Friday, May 8, 2020
Broader Market Review
My early surfing years intersected with a game changing turning point in surfboard design. In a few short years during the 1960’s, boards went from a standard 10ft length with rounded rails and a pretty boring looking fin to multi, miniature fin shortboards with V bottoms, concave bottoms, flat bottoms, down rails, pointed noses, rounded noses and even an L shaped fin on one of my personal favs, the Dewey Weber Performer. That was a definite fun time.
Are we having fun now? A little better thank you with what looks like an almost V Bottom recovery. How bout that segue..
Nasdaq has recovered about 75% of it’s Corona Crash and the broader S&P 500 has recovered about 50%, both in an almost V Bottom. The recovery has been nothing short of spectacular and I think the next few months will present opportunities to leg in for holding into next year, at least. Wide chop through summer should lead to a surge around election time that could last well into 2021. I think the expansion that was so rudely interrupted is just now delayed.
As we move away from March 23rd in time and price, risk will shred faster than a coronavirus from a hot bowl of bat wing soup. This doesn’t mean it won’t be wobbly. Just like a V Bottom surfboard a V Bottom recovery can be unstable. After a few summer months of uncertainty and probable consolidation during which time we get additional health and economic data I expect the expansion to resume.
I would continue to avoid energy and lean towards large cap technology. I like semiconductors and still love software infrastructure/application. I do like a few exotics as well, like Beyond Meat, Carvana, Bitcoin, Tesla and KWEB, a China internet ETF.
You can own QQQ and get nice technology exposure owning these names. You can own SMH and own these semiconductor companies. You can own PSJ and own these software companies. Or, you can buy individual companies many of which are listed on the Trade Alert page under “Entries” in the premium section on my website.
Follow me into The Chart Room
Check out the short and intermediate term broader market forecasts in addition to some charts that caught my eye this week.
SPDR Dow Jones Industrial Average ETF (DIA)..weekly forecast
SPDR Dow Jones Industrial Average ETF (DIA)..2017-2021
Invesco QQQTrust Ser 1 (QQQ)..forecast through 2020
Invesco QQQTrust Ser 1 (QQQ)..perspective
Amazon.Com Inc (AMZN)..this is going to $5,000
iShares S&P GSTI Software Index Fund ETF (IGV)..2018-2021
KraneShares CSI China Internet ETF (KWEB) 2015-2022
Direxion Technology Bull 3X (TECL) 2017-2021
Direxion Daily Semicon Bull 3X (SOXL)..2017-2022
SPDR S&P Transportation ETF (XTN)..2015-2022
Carvana Co (CVNA)..+120% from my April 5th highlight!
Visa Inc (V)..2018-2020..Rockstar
Square (SQ).. 2020 forecast..Love it
Okta Inc Class A (OKTA)..WOW
Grayscale Bitcoin Trust BTC (GBTC)..2019-2020..on the move
The broader market looks like it wants to continue pushing up this coming week. Longer term into the end of the year or beginning of 2021 I expect an overbought surge higher to reflect the extreme oversold condition we experienced with the Corona Crash. So, look for multiple opportunities over the summer to buy dips that should result in much higher prices looking out into next year.
It’s time to ramp up the training that helps this old fart still manage to paddle out, catch a wave and get up and ride. Just keep surfing.