Good morning…
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 by saying there are some ‘green shoots’
A few weeks back on Momentum Monday we talked about the biotech index breaking above the 200-day moving average. They have stuck and started to move higher still. Today it was the Small Cap Index doing the same. the S&P is right there and only the Nasdaq 100 has some more work to do.
Ryan Detrick points out that there are some technicals flashing positive signs…
The fact that people are scoffing at the green shoots and that sentiment is still disdain for stocks, the FED, anyone buying or investing could be another wall of worry that this market will climb.
As always, Ivanhoff and I talk about all this and more in this weeks Momentum Monday. You can watch/listen right here on YouTube. I have also embedded it below on my blog:
The main indexes pulled back earlier last week to their rising 10-day moving average. Then, July CPI readings came a bit below expectations and most stocks just took off. This time, the biggest gainers didn’t come from biotech and software. Last week was all about energy and metals. Lithium stocks ALB, SQM, LTHM, PLL had a massive rally. Coal, oil & gas names had one of their best weeks in a while.
The market reaction to earnings continues to be overwhelmingly positive this season. Semis, Micron (MU) and Nvidia (NVDA) guided down. Both gapped down only to completely recover by the end of the week. Going up on bad news is bullish. In the meantime, stocks that beat earnings estimates broke out on volume and followed through for the most part – TTD, SWAV, STAA, ARRY, GFS, QLYS, etc.
The small caps ETF – Russell 2k (IWM) went up 25% in the past couple of months and it is back above its 200-day and 50-day moving averages for the first time since November of 2021. The large-cap S&P 500 is less than 1% from its 200-day moving average. Bearish rally or not, capital is getting put to work, dips are getting bought, stocks are breaking out and following through, and there are almost no distribution days. No one knows how long it is going to last. The last time, I thought we had a bear market rally was April 2020 and the markets just kept going higher. I don’t think it’ll happen again but I’ll keep an open mind.
Howard here again…
My eyes are still on US dollar and rates. It is nice to see that stocks can go up on bad news and the market is trying to digest higher inflation numbers and interest rates.
Charlie’s 9 chart Monday is good.
Here is the Stocktwits weekly momentum 25. What now stands out is that small caps have both energy names and biotech names on the list.
Have a great rest of 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.