Market Update

May 11, 2021 | By greg | Filed in: Stocks, Trade Setups.

As I write this, we have been watching a major rotation of capital out of the high growth, speculative stocks, and even the high market cap tech stocks. This capital has been moving into value stocks with lower P/E rations as more people realize inflation is taking hold and start to follow the heard. Yesterday we saw QQQ drop over 2% and /NQ futures are down this morning quite a bit. For a short term trade, I am looking for some really sold off names to bounce, only if they are solid companies in demand sectors. AMD currently rests at a support level that goes back to September 2020 and a nice defined stop if the downside continues. I am watching Cathie Wood’s ARK funds to see what investors are doing, as well as TSLA, NIO, and the cryptos. ARKK should rally for a couple days as it has gotten seriously oversold. I personally think it is time to ring the register on these value stocks as long term holdings as more and more of the growth names hit attractive levels. I would expect to see the institutional investors increasing there holdings in the growth names.

Longer term, as we move into summer and fall, we most definitely will see more shortages and higher prices continue. Companies like PG, KO, and REYN have already increase prices and have all stated they expect more to come. As the velocity of money increases due to more people going on and spending, the economy will really heat up. It is astonishing to me that the Fed continues to keep rates at zero, but at some point they will be forced to raise them. The market is not going to like that. I am working on an inflation article as well as some more trade setups to take advantage of this downside. Watch AMD for the bounces off this $76 level and keep an eye out for more ideas.

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