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Premium daily stock trading service. In our Stock Trading Alerts, we provide extensive analyses and comments at least 1 time per trading day, usually before the opening bell. The analyses focus on all the key factors essential to determining the medium- and short-term outlook for the S&P 500 futures, spanning over several time frames, credit markets and S&P 500 sectors and ratios. They also capture the key fundamental developments, events and trends in assessing the prospects and health of the S&P 500 moves. This way, you’re kept up-to-date on important developments that far too many investors are apt to miss or underestimate.

Whether you're looking for objective analyses to broaden your horizon / add confidence to trading decisions, or want to get inspired by our trade calls for S&P 500 futures, Stock Trading Alerts are the way to go.

  • Stock Records Were Made to be Broken

    March 12, 2021, 8:32 AM

    Records were made to be broken. Thursday's (Mar. 11) session was the embodiment of that.

    Every index closed in positive territory, and the Dow, S&P, and Russell all closed at record highs. Meanwhile, the Nasdaq led the way again with a 2.52% gain. After touching correction territory two times in the last week, the Nasdaq is up over 6.3% for the week. This is why you buy the dips, and why I said the second, the Nasdaq drops below 13000 support that you should buy.

    Be bold, a little contrarian, block out the noise, and never try to time the market. Sure, when you buy a dip during uncertain times, you run the risk of encountering more pain. However, in the long-term, stocks trend upwards.

    For example, do you also know what happened precisely a year ago, on March 11, 2020? The headline on CNBC read like so: Dow plunges 10% amid coronavirus fears for its worst day since the 1987 market. See for yourself.

    You know what else happened? The market didn't bottom for another 2 weeks and declined another 21%.However, if you bought the Dow-tracking DIA ETF on March 11 and held it this entire time, you'd have gained 40.51%.

    Imagine if you bought the dip as I recommended for tech.

    I cautiously said to BUY the QQQ ETF, which tracks the Nasdaq, on February 24 but recommended doing it cautiously and selectively. I doubled down once it dropped below support at 13000 and tripled down once the Nasdaq hovered around 12600 on Monday (Mar. 8).

    As I said before, the Nasdaq is up over 6.3% this week. If you followed my lead on this, you'd be pleased.

    Inflation fears and the acceleration of bond yields are still a concern. But let's have a little perspective here. It appears as if things have stabilized for now. Bond yields are still at a historically low level, and the Fed Funds Rate remains 0%. Plus, jobless claims beat estimates again and came in at 712,000. This is nearly the lowest they've been in a whole year.

    We will see how President Biden's newly signed $1.9 trillion stimulus package affects yields and inflation. But for now, with the Fed showing no signs of hiking rates shortly and inflation looking tamer than expected, we could see more firepower for stocks.

    So is the downturn overblown and already finished?

    Time will tell. I think that we could still see some volatile movements and consolidation to close the week out. That's just what happens with surges and swings like this. While I maintain that I do not foresee a crash like what we saw last March and feel that the wheels remain in motion for an excellent 2021, Mr. Market still has to figure itself out.

    A broad-based correction of some sort is still very possible. I mean, the Nasdaq's already hit correction territory twice in the last week. Corrections are healthy and normal market behavior. Only twice in the previous 38 years have we had years WITHOUT a correction (1995 and 2017).

    Most importantly, a correction right now would be an excellent buying opportunity. Once again- look at the Nasdaq since March 8.

    It can be a very tricky time for investors right now. But never, ever, trade with emotion. There could be some more short-term pain, yes. But if you sat out last March when others bought, you are probably very disappointed in yourself.

    You can never time the market.

    My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.

    With that said, to sum it up:

    There is optimism but signs of concern. The market has to figure itself out. A further downturn is possible, but I don't think that a decline above ~20%, leading to a bear market, will happen any time soon.

    Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck.

    Nasdaq- That’s Why I Called BUY

    Figure 1- Nasdaq Composite Index $COMP

    Can I flex again, please?

