Category Archives: Uncategorized

It’s Locked in a Holding Pattern

We blogged that the Fed top is here in our last post.  However, the selling pressure was abated last week.  The sellers were nowhere to be found.  The indices closed positive last week to finish a great first quarter.  With the muted price action from last week, is the market set up to launch to new heights or something else?

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It’s All About The Central Bank

When the Fed pivoted its easy money policy on January 4th earlier this year, the extremely oversold market responded with vengeance! The market participants have since pushed the market over the limit by triggering the fear of mission out motions.  The selloff occurred during the first week of March was promptly

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A short Note

We are waiting for the year-end closing data.  So the weekly blog will be out on Monday 12/31/2018.  We will be focusing on the forecast of 2019 based on how the year 2018 is closed.

Happy New Year!

S&P 500 Cycle Location 09072018

The first week of September proves once again that September is not a good month for the stock market.  The market had a mild selloff that was led by the small caps and NASDAQ.  As soon as the S&P 500 broke out the old January 2018 high, it fell right back down below the old high.

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Nasdaq Is Breaking Out–The Amazon Era

While both the DOW and S&P 500 indices are trapped below the all time high that was establish in January 2018, the Nasdaq ignored all the noises and made three more all time highs since January 2018.  We can’t ignore the fact the numbers are speaking loud and clear that the winners are still with tech!

A few major banks released earnings last Friday, but failed to ignite the banking stocks.  The banking sector is in solid bear territory.  The stock price performance is ranked 139th out of 197 industrial groups.  The semi sector is in equally a bad shape.  These two major sectors are needed in order to have a broad bull market.  Maybe these two sectors will pick up later as the market clears out the noises, but right now the winners are with Nasdaq.

The Nasdaq outperformed every other indices with an impressive gain of about 13% for the year.  The QQQ ETF had 10.61% YTD return.  The QQQ’s main holdings are the high flying names such as the FANG stocks, essentially the Nasdaq 100 is the FANG stocks.  Despite all the noises, Amazon and Netflix had no trouble at all making new highs after new highs.

It’s extremely difficult to find the fair value of Amazon or Netflix.  These two companies don’t show any sizable net profit relative to their revenue, but the street has been sold by their vision and storytelling.  Amazon and Netflix changed the rules of the game, no profits, not problem.  It’s deja vu all over again like the dot com bubble era.

Better yet, we are at the eve of a new industrial revolution–artificial intelligence.  So the bubble is only at the very beginning stage.  For sure, we are going to have a tech bubble in the next few years surrounding the AI area.  The multi-year easy money policy created bull market is not going to die off so easily, without a bull trap to destruct all the wealth accumulated before the bubble.

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