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Happy Monday everyone.
As always here on Monday’s blog, I review the world of Momentum to get ready for the week.
Each Saturday I start my week by scanning the Stocktwits 25. In technology it is semiconductors leading. Facebook and Google are leading the FAANG gang.
Ivanhoff and I tour the markets in this week’s episode and once again Ebay catches my eye, but we talk mostly semiconductors, crypto and homebuilders. You can watch/listen here on YouTube.
Ivanhoff had this to say:
For the better part of 2021, we got used to seeing constant sector rotations. When small caps were rising, large-cap tech was pulling back. Things changed last week. All major indexes rallied together and cleared pivotal levels.
Semiconductor stocks are the new leaders. It started with semiconductor equipment stocks like AMAT, LRCX, UCTT, ASML, ICHR, KLAC breaking out first while the main indexes were chopping in a range. Then, chipmakers and designers joined the rally last week – MU, TSM, ON, NVDA, AMD, INTC, QCOM, QRVO, SWKS, etc. If the same trend persists, we are likely to see the lower-priced, smaller-cap semiconductor stocks start to outperform.
It might come as a surprise but oil stocks are among the best-performing stocks for the past 6 months which de facto makes them momentum stocks. Quite a few of them broke out last week after a month or so of consolidation.
Most homebuilders are setting up for a potential breakout which should not be a big surprise with the homebuilders ETF at all-time highs. Some names to watch next week: BZH, TPH, MTH, TOL, etc. They are not fast movers but are looking constructively.
As for the crypto run…it is wild and spectacular and feels a lot like 2017. The total market cap of crypto passed $2 trillion. Something so large financially has never felt this small. My friends at Van Eck have been building and managing ETF’s for decades and have approximately $65 billions under management. Grayscale ($GBTC) has been in the ETF business for a handful of years and manager over $45 billion.
I have never seen so much denial and FOMO as I have in crypto. I am glad I just followed the smart people like Fred Wilson and Chris Dixon back when they first got excited. As for when all this ends, I’ll just wait for them to find a new toy. Keeping it simple has worked for me. I hear people asking for ‘the killer app’ and I keep thinking the killer app might still just be investing and trading. Of course other uses will develop, but the exchanges and the transacting will keep growing as well.
As for the homebuilders…it feels like 2002. I imagine Wall Street will spin up a great story about how this generation of gen-z will use all the trillions handed down to them to buy new houses (with special ‘influencer’ rooms, Vaping pods, and ‘TikTok basements’) which means that housing P/E multiples should be double. Don’t hate the players.
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.