Ivanhoff Capital

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QQQ started last week strong and accelerated its ascent, only to be shaken by a 10% correction in two days. No one knows if we have already seen the high for 2020 but after the selloff, the odds are that chasing is not going to be as mindless as before. Many of the momentum high flyers have reached absurd valuations. Some of them will have 50-80% corrections. OSTK, for example, is already down 50% from its highs. Others will limit their drop to 10-20% and just form new bases but they will need time to do so.  

The truth is that stocks still don’t have an alternative in a perpetual zero interest rate world, constant fiscal and monetary stimulus, and relatively low supply of new stocks. The capital has to go somewhere. While tech paused last week, we saw many lagging industries perking up – banks, airlines, cruise ships, hotels, retail outlets. Some of them are looking constructive and might try to break out next week.

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The charts in this video are powered by MarketSmith

Liquidity, FOMO, weak U.S. Dollar and Treasuries, career risk for money managers continue to drive stock prices higher. The large-cap indexes, SPY and QQQ have gone parabolic. In the meantime, the small-cap Russell 2000 has consolidated in a tight range and it looks primed for a breakout.

This bull market continues to correct the excesses through sector rotation – when one sector pulls back, another step up and leads higher. Many of the stocks that sky-rocketed during the COVID crises started to pull back while the ones that were hurt the most are perking up – restaurants, casinos, cruise ships, retailers, etc. The likely reasons behind that rotation – The FDA approved a 15-minute COVID test that costs $5 and several vaccines are in their trial stage and it is very likely they get approved.

Try my new 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 50 list of market leaders, and much more. See some of the recent testimonials.

PERFORMANCE

Here’s a Google spreadsheet tracking all closed option 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 S&P 500 hit new all-time highs and it is now up 5% for the year. The Nasdaq 100 accelerated lifted by the big five tech stocks that now account for 50% of it – AAPL, AMZN, GOOGL, MSFT, FB. 

Stock splits seem to be moving prices again. A Deja Vu from the late 90s. In theory, a stock split should have zero impact on a price. In practice, it has done crazy miracles. Apple announced a 4 to 1 stock split, then the company hit a $2 Trillion valuation and kept going. Tesla went up almost 50% after announcing a 5 to 1 split.

In the meantime, the small-cap ETF Russell 2000 tested its 20-day moving average and market breadth hasn’t looked this bad in a while. Will it matter this time? In a strong bull market, such divergences can be resolved through sector rotation. The small-caps can bounce next week and everything will be forgotten. We saw it numerous times in the past few months. Just when a sector was looking ready to roll over, it woke up and jumped higher. Software and biotech are the most recent examples. 

Try my new 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 50 list of market leaders, and much more. See some of the recent testimonials.

PERFORMANCE

Here’s a Google spreadsheet tracking all closed option 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.