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  • Momentum Monday - A Rally Continues And The $QQQ over $SPY Remains The Winning Investment.

Momentum Monday - A Rally Continues And The $QQQ over $SPY Remains The Winning Investment.

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Good morning…

As always, Ivanhoff and I toured the markets looking for momentum. It continues right now in the $QQQ and partucularly Microsoft. In the chart below you can see that Apple and Microsoft now are a combined 14 percent (record) of thr S&P 500.

You can watch this weeks episode of Momentum Monday and lasts weeks episode of Trends with Friends on my YouTube. It is easy to subscribe and if you do every Sunday you will get an alert when we post the show.


  • Intro (0:00)

  • Large cap strength (1:05)

  • Energy pull back (3:20)

  • Dominant price action (4:10)

  • What’s working (9:35)

  • QQQ/IWM - get profitable (11:40)

  • What’s to come (19:00)

Riley’s ‘Price and Popularity’ Lists:

Here’s Riley’s screen that tracks new 52-week highs and lows 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 Highs led New Lows — 75 vs. 63.

Some notable names,

Duolingo ($DUOL) is the New High Standout of the Week. The online language-learning application lept +32.76% following last week’s earnings release. The company beat estimates and reviewed multi-subject strategic shifts into Math and Music.

Light & Wonder ($LNW) is a notable new high. The cross-platform gambling creator carried +10.71% following last week’s earnings release.

The company beat estimates, posting its 10 consecutive quarter of revenue growth.

Transdigm Group ($TDG) is a notable new high. The aircraft component company flew +12.52% following last week’s earnings release.

Transdigm beat estimates and issued a $35 special dividend.

MicroStrategy ($MSTR) is a notable new high. The enterprise software company advanced +12.17% and closed at its highest price since March 2022.

MicroStrategy posted mixed earnings early this month and holds 158,400 bitcoins on its balance sheet.

Spirit Airlines ($SAVE) is the New Low Standout of the Week. The discount airliner dropped -22.02% and touched down at its lowest price since March 2020. The stock collapsed as the Dept. of Justice attempts to block its merger with JetBlue.

$SAVE tumbled -47.68% in 13 of the last 15 trading days.

Topgolf Callaway Brands ($MODG) is a notable new low. The Golf equipment and accessories manufacturer flopped -22.81% following last week’s earnings release.

The company posted mixed results and cut guidance by 15%. $MODG is down -36% since it announced its TopGolf merger in October 2020. 

Fisker ($FSR) is a notable new low. The EV manufacturer unplugged -15.6% after it postponed its earnings release. The company is scheduled to report Monday after market close.

Click here for the full weekend review.

Here are Ivanhoff’s thoughts:

The lock-out rally continued with full force and didn’t involve only the so-called Magnificent 7 stocks – NVDA, AAPL, AMZN, GOOGL, MSFT, META, TSLA. Anything tech-related was on fire – semiconductors, software, communication stocks. The dips were shallow and they were bought again. It only makes sense for large caps to lead right now. If most institutions are underinvested, then the fastest way to get into the market is via liquid large caps. 

Small caps continue to be the much weaker part of the market. Russell 2000 ETF, IWM lost 3% for the week. It found resistance near its declining 50dma. Can the overall market rally continue without small caps? Anything is possible. I don’t think it’s very likely. If this rally has more room to run, we will eventually see some rotation into small caps. We saw it happen last summer when large caps led the way breaking out in mid-May. Then small caps joined a couple of weeks later in early June. If the same scenario plays out again, the best is yet to come on the long side. 

There’s always a chance that small caps continue lower and the current stock rally will fizzle. A lot will depend on interest rates. Any spike in yields will be a big headwind. As of now, the trend for QQQ and SPY is up, the bulls are in control. It’ll take more than one distribution day to shake people out. The pain trade is still higher because almost no one believes in the sustainability of this rally. I don’t believe in it either but I am not fighting it. I’ve made sure that I am participating because the market doesn’t care about our feelings and expectations.

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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