Momentum Monday – Venture Bubble? More Fang Please and NEVER Stop Looking for Relative Strength

Happy Monday everyone.

As a reminder, Marketsmith (by Investor’s Business Daily) is now a sponsor of the weekly show. All the charts you have been seeing in the videos and will continue to see are from Marketsmith. They are offering my readers a three week trial for $19.95. Click this link if you would like to try it out.

I will start out this week with a great quote from Morgan Housel:

“Every past market crash looks like an opportunity, but every future market crash looks like a risk.”

I will get right to this weeks Momentum Monday show. You can WATCH/LISTEN by clicking here and I have embedded it below:

In this weeks episode I go deep on all my mistakes this year that have led to my 8-80 portfolio underperforming the averages and some changes I have made. I hope it helps.

Centralization and Big Tech (FAANGM) had another great week. This chart shows it well:

As great a year as it has been for the $QQQ, $SMH (semiconductor) and $SPY indexers, the real relative strength has been in crypto and startups.

The 1 year charts of Layer 1 blockchains show why the hunt for relative strength is worth it:

I saw this data point flying around my venture streams and it really startled me:

“In the last 12 weeks, startups raised more cash than startups did during the entire 1999-2000 dotcom boom and bust.”

I like what Charlie said about the speculation we are seeing – Investors Are Behaving as if the Future Has Already Happened.

On the surface, it is easy to yell ‘bubble’, but underneath the surface of the indexes and speculation are bear markets and crashes. Charlie shared a list of recent leaders down 50 percent or more (sadly I hold a few) in his weekly 7 chart Sunday

The small caps are very weak underneath the meme stocks and Latin America is in a nasty bear market

Here are Ivanhoff’s summarized thoughts:

The market is worrying about Covid again. The lockdown measures in parts of Europe and the rise of new Covid cases are definitely impacting money flows. Look at the price action in the past couple of weeks. Anything related to “the reopening” and “going back to normal” has been under heavy pressure – airlines (JETS), leisure and entertainment (PEJ), oil & gas (XLE). The small-cap ETF -IWM, has been showing relative weakness too. If IWM cannot bounce in the 230-232 area, we can talk about a failed breakout.

In the meantime, capital has fearlessly been flowing into mega-cap tech stocks which have been among the biggest winners in a “work-from-home world”. AAPL, MSFT, NVDA, and SHOP reached new all-time highs. AMZN and GOOGL are basically there too. FB is acting constructively above its 50-day moving average. In addition, vaccine stocks, MRNA, and BNTX are bouncing after 50%+ correction.

Semiconductors ETF – SMH, closed at new all-time highs inspired by another strong earnings report from Nvidia. There’s a lot of strength in the sector – NXPI, LRCX, MU, ON are just a few examples.

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