Momentum Monday – X’s over Q’s…Not a Fun Market For Growth Stocks (Software and Cloud)

This post is by Howard Lindzon from Howard Lindzon

Happy Monday.

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As I said in the headline, the X’s over the Q’s is the market environment right now.  The energy sector ($XLE and $XOM) is breaking out as are the old financials ($XLF).

I discuss this with Ivanhoff in this week’s show.  You can watch or listen right here and I have embedded it on my blog below:

Here are Ivanhoff’s thoughts:

The first week of the new year was all about the market discounting rising inflation expectations. Interest rates spiked and with them, many financials, oil, basic materials, metals, and industrial stocks galloped higher -. In the meantime, most of the so-called new-economy sectors were under notable pressure – software, semis, biotech.

The Nasdaq 100 lost 4.5% in the first week of 2022. The small-caps Russell 2k lowest almost 3%, the better diversified large-cap S&P 500 shed 1.9%. There are obvious distribution signs on the tape. Big intraday sell-offs are followed by shallow bounces. The short-term trend is lower. The only bullish argument in this tape is the sector rotation into old-economy sectors. Rotational corrections rarely lead to big pullbacks for too long. I am not saying to blindly buy the dip (Read more...)