Momentum Monday…Still So Much Pessimisim Amidst The Speculation

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Happy Monday everyone.

As always, Ivanhoff and I spent 20 minutes pouring over the markets looking at the areas of Momentum. Have a watch/listen here. I have embedded it below :

I am starting to think there are two macros…one for the old physical world (thousands of textbooks and hundreds of years of history) and one for the digital world which is anyone’s guess with so little history.

Obviously fear and greed will still drive both worlds as they do all markets.

The stock markets continue their amazing rotation without wreaking too much havoc. Here is this weeks FREE Stocktwits 25 which does a great job highlighting where the momentum is hanging out.

The SPAC market is one of the exceptions and has been a disaster since February. But, let’s be honest…the EV craze was not founded in rigorous fundamentals. If you were greedy and had no exit plan the markets did what they always do.

In Charlie’s great weekly 5 chart Friday he points out what I said last August when I wrote ‘Supply Is Coming‘ on the topic of SPACs…

Nikita has here weekly SPAC update she writes at Social Leverage and you can sign up for it on Substack. Here is this weeks edition.

It now seems like all the SPAC, political and COVID experts have turned their genius on crypto. It feels frothy but the market trades on technicals and the fear and greed of the ‘yoots’ is way different than anything I have seen before.

Two charts from the crypto world that caught my eye this week:

Ethereum breaking out relative to Bitcoin…

The assets in $GBTC have surpassed assets in $GLD…

Bitcoin is this generations religion/gold. I trust bitcoin over gold because I trust the supply is fixed at 21 million.

Here is what Ivanhoff had to say about the price action this week:

The large-cap indexes continue to grind higher and make new all-time highs almost on a daily basis. SPY, QQQ, DIA have been so strong that many active investors wish they were passive indexers since mid-February. The small-cap ETF – Russell 2000, is lagging a bit but also acting constructively – consolidating in a tight range near 225 and setting up for a potential breakout. And yet, there’s something weird going on beneath the surface – there are very few high-quality long setups among high-beta stocks; most breakouts in that space have found very little follow through and some are under clear distribution. Is this type of price action sustainable? Yes and no. No one can really say how long it’ll last but the truth is that is not going to take much to scare people out and cause a quick 4-5% pullback. If such a pullback happens, it will be welcomed as a buying opportunity by many so it might not happen at all. As the saying goes, the markets will move in the direction that will surprise the biggest number of market participants.

The new earrings season is here. Over the next few weeks, we will see thousands of earnings reports. Most won’t matter but some will start big new trends. As a rule of thumb, markets tend to be choppy and range-bound during the bulk of earnings season, so I expect to see something of that fashion.

Have a great week everyone.

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