Momentum Monday – A Little Froth Is Fun

Happy Monday everyone.

The markets are closed today.

Ivanhoff and I still put together our Momentum Monday episode. You can watch/listen here.

As I mentioned in the title of the post, there are a few signs of froth.

First Tesla shot too $1,000. This week they were smart to use the run up in price to raise $2 billion in a secondary offering. The stock held very well.

This week it was a SPAC called $SPCE (Virgin Galactic Holdings) that literally went to the moon. Here is a wikipedia definition of a SPAC.

Is space the new cloud?

Here is Ivanhoff’s quick take of this continuing relentless rally:

There is so much liquidity in the system that everything is rising – U.S. stocks, emerging markets, junk bonds, Treasuries, gold, crude oil, crypto. Granted, there are still prominent negative momentum divergences but they can resolve through a sideways consolidation.

After rising anywhere between 300% and 2000% in the past three years, cloud stocks continue to make new highs and deliver solid earnings reports: SHOP, AYX, TEAM, etc. While cloud is still popular, there are other hot topics that are mesmerizing the momentum cloud – space (SPCE), online sports gambling (DEAC, IBKR, etc), AI and clean energy (TSLA).

Even Warren Buffett has become a momentum investor. His company just increased its stake in Restoration Hardware – a company that is selling $15k couches. Fun times. The good news is that premium are cheap, so buying some insurance while riding the uptrend might not be a bad idea. Just in case.

Have a great week.

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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