    Flexing.

    The Nasdaq's performance this week is why I called BUY despite hitting two corrections in the last week. On Tuesday (Mar. 9), the Nasdaq saw its best day since November. The index's gains continued after that and is now sitting pretty up over 6.3% for the week.

    If you bought the dip, good on you. It's an excellent time to be a little bit bold and fearless. Take Ark Funds guru Cathie Wood, for example. Many old school investors scoffed at her comments on Monday (Mar. 8) after she practically doubled down on her bullishness for her funds and the market as a whole. After crushing 2020, her Ark Innovation Fund (ARKK) tanked over 30%. Many called her the face of a bubble. Many laughed at her. Tuesday, March 9, ARKK saw its best day in history. Week-to-date, ARKK is up a staggering 16.71%.

    I'm not saying that we're out of the woods with tech. But I am saying not to try and time the market, not get scared, and have some perspective.

    The Nasdaq is once again positive for the year, but unfortunately, I no longer think we're at a BUY level. We could see some consolidation and profit-taking to end the week. Still, if we see a significant drop, especially below 13000, it could be a good buy again. It can't hurt to keep nibbling- we're still off the highs. I'm going to stick with the theme of "selectively buying" sub-sectors such as cloud computing, e-commerce, and fintech.

    I think you should now HOLD and let the RSI guide your Nasdaq decisions. See what happens over subsequent sessions, research emerging tech sectors, and high-quality companies, and buy that next dip.

    For an ETF that attempts to correlate with the performance of the NASDAQ directly, the Invesco QQQ ETF (QQQ) is a good option.

    For more of my thoughts on the market, such as when small-caps will be buyable, inflation, and emerging market opportunities, sign up for my premium analysis today.

    Thank you for reading today’s free analysis. If you would like to receive daily premium follow-ups, I encourage you to sign up for my Stock Trading Alerts to also benefit from the trading action described - the moment it happens. The full analysis includes more details about current positions and levels to watch before deciding to open any new ones or where to close existing ones.

    Thank you.

    Matthew Levy, CFA
    Stock Trading Strategist

  • That’s Why You Buy the Dips

    March 10, 2021, 8:13 AM

    Days like Tuesday (Mar. 9) are why you buy the dips. It was nothing short of a reverse rotation from what we’ve seen as of late. Bond yields moved lower; tech stocks popped.

    That’s why I called BUY on the Nasdaq.

    Inflation fears and the acceleration of bond yields are still a concern. But it looks as if things are stabilizing, at least for one day. The lesson here, though, is to be bold, a little contrarian, and block out the noise.

    Unless you’ve been living under a rock, you know that recent sessions have been characterized by accelerating bond yields driving a rotation out of high growth tech stocks into value and cyclical stocks that would benefit the most from an economic recovery. The Nasdaq touched correction territory twice in the last week and gave up its gains for the year.

    But imagine if you bought the dip as I recommended.

    The Nasdaq on Tuesday (Mar. 9) popped 3.7% for its best day since November. Cathie Wood’s Ark Innovation ETF (ARKK) surged more than 10% for its best day ever after tanking by over 30%. Semiconductors also rallied 6%.

    Other tech/growth names had themselves a day too: Tesla (TSLA) +20%, Nvidia (NVDA) +8%, Adobe (ADBE) +4.3%, Amazon +3.8%, Apple (AAPL) +4.1%, and Facebook (FB) +4.1%.

    In keeping with the theme of buying the dip, do you also know what happened a year ago yesterday to the date? The Dow tanked 7.8%!

    There’s no way to time the market correctly. If you bought the Dow mirroring SPDR DJIA ETF (DIA) last March 9, you’d have still seen two weeks of pain until the bottom. However, you’d have also seen a gain of almost 36% if you bought that dip and held on until now.

