Navigating Nasdaq's Surge and the Red Sea Ripple
January 28th, 2024 Update
Very quick update this week.
Let’s have a look at the Nasdaq first:
It closed 1% above last week, the 12th positive week out of the last 13. I expect it to keep grinding higher as long as there are no disruptions from the interest rates side of the market. Note: it might decline next week and the following in the short term, I don’t know. Yet, I see a clear uptrend right here until proven otherwise. The #AI trend keeps pushing the index up.
What about interest rates then?
The 10-year was slightly up for the week. We want to see it trending down again to support the equity markets. I’m keeping an eye on it and it looks like it could break out any day in either direction.
Another data point to keep an eye on is the price of oil, considering the ongoing crisis in the Red Sea. Below is the chart for Brent Oil:
It is up 5.6% for the week. Considering the tensions in the Middle East and the Red Sea crisis, this chart can quickly become clearly “bullish” if the price goes above $84. We are very close. A new uptrend in the oil price will not be taken as a positive by the markets.
Looking at sectors, the Energy sector had a very strong week and could continue if oil prices keep grinding higher.
Last, let’s have a look at the equal-weight SP500 for a better sense of the health of the overall market:
The market has been going sideways yet above the very long consolidation box. A healthy behavior so far.
What about recession fears?
Right now the GDP Nowcasting algorithm is predicting the economy to grow at around 3% in Q1 2024. it will take a lot of bad data to get it below 0%.
My only concern right now is the ongoing crisis in the Red Sea and the impact it might have on inflation, especially in Europe.
Also, the market is close to being “overbought” and the Fear and Greed index is in “Extreme Greed territory:
In the very short term, we might see some volatility. yet the uptrend at this point looks intact.
Now to my momentum portfolios.
10X SMALL CAP MOMENTUM PORTFOLIO
Here is what the portfolio looks like (I updated all my stop-loss levels):
All my BUY STOP orders were triggered last week.
For this week I will be:
creating a STOP BUY order for 1450 shares of HITI 0.00%↑ at 1.93 USD. This is a marijuana stock, a group that is among the strongest and it is not correlated with the tech sector. Link to website.
The stock looks like about to break out again from a very long period of consolidation:
10X LARGE CAP MOMENTUM PORTFOLIO
Here is what the portfolio looks like today (I updated all my stop-loss levels):
Here I am doing nothing this week as I am fully invested right now.
That’s all for the week!
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Important: This is not investment advice. Consult a licensed financial advisor before making any investment decision.