Happy Monday.

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.

As I said in the headline, the X’s over the Q’s is the market environment right now.  The energy sector ($XLE and $XOM) is breaking out as are the old financials ($XLF).

I discuss this with Ivanhoff in this week’s show.  You can watch or listen right here and I have embedded it on my blog below:

Here are Ivanhoff’s thoughts:

The first week of the new year was all about the market discounting rising inflation expectations. Interest rates spiked and with them, many financials, oil, basic materials, metals, and industrial stocks galloped higher -. In the meantime, most of the so-called new-economy sectors were under notable pressure – software, semis, biotech.

The Nasdaq 100 lost 4.5% in the first week of 2022. The small-caps Russell 2k lowest almost 3%, the better diversified large-cap S&P 500 shed 1.9%. There are obvious distribution signs on the tape. Big intraday sell-offs are followed by shallow bounces. The short-term trend is lower. The only bullish argument in this tape is the sector rotation into old-economy sectors. Rotational corrections rarely lead to big pullbacks for too long. I am not saying to blindly buy the dip here. That would be irresponsible. I am saying to have an open mind that the new earnings season that starts in less than a couple of weeks might lead to another bounce. For us, it doesn’t matter too much. We will find good risk/reward trades in any market environment. Even last week, when most of the market was under pressure, there were plenty of opportunities on the long side every single day.

Moving on…

Here is Charlie’s 7 chart Sunday. The weakest part of the ‘Q’s has been the software and cloud sectors which are correcting very fast. That seems to be how the markets do their thing.

Charlie also shared a chart of the best performing stocks of the last 30 years which is really a fantastic advertisement for indexing as nobody could have picked the stocks and held them.

Finally, for us home gamers, here are the Stocktwits 25 momentum lists.

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.