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Thursday, May 30, 2024

Momentum Monday – Bear Market Price Action and Big Week of Earnings

Momentum Monday – Bear Market Price Action and Big Week of Earnings

Courtesy of Howard Lindzon

Good morning..

As always, each Monday Ivanhoff and I tour the markets looking for momentum. You can watch this weeks episode right here on YouTube. It is easy to subscribe so please do and every Sunday you will get an alert when we post the show. Below we list the chapters so you can click ahead to the different parts…

 

Chapters:

  • Intro (0:00)
  • Increasing Selling/Distribution (0:28)
  • Unprofitable companies (1:30)
  • QQQ & yields (4:00)
  • Momentum (7:00)
  • Bitcoin & Gold (10:28)
  • Earnings (13:30)
  • The next bull market (15:28)

Riley’s Corner – Price and Popularity:

Here’s Riley’s screen that tracks new 52-week highs and lows sorted by the total followers on Stocktwits. For those unfamiliar, here’s the gist, 

In uptrending markets the least followed stocks with the highest relative strength are most interesting to me.

In downtrending markets, the most followed stocks with the weakest price relative strength are most interesting to me.

Riley shared a few words on this week’s results…

Some notable names,

Moderna ($MRNA) is the New Low Standout of the Week. The mRNA vaccine maker moved -18.21% and closed at its lowest price since Nov. 2020. $MRNA has 103,110 followers on Stocktwits, up 103 since 10/16/2023.

ChargePoint ($CHPT) is a notable New Low. The EV charging network tumbled -13.66% and closed at an all-time low. If the stock drops below $2.77 it will be ineligible for our lists due to a market cap below $1B.

Last week marked ChargePoints 7th consecutive negative week. $CHPT has 58,776 followers on Stocktwits, up 159 since 10/5/2023.

VinFast Auto ($VFS) is a Notable New Low. The Vietnamese EV collapsed -32.58% to an all-time low. The $12.5B company is down -93.5% from its Aug. 28th all-time high. $VFS has 5,532 followers on Stocktwits, up 153 since 10/3/2023.

Liberty Energy ($LRBT) is the New High Standout of the Week. $LBRT leapt 9.80% following its Q3 earnings report. $LBRT has 700 followers on Stocktwits, up 10 since 10/16/2023.

Click here for the full weekend review.

Here are Ivanhoff’s thoughts:

The indexes are still in a pattern of lower highs and lower lows or in other words a downtrend. Until that changes, any talks about positive seasonality are fruitless. The mere fact that stocks are correcting despite bullish seasonality should get your antennas up. There’s something rotten in this market. It tried to rally on October 6th; ran for a few days and just like any other rally since August, it was met with overwhelming supply and sold off again.

I am not sure if the market is still worrying about inflation but the 10-year yield tagged 5% last week. The jump in rates might be a reflection of a bigger bond supply to fund the ever-expanding deficit and worries about the price of oil if the Middle East conflict escalates. The net effect is the same nevertheless. Interest rates are like gravity for stocks.

There are no growth, momentum stocks left to hide in. Anything that held relatively well up until recently, was taken out on a stretcher after TSLA missed earnings estimates. What about GOOGL, META, and MSFT some might ask? I don’t consider them high-momentum, high-growth stocks. They are slower movers and more of a cash-cow play. When cash pays 5% and stocks are falling, people have an easy alternative.

Earnings season has begun. So far, the reactions have been mostly bearish. Regardless of beating or missing estimates, most stocks have been selling off post-earnings. NFLX was a minor exception. The expectations there were too low as the stock was crashing ahead of its report. It gapped near its declining 50dma, where it is trying to hold and build a new base. Tesla missed estimates and it was completely crushed. Next on the deck are Google, Microsoft, Amazon, and Meta. If some of them don’t really surprise to the upside, the indexes are in trouble.

Until next 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. They are offering my readers a three week trial for $19.95. Click this link if you would like to try it out.

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