    Look, I get there are concerns and fears right now. The speed at which bond yields have risen is concerning, and the fact that another $1.9 trillion is about to be pumped into a reopening economy makes inflation a foregone conclusion. But let’s have a little perspective here.

    Bond yields are still at a historically low level, and the Fed Funds Rate remains 0%.

    So is the downturn overblown and already finished?

    Time will tell. I think that we could still see some volatile movements over the next few weeks as bond yields stabilize and the market figures itself out. While I maintain that I do not foresee a crash like what we saw last March and feel that the wheels remain in motion for an excellent 2021, Mr. Market has to figure itself out.

    A correction of some sort is still very possible. I mean, the Nasdaq’s already hit correction territory twice in the last week and is still about 3-4% away from returning to one. But don’t fret. Corrections are healthy and normal market behavior. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017).

    Most importantly, a correction right now would be an excellent buying opportunity. Just look at the Nasdaq Tuesday (Mar. 9).

    It can be a very tricky time for investors right now. But never, ever, trade with emotion. Buy low, sell high, and be a little bit contrarian. There could be some more short-term pain, yes. But if you sat out last March when others bought, you are probably very disappointed in yourself. Be cautious, but be a little bold too.

    You can never time the market.

    My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.

    With that said, to sum it up:

    There is optimism but signs of concern. The market has to figure itself out. A further downturn is possible, but I don’t think that a decline above ~20%, leading to a bear market, will happen any time soon.

    Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck.

    Nasdaq- That’s Why I Called BUY

    Figure 1- Nasdaq Composite Index $COMP

    For the second time in a week, the Nasdaq hit correction territory and rocketed out of it. It saw its best day since November and proved once again that with the Nasdaq, you always follow the RSI. There could be more uncertainty over the next few weeks as both the bond market and equity market figure themselves out. However, the Nasdaq declines were very buyable, as I predicted.

    If you bought the dip before Tuesday’s (Mar. 9) session, good on you. Be a little bit bold and fearless right now. Take Ark Funds guru Cathie Wood, for example. Many old school investors scoffed at her comments on Monday (Mar. 8) after she practically doubled down on her bullishness for her funds and the market as a whole. After crushing 2020, her Ark Innovation Fund (ARKK) tanked over 30%. Many called her the face of a bubble. Many laughed at her.

    Tuesday, March 9, ARKK saw its best day in history.

    I’m not saying that we’re out of the woods with tech. All I’m saying is don’t try to time the market, don’t get scared and have perspective.

    The Nasdaq is once again roughly flat for the year, its RSI is closer to oversold than overbought, and we’re still below the 50-day moving average, near a 2-month low, and right around support at 13000.

    It can’t hurt to start nibbling now. There could be some more short-term pain, but if you waited for that perfect moment to start buying a year ago when it looked like the world was ending, you wouldn’t have gained as much as you could have.

    I think the key here is to “selectively buy.” I remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.

    Mike Wilson, chief investment officer at Morgan Stanley, had this to say about recent tech slides- “I don’t think this is the end of the bull market or the end of tech stocks per se, but it was an adjustment that was very necessary.”

    I like the levels we’re at, and despite the possibility of more “adjustments” in the short-run, it’s a good time to BUY. But just be mindful of the RSI, and don’t buy risky assets. Find emerging tech sectors or high-quality companies trading at a discount.

    For an ETF that attempts to correlate with the performance of the NASDAQ directly, the Invesco QQQ ETF (QQQ) is a good option.

    For more of my thoughts on the market, such as when small-caps will be buyable, more thoughts on inflation, and emerging market opportunities, sign up for my premium analysis today.

    Thank you for reading today’s free analysis. If you would like to receive daily premium follow-ups, I encourage you to sign up for my Stock Trading Alerts to also benefit from the trading action described - the moment it happens. The full analysis includes more details about current positions and levels to watch before deciding to open any new ones or where to close existing ones.

    Thank you.

    Matthew Levy, CFA
    Stock Trading Strategist

  • Markets: Any Reasons to Worry About Recent Downturn?

