Momentum Monday – Dips Are Still Being Bought

The price action in the indexes last week was like Christmas lights – red and green days alternating. At the end of the week, dip buyers won again. The large-cap indexes closed near all-time hghs. The small-cap ETF – IWM, closed above its 50-day moving average.

The U.S. Dollar continues to pull back. Naturally, capital is not leaving the stock market; it is just rotating between sectors. Beaten down former momentum darlings in clean energy bounced. NFT stocks woke up. Homebuilders made another all-time high. Biotech is back in the game with quite a few constructive setups in the space – CRSP, MGNX, AGIO, NTLA, HZNP, etc. The semiconductor ETF – SMH, held its 50-day moving average and now we see some intriguing setups there – AMAT, KLAC, ICHR, etc. Industrial metal stocks keep showing relative strength – steel (X, CLF), copper (FCX), aluminum (AA), lithium (ALB, LIT). Potash is also looking attractive – MOS, CF, SQM, etc. Tech stocks are also holding their ground – NET had a high-volume breakout, XM is working on a new base, ETSY is setting up, etc.

Big week for earnings is ahead. Big Tech reports – AAPL, GOOGL, MSFT, AMZN, FB, TSLA. Also, V, MA, TXN, MCD, QCOM, UPS, SBUX, CAT, AMD, and hundreds of others. Both, the Nasdaq 100 and Russell 2000 are setting up for a potential breakout. I suspect that they will remain range-bound until the bulk of earnings is behind us.