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Momentum Monday - A $VIX Spike Reveals Some Cracks
Howard Lindzon
February 24, 2025
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Happy Monday…
Executive orders and tweets from Elon Musk are moving the markets.
I am not sure why investors do not remember Trump’s first term where the market was a toy to Trump. Elon has never respected the SEC or markets either.
Nvidia reports this week and I have no idea what to expect from the reaction to the numbers.
The hottest stocks in the market $AXON, $APP, $HIMS, PLTR, $OKLO, $HOOD came crashing down towards their 200 day moving averages.
The Chinese stocks like $BABA and $BYD (China’s Tesla) rose everyday.
This should be an interesting week and Ivanhoff and I tour the damage to pick up on some clues…
Welcome back to Momentum Monday!
In today’s episode of Momentum Monday, Ivanhoff and I discuss the following:
Market Volatility and Stock Performance
Market Dynamics: Open AI, Microsoft, and NVIDIA Predictions
Market Volatility and Trade Wars
Chinese Stocks and Market Speculation
Tesla's Global Challenges and Strategy Shift
Navigating the Bull Market: Key Insights and Strategies
Reminder: Riley on my team created the ‘Trends With No Friends’ email which is my go to list every day to track what is working and what is not. You can get it for free here.
In This Episode, We Cover:
Market Volatility and Stock Performance (0:00)
Market Dynamics: Open AI, Microsoft, and NVIDIA Predictions (2:00)
Market Volatility and Trade Wars (3:55)
Chinese Stocks and Market Speculation (5:40)
Tesla's Global Challenges and Strategy Shift (7:22)
Navigating the Bull Market: Key Insights and Strategies (9:00)
Here are Ivanhoff’s thoughts:
The main indexes remain in a range not too far from their all-time highs. And yet, there have been some cracks under the surface. The number of distribution days is increasing. Most megacaps sold off after earnings. High-momentum leaders came under pressure last week – HOOD, RCL, PLTR, APP, etc. One of the leading sectors year-to-date – financials, is also starting to lose ground. There’s still strength in select Chinese and biotech stocks but this is hardly enough to sustain the indexes.
What’s next for the market?
No one knows. The only thing we can do is develop scenarios and be ready to act.
The bearish scenario assumes that megacap and momentum stocks are leading and their weakness will be felt in the rest of the market. If the government is serious about spending cuts and raising tariffs, the market will likely blink and price it at some point. A 7-10% correction would not be a big surprise.
The bullish scenario supposes that dips will remain tepid and continue to get bought. The best buying opportunities this year happened after headline-driven pullbacks.
Both scenarios are equally likely. What matters is what we do. The number one goal is always to keep drawdowns small, so we can grow our capital quickly. We do that by keeping losses small. If we can benefit from a quick correction with some tactical Put options and inverse ETFs, we will do that. We already took some META and TSLA Puts last week. Corrections create the best buying opportunities once they are done, so building a list of potential leaders will help us to take full advantage of the next uptrend.
And here are the charts discussed:
PS - Here is the latest ‘Trends With No Friends’ which covers ‘new highs and new lows’ and measures the followers (friends) on Stocktwits versus the prices. Subscribe here.
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