Momentum Monday – Seeds and 17 Sigma

Good Monday morning everyone.

Monday’s mean ‘Momentum Monday’ and while it has not been fun to be ‘Howie’ in a market that hates growth since December, the show must go on. Also, being Howie is relative and my heart goes out to the people of Ukraine suffering while I surf the internet. I am a fortunate man.

This week’s tour of the markets like always is sponsored by my friends at Marketsmith. You can watch/listen to the show right here on Youtube. I have embedded it below here on the blog:

For me, the cash sidelines for 30-60 percent of my stock exposure feels about right (I will aggressively swing trade once in a while). I am happier to pay up for ‘growth’ stocks when software/technology companies start trending again.

Any extra market time the last month has gone into watching the stocks on the Stocktwits momentum 25 lists. They have been bursting with energy, metals and financial stocks for months.

Ivanhoff and the rest of the swing traders moved to these as did investors and traders that follow price momentum.

JC has a great chart that sums up the strength right now in energy over tech:

In other relative stock performance ‘important ‘news’…the equal weighted S&P Index is outperforming good ol’ FAANG stocks:

Here are Ivanhoff’s thoughts:

The main indexes tested and even went below their January lows, only to stage a major bounce towards the end of the week. Given the sentiment and economic backdrop, it’s probably just an oversold bounce within a bear market. And yet, it’s anyone’s guess is how long it’ll last. The S&P 500 testing its declining 20-day moving average or even 450 is not out of a question.

Metals stocks have been notably the strongest sector, probably due to war-related sanctions. XME is at 10-year highs. Steel, aluminum, copper stocks are busting loose.

Oil stocks are also holding well and are setting up for potential breakouts – GUSH, ERX, AR, DVN, TRGP, FANG, MUR, SU, etc.

It’s good to see stocks outside of the commodity space starting to break out and set up – SEAS, LNPH, DOCS, etc.

It’s still a headline-driven choppy market that is capable of gapping up or down 2% on any given day. This environment requires one to be nimble, open-minded, and willing to trade both sides of the market.

Last but not least, Charlie has an excellent 7 chart Sunday with some Russia charts that put into perspective the immediate financial mess.

Have a great week.

Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. For full disclosures, click here. 

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. Click this link if you would like to try it out.