    March 8, 2021, 9:19 AM

    The theme of last week was primarily the same as the previous few weeks - rising bond yields and inflation fears caused stocks to crumble.

    Look, it's not the fact that bond yields are rising that are freaking out investors. Bond yields are still at a historically low level, and the Fed Funds Rate remains 0%. But it's the speed at which they've risen that are terrifying people. So far this year, the 10-year yield has soared 72%

    Fed Chair Jerome Powell's statement that inflation could "temporarily return" did not help matters much last week either. However, despite the fears, the indices really did not perform all that badly the previous week after a Friday (Mar. 5) reversal. The Dow Jones managed to gain 1.8%, the S&P eked out a 0.8% gain, and after briefly touching correction territory and giving up its gains for the year, the Nasdaq managed to decline only -2.1%.

    So what's on tap for this week? Is the downturn overblown and already over?

    This is a massive week for market sentiment. First and foremost, the Senate passed President Biden's $1.9 trillion stimulus plan over the weekend. On the one hand, stocks could pop from this, while on the other hand, this makes inflation a foregone conclusion. Remember this, too - when the market gets what it expects, it's usually a sell signal rather than a buy signal. Markets look forward; not to the past, and not to the present.

    Important data being released this week also includes inflation data, initial claims, and consumer sentiment.

    Time will tell where we go from here. While I still do not foresee a crash like we saw last March and feel that the wheels remain in motion for a healthy 2021, inflation is a genuine concern and could be here already.

    According to Bloomberg, the price of gas and food already appear to be getting a head start on inflation. For January, Consumer Price Index data also found that the cost of food eaten at home rose 3.7 percent from a year ago — more than double the 1.4 percent year-over-year increase in all goods included in the CPI.

    This could only be the start too. In its 2021 outlook report, the Economic Research Service for the U.S. Department of Agriculture forecast the food cost from grocery stores to rise 1 to 2% this year.

    Moody's Analytics chief economist Mark Zandi also believes that Wall Street is significantly underestimating inflation's seriousness and warns it could affect every sector in the market — from growth to cyclicals.

    "Inflationary pressures will develop very quickly," he said. "I don't think there's any shelter here."

    I'm not trying to sound the alarm, but be very aware. These are just the early warning signs.

    I still feel that a correction of some sort is imminent. The Nasdaq touched it briefly last week and is still about 2% away from one. Other indices could possibly follow. But don't fret. Corrections are healthy and normal market behavior, and we have been long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017).

    Most importantly, this correction could be an excellent buying opportunity.

    It can be a very tricky time for investors right now. But never, ever, trade with emotion. Buy low, sell high, and be a little bit contrarian. There could be some more short-term pain, yes. But if you sat out last March when others bought, you are probably very disappointed in yourself. Be cautious, but be a little bold too.

    There's always a bull market somewhere, and valuations, while still somewhat frothy, are at much more buyable levels now.

    My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.

    With that said, to sum it up:

    There is optimism but signs of concern. A further downturn by the end of the month is very possible, but I don't think that a decline above ~20%, leading to a bear market, will happen.

    Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck.

    Nasdaq - Buyable but Beware of the Risks

    Figure 1- Nasdaq Composite Index $COMP

    The Nasdaq is no longer in correction territory, nor is it negative for 2021 any longer. But beware- this could change very quickly. More pain could be on the horizon until we get some clarity on this bond market and inflation. However, this Nasdaq downturn is long overdue and starting to be buyable.

    If you bought at the bottom on Friday, before the afternoon reversal and made some quick gains, good on you. It actually didn’t end up being THAT bad of a week for the Nasdaq after Friday’s reversal.

    Be that as it may, Friday’s reversal does not mean we’re out of the woods. According to Morgan Stanley’s chief U.S. equity strategist Mike Wilson, “10-year yields finally caught up to other asset markets. This is putting pressure on valuations, especially for the most expensive stocks that had reached nosebleed valuations.”

