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Momentum Monday – The Two Financial Systems and Rotation Is My Friend

 

Momentum Monday – The Two Financial Systems and Rotation Is My Friend

Courtesy of Howard Lindzon

Good Monday morning everyone.

The theme of today is financials. Everything financial seems to be working. Goldman Sachs is at all-time highs. Even Wells FraudGo is working.

The government is trying to hard right now to link the crypto digital world and physical financial world so the government can get paid. At some terrible level it will work but from the price action it looks like there will be two very separate financial economies.

Here is this week’s Momentum Monday which I do with Ivanhoff each and every week to prepare us for the week ahead and express some more of my thoughts on the financials. Of course we chatted about Robinhood. Ivanhoff dives into the continued strength from rotations. I have embedded the video below if you come to the blog:

Here are Ivanhoff’s quick thoughts:

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.

Other Monday reads to help me get ready for the week in markets…

The Stocktwits momentum 25 lists.

Charlie’s 7 Chart Sunday

Nikita’s weekly SPAC report.

I am headed back to Phoenix today to get back in the studio and tape 10 new ‘Panic With Friends’ episodes with the crew (Knut) who has been in Norway all summer sipping champagne while sunbathing in the fjords.

Have a great week.

As a reminder, Marketsmith (by Investor’s Business Daily) is now a sponsor of the weekly show. All the charts you have been seeing in the videos and will continue to see are from Marketsmith. 


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