Momentum Monday – Cloudy With A Chance of Cloudier

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Short and sweet today because the markets suck unless you own commodities and agriculture stocks and I don’t see any catalysts for growth stocks to stop going down as rates and inflation are unchecked to the upside.

I toured the market as always with Ivanhoff and here is this weeks show which you can watch/listen on YouTube. I have also embedded it below on my blog here:

Here are Ivanhoff’s comments:

The 10-year US Treasuries yield is not far from reaching 3%. Less than two years ago, it was 0.5%. It should not be a big surprise that most tech stocks have been under heavy pressure. The Nasdaq 100 (QQQ) fell to 340 last week. Its March lows are only 20-points away. If you think that it’s impossible to test them, keep in mind that the semiconductors ETF – SMH, just did exactly that.

The earnings season has just begun. Big Tech will report in the next three weeks. As always, some will show more resilience to the current driving economic forces and report better than expected results. This is why I believe that choppy, range-bound action is more likely than an accelerated selloff in tech.

The current leaders are still concentrated in the energy, metals, and agricultural space – oil, gas, coal, uranium, gold, steel, potash, etc. Most of them have started a new leg up in the past couple of weeks. Don’t forget that even momentum leaders need to pull back and consolidate occasionally. Don’t chase stocks that are up several days in a row because they don’t offer good risk-to-reward. If you have to endure a 10% pullback to make a 10% potential return, the setup is too sloppy.

There’s another theme that is starting to emerge again – travel stocks are showing relative strength. A few weeks ago Carnival Cruises (CCL) said they are seeing record bookings. Last week, Delta Airlines was very optimistic about booming demand despite higher fuel costs. As a result, other travel stocks are perking up – hotels Marriott (MAR) and Hilton (HLT) are near all-time highs. The stocks of AirBnB (ABNB) and car rental companies Hertz (HTZ) and Avis (CAR) are also looking constructively. People want to travel this year as much as possible no matter what and it is shown in the charts of the relative companies. We don’t know if this group of stocks can continue to push higher in the face of additional market weakness but their relative strength is something to pay attention to. They are likely to be among the leaders when the indexes bounce again.

Have a great week.