Happy Monday everyone.
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The momentum stocks had another great week. All news has been good news but I know that can’t last. I just don’t know when people will start caring.
I will get right to this weeks episode of Momentum Monday, You can watch/listen Ivanhoff and I tour the markets here and I have embedded the video on my blog:
Ivanhoff riffs on the momentum in his post:
Momentum stocks were on absolute fire last week and accelerated their ascent – software (FSLY, APPS,VRNS, MDB, WDAY,IGV, etc.), cybersecurity (HACK), anything cleantech (especially solar TAN and fuel cells like PLUG, BE, BLDP, FCEL), social distancing (PTON), e-commerce (CHWY, RVLV, ETSY, SHOP), e-sports and games (SKLZ, NGMS, PENN, CRSR, DKNG), online payments (SQ, PYPL, PAGS, STNE, ADYEY), real estate software (RDFN, Z, FTHM, EXPI, IPOB), select biotechs (TGTX, SGTX, BTAI, IONS, SAGE, RARE, ITCI), homebuilders (NAIL). Gold and silver also started to move as it became clear there is an agreement for a new stimulus. Bitcoin broke above 20k. Even some of the mega-cap like AMZN, AAPL, and MSFT woke up. The U.S. Dollar made new multi-year lows.
Many momentum stocks are looking extended for new entries here. I wouldn’t advise chasing stocks that are up multiple days in a row and 20-50% in the past 1-2 weeks. We certainly noticed an uptick in volatility last week – there were quite a few failed breakouts and reversals which means many people are anxious to take profits quickly. Capital is not leaving the market. It is just rotating very rapidly. There is still a good number of decent long setups and they might just continue to work into the end of the year. Until all major indexes’ 5-day EMAs are above their 20-day EMAs, we should be focused on long setups.
Howard here…I continue to be the old man in the room expecting the fun to end and the narrative to change.
I decided to have my friend Ben Hunt back on ‘Panic With Friends’ (here is his last visit) to discuss the ‘platform narrative’. Ben goes deep on my three favorite current topics – SPACS, software valuations and Bitcoin. Ben is the founder of Epsilon Theory a favorite read and subscription.
It’s a treat to have smart, thoughtful people like Ben on the podcast. He’s isn’t trying to spin a narrative, but genuinely wants to inform others about what’s going on and what they can do about it (One of my favorite Ben pieces is ‘Sheep Logic‘). Last time I had Ben on we talked about zero interest rates, writing and the politicizing of the stock market. This time around, Ben and I talked about his life as a publisher, media culture, the markets, the ‘mendacity’ of the world, crypto, SPACs, capital and what’s been going on with his company. This was a fun one to record. Enjoy!
Finally, I can tell you what the ‘bears’ are looking at and sharing…this thread from Sentiment Trader titled ‘The Most Confident Dumb Money In History‘. Have a scroll.
And…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.