Today, broader market momentum turned positive today for the first time since early June. I haven't traded in a positive momentum market in more than 60 days. Part of me forgot how to type "IWC" – the ticker for the Micro-Cap Index ETF. What do I do with my hands? What Happens Now? We've hit 4,500 on the S&P 500, a fresh all-time high. The NASDAQ is now at 15,000. Despite all the worries and woes about economic data, the delta variant, and Fed tapering, the SPY keeps chugging along. Of course, it does help that the Fed is pumping $120 billion into bonds and mortgage-backed securities each month. And, as I've noted, there is a solid relationship between the S&P 500 performance and the Fed's balance sheet. The 4,500 level requires a basic understanding of market psychology. This level could pour trillions of "dry powder" from the sidelines and back into value stocks and smaller cap stocks. I made mention of this recently. The key issue is how sustainable it is.
| | | | | | What Do I Do with My Hands? |
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| Dear Reader,
Every broadcast journalism student has a tick. There is something that they do when they are on air. It isn't nerves that causes their tick to always be exposed. Sometimes it's just boredom.
In my case, you'll notice when I'm on air that I don't know what to do with my hands.
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| | | | | | | I do this sometimes when I'm standing in a group and someone is talking to me as well. What do I do with my hands? Fold them? Put them against the wall?
Stretch?
I had a similar feeling today when I dug into the broader market. Today, broader market momentum turned positive today for the first time since early June.
I haven't traded in a positive momentum market in more than 60 days.
Part of me forgot how to type "IWC" – the ticker for the Micro-Cap Index ETF.
What do I do with my hands?
What Happens Now?
We've hit 4,500 on the S&P 500, a fresh all-time high.
The NASDAQ is now at 15,000.
Despite all the worries and woes about economic data, the delta variant, and Fed tapering, the SPY keeps chugging along.
Of course, it does help that the Fed is pumping $120 billion into bonds and mortgage-backed securities each month. And, as I've noted, there is a solid relationship between the S&P 500 performance and the Fed's balance sheet.
The 4,500 level requires a basic understanding of market psychology.
This level could pour trillions of "dry powder" from the sidelines and back into value stocks and smaller cap stocks. I made mention of this recently. The key issue is how sustainable it is.
My view is that this could kick start a rally in small cap stocks once again. And we can be a lot more actionable about it. We also want to look for some beaten down companies that have strong balance sheets.
This is the type of market that can lift all boats, and we're already seeing breakouts today in the nanocap space. The universe of these small stocks is leading the market higher and momentum higher.
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| | | | | | | Full speed ahead.
Keep an Eye on Nordstrom
One company that has my attention today is Nordstrom (JWN). The stock has fallen nearly 17% today after a very weak earnings report. Revenue levels fell below pre-COVID hit, raising concerns about its short-term future.
We want to watch the momentum indicators on this stock. This stock could easily move into oversold territory in the next 48 hours.
That presents an opportunity.
Remember, the Nordstrom family offered $50 per share to take this company private in 2018. This looks like a one-off, negative quarter.
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| | | | | | | A buying opportunity might emerge very soon.
Enjoy your day,
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| | | Garrett Baldwin
Chief Analyst, American Markets
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| | | | | | | | | Dr. Bauer and I will be sitting down to discuss the incredible success he's had this year with his German trading service.
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*Results are NOT - and should not be assumed to be - typical and may vary from person to person. For more information, please go to: https://login.godesburgfinancialpublishing.com/disclaimer/. |
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