    Expensive stocks? Nosebleed valuations? Sounds like tech to me.

    Wilson also said that once valuation correction and repositioning are finished, then growth stocks can potentially “rejoin the party.”

    The Nasdaq is now mostly flat for the year, its RSI is closer to oversold than overbought, and we’re at almost a 2-month low.

    It can’t hurt to start nibbling now. There could be some more short-term pain, but if you waited for that perfect moment to start buying a year ago when it looked like the world was ending, you wouldn’t have gained as much as you could have.

    I think the key here is to “buy selectively.” I remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.

    I also think it’s an outstanding buying opportunity for big tech companies with proven businesses and solid balance sheets. Take Apple (AAPL), for example. It’s about 15% off its January 26th highs. That is what I call discount shopping.

    I like the levels we’re at, and despite the possibility of more losses in the short-run, it’s a good time to start to BUY. But just be mindful of the RSI, and don’t buy risky assets. Find emerging tech sectors or high-quality companies trading at a discount.

    For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.

    For more of my thoughts on the market, such as when small-caps will be buyable, more thoughts on inflation, and emerging market opportunities, sign up for my premium analysis today.

    Thank you for reading today’s free analysis. If you would like to receive daily premium follow-ups, I encourage you to sign up for my Stock Trading Alerts to also benefit from the trading action described - the moment it happens. The full analysis includes more details about current positions and levels to watch before deciding to open any new ones or where to close existing ones.

    Thank you.

    Matthew Levy, CFA
    Stock Trading Strategist

  • Correction for Nasdaq- More Indices to Follow?

    March 5, 2021, 9:11 AM

    I called Jay Powell's bluff a week ago. Remember when he said last week that we're still far from The Fed's inflation targets?

    Well, I was right to doubt him. The market didn't like his change in tone Thursday (Mar. 5).

    You see, when bond yields are rising as fast as they have, and Powell is maintaining that Fed policy won't change while admitting that inflation may "return temporarily," how are investors supposed to react? On the surface, this may not sound like a big deal. But there are six things to consider here:

    1. It's a significant backtrack from saying that inflation isn't a concern. By admitting that inflation "could" return temporarily, that's giving credence to the fact that it's inevitable.
    2. The Fed can't expect to let the GDP scorch without hiking rates. If inflation "temporarily returns," who is to say that rates won't hike sooner than anyone imagines?
    3. Fool me once, shame on me, fool me twice...you know the rest. If Powell changed his tune now about inflation, what will he do a few weeks or months from now when it really becomes an issue?
    4. Does Jay Powell know what he's doing, and does he have control of the bond market?
    5. A reopening economy is a blessing and a curse. It's a blessing for value plays and cyclicals that were crushed during COVID and a curse for high-flying tech names who benefitted from "stay-at-home" and low-interest rates.
    6. The Senate will be debating President Biden’s $1.9 trillion stimulus plan. If this passes, as I assume it will, could it actually be worse for the economy than better? Could markets sell-off rather than surge? Once this passes, inflation is all but a formality.

    Look, it's not the fact that bond yields are rising that are freaking out investors. Bond yields are still at a historically low level, and the Fed Funds Rate remains 0%. But it's the speed at which they've risen that are terrifying people.

    According to Bloomberg, the price of gas and food already appear to be getting a head start on inflation. For January, Consumer Price Index data also found that the cost of food eaten at home rose 3.7 percent from a year ago — more than double the 1.4 percent year-over-year increase in all goods included in the CPI.

    The month of January. Can you imagine what this was like for February? Can you imagine what it will be like for March?

    I'm not trying to sound the alarm- but be very aware. These are just the early warning signs.

    So, where do we go from here? Time will tell. While I still do not foresee a crash like we saw last March and feel that the wheels remain in motion for a healthy 2021, that correction that I've been calling for has already started for the Nasdaq. Other indices could potentially follow.

