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Monday, May 27, 2024

Momentum Monday – Apple Helps The Markets Bounce

Momentum Monday – Apple Helps The Markets Bounce

Courtesy of Howard Lindzon

Welcome back to Momentum Monday!

In today’s episode of Momentum Monday, Ivanhoff and I discuss the following:  

  • Last week in review

  • Big Tech

  • Howard’s proxy for the market – Google, Goldman and Gold

  • China Internet Stocks Breaking Out

  • Speculation is alive

  • What’s working – Many Small and Mid Caps

Reminder: Riley on my team created the ‘Trends With No Friends’ email which is my go to list every day to track what is working and what is not. You can get it for free here.

In This Episode, We Cover:

  • Intro (0:00)
  • Week in review (1:20)
  • Big Tech (3:20)
  • Howard’s proxy for the market (7:40)
  • China (8:30)
  • Speculation is alive (12:50)
  • What’s working (16:00)

Here are Ivanhoff’s thoughts:

By now it should be clear to everyone that the Fed doesn’t have a specific plan for when they will cut rates this year. Powell keeps saying they are taking the data one month at a time and adjusting their view. This is why stocks rallied when the jobs number on Friday came well below estimates. A weakening jobs market improves the prospects for an earlier rate cut.

We are already starting to see some easing. The pace of the Fed’s balance sheet reduction is slowing down. The Treasury plans to start buying $2Bn worth of Treasuries weekly. This is why the dips in the stock market are likely to continue to be bought.

We are still in the midst of earnings season. Two trends stood out so far – upside gaps often faded while downside gaps followed through. These are both bearish reactions. And yet, the indexes are holding relatively well. SPY, QQQ, and IWM have made a couple of higher lows and higher highs in the past two weeks. Small caps are firmly back above their YTD VWAP. SPY and QQQ rallied to their 50-day moving average. Going above their Friday highs will likely lead to FOMO chasing as many market participants are underinvested. Losing Friday’s low will likely lead to a quick gap close. 

In the meantime, Chinese stocks had a second strong week in a row. Sentiment towards Chinese names has been extremely bearish for a long time. For me, they remain short-term trades and not investments. I played this move via PDD Calls, which went from 1.30 to 10. I sold early but still captured a decent size of the move.

We are in a market of stocks environment. The popular, well-known stocks have had some troubles this earnings season. They either gap up and then quickly close their gaps or gap down. The earnings winners this season are lesser-known names that are not widely known by institutions – HWM, PI, TMDX, ASPN, CVNA, SNAP, PRCT, TNDM, PRDO, CRS, ENVX, TWST, LIVN, SFM, etc.

And here are the charts discussed:

 

PS – Here is the latest ‘Trends With No Friends’ which covers ‘new highs and new lows’ and measures the followers (friends) on Stocktwits versus the prices. Subscribe here.

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