Momentum Monday – Growth Stocks Have COVID and Ivanhoff Lived

Happy ‘markets closed’ Monday as we pay respects to Martin Luther King Jr.

Last week Ivanhoff had COVID, but the young scrappy man beat it.

We cannot say the same things about growth stocks which continue to struggle from the financial cocktail aftermath of it.

Here is this week’s episode of Momentum Monday. You can watch/listen right here or I have embedded it on my blog below:

Here a Ivanhoff’s quick thoughts:

The main theme remains fear of tapering and rising interest rates which is pressuring richly-valued stocks – software, Internet retail, biotech. Many are already down 30-50% in the past 2-3 months alone. Can they go down further? Absolutely. It’s normal for momentum stocks to give back 50% to 90% of their gains. Many never recover from such drawdowns. The likes of AMZN, AAPL, NVDA, TSLA, GOOGL that keep climbing higher for many years are the exception; not the rule.

In the meantime, anything commodity-related is showing relative strength. Many oil & gas stocks are up 20%+ in the past couple of weeks. The metals and miners ETF – XME, is hovering near all-time highs.

Outside of the basic material space, semiconductors, and carmakers have held the best. The biggest chip producer in the world, TSM broke out to new all-time highs lifting the entire semiconductor equipment space with it – AMAT, LRCX, ICHR, KLAC, ASML, etc.

The S&P 500 and the Nasdaq 100 are below their 50-day moving average while the small-cap Russell 2k is below its 200-day moving average and close to breaking down from a very long range. The choppiness level in the indexes has increased significantly. We are seeing bigger and more frequent gaps that often get faded and much wider daily ranges. It’s a challenging tape for swing trades but an excellent one for nimble, intraday ideas on both the long and short side.

Here is Charlie’s 7 Chart Sunday.

Here is this weeks Stocktwits Momentum 25 lists. The lists are filled with large and small energy names and banks. Like I have been saying X’s ($XLE $XLF) over Q’s.

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. 

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.