    Finally.

    Corrections are healthy and normal market behavior, and we have been long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017).

    Most importantly, this correction could be an excellent buying opportunity.

    It can be a very tricky time for investors right now. But never, ever, trade with emotion. Buy low, sell high, and be a little bit contrarian. There could be some more short-term pain, yes. But if you sat out last March when others bought, you are probably very disappointed in yourself. Be careful, but be a little bold right now too.

    There's always a bull market somewhere, and valuations, while still somewhat frothy, are at much more buyable levels now.

    My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.

    With that said, to sum it up:

    There is optimism but signs of concern. A further downturn by the end of the month is very possible, but I don't think that a decline above ~20%, leading to a bear market, will happen.

    Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck.

    Nasdaq- From Overbought to Oversold in 3 Weeks?

    Figure 1- Nasdaq Composite Index $COMP

    The Nasdaq is finally in correction territory! I have been waiting for this. It’s been long overdue and valuations, while still frothy, are much more buyable. While more pain could be on the horizon until we get some clarity on this bond market and inflation, its drop below 13000 is certainly buyable.

    The Nasdaq has also given up its gains for 2021, its RSI is nearly oversold at about 35, and we’re almost at a 2-month low.

    It can’t hurt to start nibbling now. There could be some more short-term pain, but if you waited for that perfect moment to start buying a year ago when it looked like the world was ending, you wouldn’t have gained as much as you could have.

    Plus, it’s safe to say that Cathie Wood, the guru of the ARK ETFs, is the best growth stock picker of our generation. Bloomberg News’ editor-in-chief emeritus Matthew A. Winkler seems to think so too. Her ETFs, which have continuously outperformed, focus on the most innovative and disruptive tech companies out there. Not to put a lot of stock in one person. But it’s safe to say she knows a thing or two about tech stocks and when to initiate positions- and she did a lot of buying the last few weeks.

    I think the key here is to “selectively buy.” I remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.

    I also think it’s an outstanding buying opportunity for big tech companies with proven businesses and solid balance sheets. Take Apple (AAPL), for example. It’s about 30% off its all-time highs. That is what I call discount shopping.

    What’s also crazy is the Nasdaq went from overbought 3 weeks ago to nearly oversold this week. The Nasdaq has been trading in a clear RSI-based pattern, and we’re at a very buyable level right now.

    I like the levels we’re at, and despite the possibility of more losses in the short-run, it’s a good time to start to BUY. But just be mindful of the RSI, and don’t buy risky assets. Find emerging tech sectors or high-quality companies trading at a discount.

    For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.

    For more of my thoughts on the market, such as the streaky S&P, inflation, and emerging market opportunities, sign up for my premium analysis today.

    Thank you for reading today’s free analysis. If you would like to receive daily premium follow-ups, I encourage you to sign up for my Stock Trading Alerts to also benefit from the trading action described - the moment it happens. The full analysis includes more details about current positions and levels to watch before deciding to open any new ones or where to close existing ones.

    Thank you.

    Matthew Levy, CFA
    Stock Trading Strategist

  • Mixed Start for Stocks in March

    March 3, 2021, 8:45 AM

    After March kicked off with a session that indicated the worst for stocks may be over (for now), Tuesday saw the indices sell-off towards the close.

    At least Rocket Mortgage (RKT) had a good day, though! And, at least the 10-year yield didn’t spike either. But that could change. Yields ticked up overnight to 1.433%, after President Biden pledged enough vaccine supply to inoculate every American adult by the end of May.

    So, where do we go from here? This positive economic and health news is excellent for reopening. But rising bond yields are a blessing and a curse. On the one hand, bond investors see the economy reopening and heating up. On the other hand, with the Fed expected to let the GDP scorch without hiking rates, inflation may return.

    I don’t care what Chairman Powell says about inflation targets this and that. The price of gas and food is increasing already. In fact, according to Bloomberg, food prices are soaring faster than inflation and incomes.

