setups there – AMAT, KLAC, ICHR, etc. Industrial metal stocks keep showing relative strength – steel (X, CLF), copper (FCX), aluminum (AA), lithium (ALB, LIT). Potash is also looking attractive – MOS, CF, SQM, etc. Tech stocks are also holding their ground – NET had a high-volume breakout, XM is working on a new base, ETSY is setting up, etc. 

Big week for earnings is ahead. Big Tech reports – AAPL, GOOGL, MSFT, AMZN, FB, TSLA. Also, V, MA, TXN, MCD, QCOM, UPS, SBUX, CAT, AMD, and hundreds of others. Both, the Nasdaq 100 and Russell 2000 are setting up for a potential breakout. I suspect that they will remain range-bound until the bulk of earnings is behind us.

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The charts in this video are powered by MarketSmith

The large-cap indexes continue to grind higher and make new all-time highs almost on a daily basis. SPY, QQQ, DIA have been so strong that many active investors wish they were passive indexers since mid-February. The small-cap ETF – Russell 2000, is lagging a bit but also acting constructively – consolidating in a tight range near 225 and setting up for a potential breakout. And yet, there’s something weird going on beneath the surface – there are very few high-quality long setups among high-beta stocks; most breakouts in that space have found very little follow through and some are under clear distribution. Is this type of price action sustainable? Yes and no. No one can really say how long it’ll last but the truth is that is not going to take much to scare people out and cause a quick 4-5% pullback. If such a pullback happens, it will be welcomed as a buying opportunity by many so it might not happen at all. As the saying goes, the markets will move in the direction that will surprise the biggest number of market participants.

The new earrings season is here. Over the next few weeks, we will see thousands of earnings reports. Most won’t matter but some will start big new trends. As a rule of thumb, markets tend to be choppy and range-bound during the bulk of earnings season, so I expect to see something of that fashion.

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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 digest gains through sector rotations. Small caps and the so-called “back-to-normal” stocks have led the market higher since the first Covid vaccine was approved last November. In the meantime, mega and large cap tech stocks have been lagging for the most part. This changed last week. Maybe it is the approaching new earnings season and the realization that no interest rates spike is going to change the fact that those stocks are highly efficient cash-generating machines with clearly sustainable competitive advantage. Rare assets rise during periods of rising inflation expectations: AAPL, AMZN, FB, GOOGL, MSFT, NVDA, NFLX.

MRNA and BNTX – the mRNA vaccine stocks have woken up. Both obviously have remarkable earnings and sales growth but for the past few months, their products have been considered generic – with no longer-term edge. Just a couple of vaccines among many other vaccines that are likely to get approved in the next year or so. With AstraZeneca vaccine having troubles getting people’s trust in Europe and Janssen getting some bad press in the U.S., Moderna and Pfizer/Biontech have become a desired brand – I don’t know if it is actually true but they are currently widely perceived as safer and if not safer, then at least much more effective than their competitors. This is starting to be reflected in their prices.

Obviously, semiconductor stocks are still the leaders – just look at the tight-range consolidation most of them are exhibiting after their big breakouts two weeks ago. They might need more time to digest but many are acting in a constructive manner – MU, TSEM, TSM, AMAT, HIMX, QRVO, SWKS, KLAC, KLIC, LRCX, 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.