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Momentum Monday - The Rotation Continues into Small Caps and Semiconductors Are Oversold in Their Big Uptrend
Howard Lindzon
July 29, 2024
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Welcome back to Momentum Monday!
In today’s episode of Momentum Monday, Ivanhoff and I discuss the following:
Last week in review
Market breadth and sector performance
Tech Sector and the rotation into Small Caps
Banks, Crypto, and Healthcare
General trends
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:
Here are Ivanhoff’s thoughts:
Since the CPI inflation readings came below estimates on July 11th, we saw a major rotation out of tech and into small caps, financials, biotech, and home builders. The last week was more of the same. The Nasdaq 100, QQQ sliced through its 50dma and tested its 100-day moving average. The S&P 500 barely closed above its 50dma. The small-cap ETF, IWM had another strong week and closed near its 52-week highs.
The earnings season continues with full force. What I suspected last week about tech earnings was confirmed. The positive surprises are priced in. Any hick-up leads to a quick move down as we saw in TSLA and GOOGL.
The next week is full of market-moving events. AMZN, AAPL, MSFT, META, and AMD report earnings alongside 800+ other stocks.
There is an FOMC meeting that will shed more light on the Fed’s interest rate policy. The expectation is to hint at a rate cut in September. This is the main reason behind the recent rally in small caps, financials, home builders, and biotech. If the market senses that the Fed wants to keep rates at the same level until the rest of the year, we might see a pullback in those areas. The latter might become a tailwind for tech.
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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