Momentum Monday – The Markets Are In Beast Mode…. Should You Panic First?

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Happy Monday everyone.

As my headline says…pretty much everything I care about in the markets is working. That makes me uncomfortable.

If I were to pick just one chart that explains the party in growth and speculation it would be this one from Charlie:

If I were to pick a second it would be Solana which is a popular and speedy blockchain that has gone from $1 to $100 just this year alone ( I do own it):

At the moment, the semiconductors, the Nasdaq 100 and the financials are at all time highs. The financials joining the all-time high party feels very bullish. I won’t dare fight this trend because I have made my living riding trends, but when things are so good, I like to remind myself of the moments that markets are in panic mode. It was not long ago that we people could not wait to sell every stock they owned.

In today’s episode, I speculate on how the leading financials like Goldman Sachs as well as Google/Facebook are the megacap benefactors of the crypto explosion.

You can watch today’s Momentum Monday here. I have embedded it below:

Here are Ivanhoff’s quick thoughts on the markets:

Neither Covid nor rising inflation or Fed’s plan of tapering is scaring investors off. The large-cap indexes – SPY and QQQ, hit new all-time highs. The small-cap Russell 2000 had one of its strongest weeks in 2021 and closed above its 50-day moving average. The stock market is hitting on all cylinders in the midst of what is supposed to be a seasonally weak period for stocks. I guess we should not be really surprised by all that strength and relentless dip-buying. Money supply has gone up 40% in the past two years alone which is the fastest pace of increase in U.S. financial history. There’s so much money in the system and so many new millionaires (56MM by the last count) that pictures of rocks are selling for millions of dollars as NFT digital art. The world has invented entirely new asset classes to speculate on.

Covid cases, hospitalizations, deaths, and restrictions are rising but it seems financial markets are looking past this threat and betting on a recovery six months or so from now. At least, this is how I read the recent price action in airlines, hotels, and department store stocks. Most of them took a sizable haircut during the summer and are now starting to stabilize and even look constructively. I am staying away from them for now but keeping a close eye on the development in the space.

The negative correlation between tech and the so-called recovery stocks (mostly old-economy sectors like retail, financials, homebuilders, industrials) appears to be breaking. Both groups are now rising in unison. The software ETF- IGF closed at all-time highs. So did the semiconductor ETF – SMH. Financials and homebuilders are not too far behind.

Some other favorite Momentum Monday reads of mine…

The Stocktwits weekly 25 lists.

Charlie’s 7-chart Saturday.

Nikita’s weekly SPAC update.

Have a great week everyone.

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