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Happy Monday!
Don’t shoot the messenger but ‘they’ say ‘so goes January so goes the year’. Actually, The Rotation Report had a good piece on all things January, sentiment, breadth and markets.
I say – let’s get right to this week’s episode. Not much has really changed if you have been listening to the weekly show. You can watch/listen to this week’s episode right here. I have embedded it below:
Here are Ivanhoff’s notes:
The Nasdaq 100 had a 7% range last week but it finished flat. Correlations have been extremely high as they usually are during corrections or bear markets. Lately, stocks have been moving in tandem regardless of fundamentals or sector belonging. Just look at the intraday charts on Friday – everything is looking very similar.
Unless your view is longer-term and you are slowly accumulating an index or a strong business at progressively lower prices, the most common-sense way to make money in this environment is intraday trading. This type of market behavior usually doesn’t last too long, except if it’s a new long bear market which is clear only in hindsight. Eventually, things calm down and multi-day swings become easier.
The new earnings season is just warming up. So far, the market has been fading every strong earnings report (minus Apple) and slamming any remote weakness. This is the first earnings season in a long time where we haven’t seen a breakout and a proper follow-through in the next few days. It’s still early but the price action so far speaks volumes about the current sentiment.
Last week, the Fed confirmed what they have been saying for a while – bond purchases will end in early March and then they will start to gradually increase interest rates. The market initially sold off after the FOMC meeting, only to bounce towards the end of the week. Let’s see if it can follow through next week. Quite a few earnings reports are on tap and they will have a major impact on the market’s direction – GOOGL, AMZN, FB, QCOM, PYPL, AMD, XOM, etc. It’s important to remain flexible and open-minded to different scenarios. If there’s follow-through, SPY can test 450 where it will encounter resistance. If Friday’s low is lost, SPY is likely to tet 420-400.
Lately, I am mostly focused on my mood and watching the people around me write about investing mood. Here are three sentiment people I trust telling it like it is…
The magazine covers are starting to get very bearish.
The bullish/bearish spread is now widest since 2013.
There were too many ‘crappy’ stocks and while they may never come back, the % of Nasdaq stocks more than 50 percent below highs is ringing some bells.
netx up…
I hate repeating the obvious but this has been a great year to be an oil investor.
The Stocktwits 25 list of the S&P is dominated by oil companies with 13 of the top 14 drilling, and selling (the other stock Activision is only on the list because Microsoft bought them)…
Here is this weeks Stocktwits 25 lists.
Makes sure you read this great Charlie post on all things drawdowns, corrections sand bear markets.
Finally, Nikita is back covering the ugliness in SPAC land.
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.