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Momentum Monday - War and The Year End Rally
Howard Lindzon
October 09, 2023
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Good morning…
Normally, Ivanhoff and I would be discussing the year end rally right about now. Last week ended with stocks holding where they should if one was to start. By the end of the weekend, war in the middle east seems like the only sure thing.
You can watch this weeks episode right here on YouTube. It is easy to subscribe, so please do and do every Sunday you will get an alert when we post the show.
Chapters:
Riley’s Corner:
Riley Rosebee created a screen that tracks stocks making new 52-week highs and lows which is also sorted by the total followers on Stocktwits.
For those unfamiliar, here’s the gist,
In uptrending markets the least followed stocks with the highest relative strength are most interesting to me.
In downtrending markets, the most followed stocks with the weakest price relative strength are most interesting to me.
Riley shared a few words on this week’s results…
New Lows continue to lead New Highs.
Some notable names,
Bank of America ($BAC) has 139,304 followers on Stocktwits. Last week, the company fell 5% and closed at its lowest price since November 2020.
Paramount Global ($PARA) has 19,972 followers on Stocktwits. Last week, the entertainment company collapsed 8% and is within 5% of its COVID low.
Celestica ($CLS) has 799 followers on Stocktwits. The design, manufacturing, hardware platform and supply chain solution provider is up 47% since its July 26th earnings report.
Distributions Solutions Group ($DSRG) has 1 follower on Stocktwits. The specialty distribution company cruised 20% last week and closed at an all-time high.
Here are Ivanhoff’s thoughts:
After some back-and-forth choppy price action for most of last week, most stocks finally had a high-volume range expansion on Friday. Can this be the beginning of a year-end rally or it will be just another oversold bounce that will fold quickly? We will know soon enough.
It all depends on interest rates and the US dollar. If they continue to pull back, this stock rally can continue. The job numbers crushed estimates on Friday (336k vs 170k estimates). The algos sold the initial number in the pre-market session. It was the final flush. The indexes started to recover shortly before the market opened and didn’t look back. The Nasdaq Composite and QQQ gained 1.6% of high volume, led by cybersecurity, software, and semis. Small caps were up 1% on decent volume too.
Later in the day became clear that the payroll report was not as strong as the headline numbers suggest. Only 23k jobs were full-time. The rest were part-time and self-employment gigs. What matters is the market reaction and the existence of setups to buy. Unlike other follow-through days in the past couple of months, this time there are some decent setups to choose from. Some examples – CRWD, PDD, ZS, PANW, VRT, NTNTX, XPO, META, INTU, GWRE, ANET, SNPS, MOD, SPOT, etc.
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.
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