    For January, Consumer Price Index data also found that the cost of food eaten at home rose 3.7 percent from a year ago — more than double the 1.4 percent year-over-year increase in the prices of all goods included in the CPI.

    Can you imagine what this was like for February? Can you imagine what it will be like for March? I’m not trying to sound the alarm - but be very aware. These are just the early warning signs.

    So about March. Will it be more like Monday or Tuesday? Was the second half of February the start of the correction that I’ve been calling for? Or is the “downturn” already over? Only time will tell. While I still do not foresee a crash like we saw last March and feel that the wheels are in motion for a healthy 2021, I still maintain that some correction before the end of this month could happen.

    Rising bond yields are concerning. Inflation signs are there. But structurally, I don’t think it will crash the market (yet).

    Corrections are also healthy and normal market behavior, and we are long overdue for one. It’s been almost a year now. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017).

    A correction could also be an excellent buying opportunity for what could be a great second half of the year.

    My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.

    With that said, to sum it up:

    There is optimism but signs of concern. A further downturn by the end of the month is very possible, but I don’t think that a decline above ~20%, leading to a bear market, will happen.

    Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck.

    Nasdaq- a Buyable Slowdown?

    Figure 1- Nasdaq Composite Index $COMP

    The Nasdaq’s slowdown has been long overdue. Even though more pain could be on the horizon, I like the Nasdaq at this level for some buying opportunities.

    But I’d prefer it drop below support at 13000 for real buying opportunities.

    But it can’t hurt to start nibbling now. If you waited for that perfect moment to start buying a year ago when it looked like the world was ending, you wouldn’t have gained as much as you could have.

    Plus, it’s safe to say that Cathie Wood, the guru of the ARK ETFs, is the best growth stock picker of our generation. Bloomberg News’ editor-in-chief emeritus Matthew A. Winkler seems to think so too. Her ETFs, which have continuously outperformed, focus on the most innovative and disruptive tech companies out there. Not to put a lot of stock in one person. But it’s safe to say she knows a thing or two about tech stocks and when to initiate positions- and she did a lot of buying the last few weeks.

    I also remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.

    Before February 12, I would always discuss the Nasdaq’s RSI and recommend watching out if it exceeds 70.

    Now? As tracked by the Invesco QQQ ETF, the Nasdaq has plummeted almost 5.5% since February 12 and is closer to oversold than overbought!

    But it’s still not enough.

    Outside of the Russell 2000, the Nasdaq has been consistently the most overheated index. But after its recent slowdown, I feel more confident in the Nasdaq as a SHORT-TERM BUY.

    The RSI is king for the Nasdaq. Its RSI is now around 45.

    I follow the RSI for the Nasdaq religiously because the index is merely trading in a precise pattern.

    In the past few months, when the Nasdaq has exceeded an overbought 70 RSI, it has consistently sold off.

    • December 9- exceeded an RSI of 70 and briefly pulled back.
    • January 4- exceeded a 70 RSI just before the new year and declined 1.47%.
    • January 11- declined by 1.45% after exceeding a 70 RSI.
    • Week of January 25- exceeded an RSI of over 73 before the week and declined 4.13% for the week.

    Again- if the index drops below 13000, and the RSI hits undeniably overbought levels, get on the train.

    But because we haven’t declined just enough, I am making this a SHORT-TERM BUY. But follow the RSI literally and take profits once you have the chance to.

    For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.

    For more of my thoughts on the market, such as the streaky S&P, inflation, and emerging market opportunities, sign up for my premium analysis today.

    Thank you for reading today’s free analysis. If you would like to receive daily premium follow-ups, I encourage you to sign up for my Stock Trading Alerts to also benefit from the trading action described - the moment it happens. The full analysis includes more details about current positions and levels to watch before deciding to open any new ones or where to close existing ones.

    Thank you.

    Matthew Levy, CFA
    Stock Trading Strategist

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