Market Thoughts
With a powerful move to start the week following the first backtest of the 200 day moving average and Trump delaying 50% tariffs on EU to July 9, the Nasdaq put in 4 consecutive tight closes within a $3 range. Stocks continue to act well with no major red flags. Many market leaders like SPOT NFLX HOOD continue to trade sideways and support at the rising daily moving averages, while a few such as HIMS & PLTR pushing out with a strong finish Friday.
The recent recovery from the April lows has been one of the most powerful in history. The Nasdaq Composite is up over +30% in 8 weeks. If go study recoveries out of similar corrections such as 1998, 2018, and 2020, the first leg off of the low is usually the biggest move in the shortest time. At some point the market will need to build out a new base to move higher and feels as if we are in that stage now. Sellers really began to put up a decent fight for the first time on a few occasions over the last two weeks, but that is a natural occurrence as the market chops away at overhead supply. The indexes remain in a “Power Trend” and buyers continue to raise the floor higher on every pullback.
”Buyers prove at support, even if sellers sold some higher, that doesn’t invalidate what the buyers have done at support and may do again” - DarkOblivion
Market Health
The market environment continues to improve week by week. VIX remains below $20 with little volatility. AAII Sentiment Survey with 41.9% bears vs 32.9% bulls. T2108 (% of stocks above 40ma) with a massive move from the April low, but still not reaching overbought or levels seen following recoveries out of previous sharp corrections. T2107 (% of stocks above 200ma) still remains low, with only 32% of stocks above their 200 day moving averages. While this can be viewed as a weak breadth reading, keep in mind that the % of stocks above their 200 day moving average didn’t get over 50% until 7 months after the March 2020 low and 5 months after the December 2018 low. We are only 2 months off the April bottom.
QQQ (Daily)
Noting a slight uptick in volume since 5/21, but continues to do nothing wrong. In a strong uptrend (which we are in now), it is best to keep things as simple as possible. For me using 20EMA and open breakaway gap from 5/12 as my guide. Want to see both of those defend on any pullback to remain optimistic in the shorter term. Most focus remains on individual stocks as leading indicator.
”The easiest way to identify a momentum market is if the 10&20-day moving averages are rising and the 10-day is above the 20-day on the Nasdaq” - Kristjan Kullamägi
IGV (Weekly & Daily)
The iShares S&P Software Index Fund is one of the more attractive ETF’s at the moment. It staged a 3-year base breakout in Q4 of 2024 and recently put in a massive U&R at that same breakout level. Supported at the daily 20EMA late last week and building out a clean high tight flag pattern. Worth reviewing these names below.
Top 20 Holdings in the IGV ETF (Sorted by Market Cap)
BTC (Daily)
Incredible strength of off the April lows making new all time highs before the Nasdaq even reclaimed its 200 day moving average. Viewing this as another leading indicator for the time being. After a +50% V-shape rally, it found some resistance just over the previous all time high. Nothing wrong with that but monitoring short term as could be rejecting from below and crossing back to the downside. Would expect support at $100,000 level and a sharply rising 50SMA. MSTR always been key tell for me as usually leads BTC up/down from my experience. Began to lag and show relative weakness the day before BTC made a new all time high. MSTR wedge dropped and BTC followed lower shortly after. MSTR supports at 50d and turns back up would be good sign. BTC weekly could chop here for weeks to months and still be a perfectly healthy chart.
PLTR (Daily)
Micromanaged this one on Friday and got stopped out back to back. Quite the intraday volatility but no excuse to not own some into the close. I know most of volume and late day move came from end of month rebalance but it is still there on the chart. Will be looking to buy support on any early weakness to start the week. This remains the top dog
HIMS (Daily)
Another name with some decent intraday volatility Friday but closed at the highs. First test of 20EMA following a +125% move in 15 days. Really like how low the volume and tight the price action was all week until Friday, acting so well. Another name would love to get a piece of on some weakness and get more out of this pattern if can build out further. Great earnings, positive catalysts, high ATR, liquid, and history of making fast, linear moves. Needs to remain a top focus.
HOOD (Daily)
Another big focus for me as one of the higher ADR liquid leaders. Consolidating sideways below the left peak at $67. Couldn’t see myself getting big size on a push out of this pattern right now but on the watchlist through this pivot. Would love for it to pullback a little deeper to test 20EMA like HIMS, but thinking this high, tight action just a sign of how strong this name is.
SMR, NNE, OKLO, LTBR (Daily)
Huge theme emerging after Trump’s Nuclear Energy Executive Orders. All up into some resistance from left peaks earlier this year. All 4 of these names put in their highest daily volume ever on that 5/23 move… That is not something to be ignored. Watching for U&R’s (undercut and rallies) at key pivots like 9EMA and HVC (high volume close) from 5/23 ignition day. Weeklies a bit extended now so potentially need a deeper pull and a new pattern to develop. No clue how long these will take before next move higher, but the group will likely move in unison so makes our job a little easier.
Focus List - PLTR HIMS HOOD SMR NNE OKLO LTBR
Current Positions - Cash