Communicating In This Market
Let's keep in mind that almost half this index is Facebook and Google. Then sprinkle in a little Twitter, Disney, Netflix, Comcast and a few others, and you have your index.
Here's Facebook breaking out of this consolidation:
We've already got a Bull Call Spread on this one. But as long as we're above this consolidation, the bet is for higher prices.
Meanwhile, this looks like a classic bull Flag in Google doesn't it?
I think a failure for Facebook to breakout here, and same going for Google's "bull flag", would tell us a lot about the strength (or weakness) in this market.
When you have a leadership group like this, losing it can hurt the overall trend.
These generals haven't fallen, so we're giving the group the benefit of the doubt.
There's a lot of Disney+ on at my house with my 7-month old baby. I can see why $DIS keeps rockin:
Looking internationally, Tencent Music Entertainment in China just broke out this week:
Sea Ltd from Singapore just pulled back to key support. If $SE is above 211 I like this with a target of 335:
The strength in Communications is being seen all around the world, not just in the United States.
One last funny chart worth pointing out in Communications is Discovery.
Kids, this is a classic chart to send to your professors any time they start running their mouths about the efficient market hypothesis:
Communications is real.
We're seeing it.
I don't know what's going on, but the relative strength is there.
Someone knows something.
And I want to be a part of it.
Bottom Fish Much?
This is one lesson I had to learn the hard way,
"Bottom Fishing Can Be Very Hazardous To Your Wealth"
It's a great reminder that stocks go down for a reason. The opposite of relative strength is relative weakness.
Now, with that in mind, if you're going to bottom fish, the squeeze after an undercut of an IPO low, is probably the time to do it.
If $DASH is above 135, a long position makes sense. The risk is very well-defined and the upside is almost 100 points:
I like that cost-benefit analysis because if it's below 135, then it's not our problem. It's someone else's headache.
Let it go to zero. I don't care.
We only want to participate if it's above 135.
Where To Buy Wood?
Yesterday we talked about the Global Timber and Forestry Index breaking out of a multi-year base to new all-time highs.
You know what else looks strong? Where you buy the stuff:
The trend here has been up for a long time, but the risk vs reward has rarely been this favorable.
We only want to be long $LOW if it's above 180 with a target of 227. Again, below 180 and we want to leave it alone.
We want to be buyers of a breakout here.
Also check out the whole post on getting long $WOOD
Will We Lose The Little Guys?
Failed breakouts love showing up near market tops. These are some important ones that can potentially put a major damper on market breadth.
If Mid-caps, Small-caps and/or Micro-caps are below their February highs, that would not be characteristic of a strong market.
I think we're going to get a lot of information heading into the end of Q1.
We're already starting to put together our Q2 Playbook, so look out for that. There are a lot of new interesting trends to take advantage of that weren't around last quarter or the ones before that.
It's a different type of market, which is perfectly normal.
As investors, it's up to us to adapt with evolving environments. The ones who are better at doing that the fastest are the biggest winners at the end.
Value > Growth??
You might be sick of hearing us talk about this rotation out of Growth stocks and into Value.
Quite frankly, we're getting a little sick of talking about it!
So I want to know from you guys. Which is it?
New weekly closing lows for Growth stocks relative to Value stocks. Is this what 2021 is going to be like or was that it and now Growth takes over leadership again?
— J.C. Parets (@allstarcharts) March 19, 2021
I encourage you to join the conversation. Let's hear it!
JC