A lot of people are asking me ‘are we there yet’ and ‘what should I buy’. I only see energy names with price momentum and so there are stocks to buy if you look have been looking in the right spot.
There is no buying in tech and we can analyze it 1000 different ways but the selling continues. The energy sector has been the one area of positive price momentum and leadership. I congratulate the people following this sector. I have been sharing the Stocktwits weekly 25 here for free and the lists have been full of energy names the past 8 months and continue today (see chart below):
Something weird and shameless about this bear market in technology stocks is the full fledged supply unconstrained scammy market in ‘airdrops’ and ‘degen’ crypto giveaways haunting everyone’s feeds on Twitter and I imagine in Discord rooms. Bots and scammers do not care what type of market we are in, they care about hitting as many people over the head with ‘get rich quick’ and confusing crypto ‘offers’ that can be dropped endlessly via Twitter. This is just a new form of supply that will also have to find an equilibrium one day at much lower prices.
As for the stock (securities) markets…
I remember in March 2020, telling people what I was buying on my ‘Panic’ podcast and nobody cared.
My friend and great markets analyst Jon Krinsky wrote this week (I get his weekly research) that we are getting closer to a ‘capitulation’ bottom but sees more downside ahead.
One chart of Jon’s that stood out was the low number of 52 week lows:
As always, Ivanhoff and I toured the markets looking for signs of change and momentum.
My word of the day for stocks I follow is ‘bleak’. Technically my areas of focus are broken and will take a lot of time to fix.
You can watch our ‘Momentum Monday’ here and I have embedded it on the blog below:
Here are Ivanhoff’s notes:
As widely expected, the Fed raised interest rates by 50bps and started to reduce its balance sheet. The initial enthusiasm last Wednesday was immediately followed by heavy selling the rest of the week. One day up 5%, the next day down 6%. Excessive volatility which means a lot of choppiness and frequent reversals is a typical price action for a bear market.
Tech has been dismantled this earnings season. QQQ is trading below its volume-weighted average price since the Covid lows in March 2020. The small-cap growth ETF – IWM, has given back its entire profit for 2021 and 2020. The rips to declining 20 and 50dmas keep getting shorted on a regular basis. We are yet to see the real panic in the tape. So far, the selling has been slow and steady – the kind that can continue a lot longer than most expect.
There are slim pickings on the long side – oil and gas names are holding the best as crude oil is setting up for another potential breakout and natural gas is at 12-year highs. If the market is really worrying about a global recession, oil and gas will also get eventually hit but until then, they are in an uptrend and uptrends tend to keep going higher until there’s a high-volume breakdown that changes the sentiment/narrative.
Have a great week and stay in the game.