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Momentum Monday - The 'Meh' Market Continues And Google Now Pitching In to Help Large Cap Tech Continue To Lead
Howard Lindzon
May 15, 2023
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Good Monday morning…
As usual, we covered a lot of ground in the 15 minute episode today so have a watch/listen. This week was still all about the large cap tech and it was all Google this week as they launched Bard integrated with their apps. The feedback has been great. The stock was up big as I call it ‘The Empire Strikes Back’. Elsewhere, the banks continue to act weak. People say that banks do well in a rising rate environment but generalizing that can lead to problems as the rising rates have actually been the banks problem as they leveraged themselves to forever low rates thinking.
You can watch this weeks episode right here on YouTube. It is easy to subscribe and if you do every Sunday you will get an alert when we post the show to YouTube.
Here are Ivanhoff’s thoughts:
April CPI came as anticipated – 4.9% year over year and 0.4% month over month. Inflation is slowly receding. This is exactly what the market has been expecting and pricing so far in 2023. As a result, tech stocks have been outperforming the rest of the sectors year-to-date. Large caps have been outperforming small caps.
There is something for everyone in this market. There are solid bearish and bullish arguments and each can easily play out. Our job is to remain open-minded and be ready to adjust to any major change in the tape. Last week was a microcosm of the tape year-to-date. There were some great opportunities on the long side – AMD, GOOGL, AMZN, SE, etc. There were some great opportunities on the short side as well – almost anything commodity-related was smoked, including Bitcoin if it can be considered a digital commodity.
The biggest current narrative is that a few mega-cap tech stocks have been propping the indexes higher while the majority of stocks have been under pressure in the past couple of months. It has been a thin market with more stocks making new lows than new highs. Typically such bearish divergences lead to a correction for the entire market but they are sometimes resolved through sector rotation. I wouldn’t exclude either scenario.
The main bullish argument is that despite declining earnings, the banking crisis, and debt ceiling rhetoric, the large-cap indexes are holding remarkably well. The Nasdaq Composite Index which consists of over 3000 stocks is trading above its 20, 50, and 200-day moving averages. The dips in SPY to its 50-day moving average are still welcomed as buying opportunities.
Solar stock woke up on Friday. FSLR closed strong. The big question is if it can add to its gains. The follow-throughs to the upside have been limited as of late.
I don’t believe this is a tape to be overly aggressive. I continue to try with small positions with mixed results. The tape is neither bearish or bullish. It’s a market of stocks environment where equity selection and being nimble matters.
Some other great reads this week…
Here is the Stocktwits momentum 25 lists.
Charlie’s ‘This Week in Charts’.
Have a great week.
PS - If you enjoy Momentum Monday, forward this email to a friend, and follow me on Stocktwits
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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