Ivanhoff Capital

MarketSurge powers the charts in this video.

Most stocks are still in an uptrend. You still need to play the market smart. When stocks are up a few days in a row and then we have an upside gap, the odds are that this will be used for profit-taking and you might get the proverbial rug-pull if you chase. This is what we saw on Friday morning with the indexes. We saw a similar behavior in many popular stocks that gapped up after strong earnings this quarter – GOOGL, MSFT, to mention just a few.

In the meantime, the dips are getting bought. We are back to the “what’s bad for the economy might be good for the stock market: environment. It seems we have been in that same environment for a long time. It’s almost as if the market likes to play a contrarian role. Unemployment claims came above estimates last week. We saw an initial selloff in the pre-market which was quickly gobbled up to new highs. 

We are in a market of stocks environment. There’s something for both the bulls and the bears. 

Restaurant stocks are having their best period in a long time. One would think that rising minimum wage will impact their profitability but their earnings continue to grow. Look at SG, CMG, CAVA, TXRH, DPZ, WING. They are all extended right now if you are looking for a fresh swing.

After a brief consolidation, gold and gold miners broke out again. Other metal stocks are also looking appealing – FCX and TECK, for example, have built humongous bases.

The semiconductor space remains among the leaders. The biggest chip maker in the world, TSMC reported a 60% year-over-year and 20% month-over-month increase in sales for April. NVDA, QCOM, AVGO, and MU are among the constructively-looking setups in the space. 

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I published a new trading book recently (2023). Check it out on Amazon.

Disclaimer: Everything I share is for educational and informational purposes only and it should not be considered financial advice. Read my full disclaimer here.

MarketSurge powers the charts in this video.

By now it should be clear to everyone that the Fed doesn’t have a specific plan for when they will cut rates this year. Powell keeps saying they are taking the data one month at a time and adjusting their view. This is why stocks rallied when the jobs number on Friday came well below estimates. A weakening jobs market improves the prospects for an earlier rate cut.

We are already starting to see some easing. The pace of the Fed’s balance sheet reduction is slowing down. The Treasury plans to start buying $2Bn worth of Treasuries weekly. This is why the dips in the stock market are likely to continue to be bought.

We are still in the midst of earnings season. Two trends stood out so far – upside gaps often faded while downside gaps followed through. These are both bearish reactions. And yet, the indexes are holding relatively well. SPY, QQQ, and IWM have made a couple of higher lows and higher highs in the past two weeks. Small caps are firmly back above their YTD VWAP. SPY and QQQ rallied to their 50-day moving average. Going above their Friday highs will likely lead to FOMO chasing as many market participants are underinvested. Losing Friday’s low will likely lead to a quick gap close. 

In the meantime, Chinese stocks had a second strong week in a row. Sentiment towards Chinese names has been extremely bearish for a long time. For me, they remain short-term trades and not investments. I played this move via PDD Calls, which went from 1.30 to 10. I sold early but still captured a decent size of the move.

We are in a market of stocks environment. The popular, well-known stocks have had some troubles this earnings season. They either gap up and then quickly close their gaps or gap down. The earnings winners this season are lesser-known names that are not widely known by institutions – HWM, PI, TMDX, ASPN, CVNA, SNAP, PRCT, TNDM, PRDO, CRS, ENVX, TWST, LIVN, SFM, etc.

Try my subscription service which includes a private Twitter feed with option and stock ideas, emails with concise market commentary, real-time market education, the Momentum 40 list of market leaders, and much more. See what subscribers say about my educational service.

Check out my free weekly email to get an idea of the content I share with members. How my ideas/alerts did.

I published a new trading book recently (2023). Check it out on Amazon.

Disclaimer: Everything I share is for educational and informational purposes only and it should not be considered financial advice. Read my full disclaimer here.

MarketSurge powers the charts in this video.

All major indexes had a big bounce after the selloff the week before. Now they are at or approaching potential resistance where sellers might show up again. 430-435 for QQQ, 199-200 for IWM, 508-510 for SPY. How they behave around those levels will depend on the market reaction to earnings. Apple, Amazon, and AMD are just a few of over 800 companies that report next week.

What do we know about earnings season so far? The stocks that were priced for perfection are very vulnerable. Going into last week’s report, META was a big earnings winner for five quarters in a row. Sentiment was extremely bullish. The company gave a soft guidance and it was obliterated. It dropped from 500 to 400 overnight. Granted dip buyers stepped up and it finished the week at 440. This is just another timely reminder that there are no sure things during earnings season. Strong companies that seem invincible that drop 20%. This is why I don’t like to sell options premium ahead of earnings events. It doesn’t make sense to try to make $3 if the downside might be $50 per option contract. I’d like to be on the other side of that bet.

Google was on the other side of market reactions – they missed and gapped down in Q1 but quickly recovered to new all-time highs. The report from last week confirmed the bullish sentiment and the stock gapped even higher, where it faded. Such big earnings gaps in heavy stocks are often used as liquidity events by institutions that want to ring the register. 

The one clear trend this earnings season is the massive capital spending by major tech companies. This is extremely bullish for companies that help to build AI infrastructure – NVDA, AMD, MU, SMCI, DELL, MSFT, GOOGL, AMZN, etc. The question is how much of that has already been priced in by the market? If the market is in a sour mood, we can still see the stocks of companies that report strong earnings pull back due to P/E multiple compression and vice versa. 

In the meantime, restaurant earnings have been on fire. CMG broke out to new all-time highs lifting many others in the space – WING, CAVA, SHAK, TXRH, etc. WING reports earnings next week.

Try my subscription service which includes a private Twitter feed with option and stock ideas, emails with concise market commentary, real-time market education, the Momentum 40 list of market leaders, and much more. See what subscribers say about my educational service.

Check out my free weekly email to get an idea of the content I share with members. How my ideas/alerts did.

I published a new trading book recently (2023). Check it out on Amazon.

Disclaimer: Everything I share is for educational and informational purposes only and it should not be considered financial advice. Read my full disclaimer here.