Stock Market Insights & Analysis
Newsletter
Netflix Stock Will Be A FAANG Again
Netflix lost it’s status as a FAANG when the stock fell from a $300 billion market cap to a $100 billion market cap this year. My firm entered Netflix in August as we fully expect the stock to become a FAANG again due to its revenue potential from ads and improving cash profile.
This Bear Market Rally has much Further to Go
Markets do not top together, nor do they bottom together. For this reason, identifying the leading markets can help you stay ahead of the trend. We continue to see evidence of these divergences, which is suggesting a meaningful low is being put in. While everyone is focused on Big Tech making new lows, they are failing to see that new leadership is pushing the market forward. Bellow, we look at the mounting evidence that this rally could extend farther than most think, and also provide the levels to watch so that you can manage risk just in case the bear market continues to new lows.
Divergences Point Toward Market Moving Higher (Technical Analysis)
Divergences are important to track. There is always a leading market that can provide advanced warning that a top or bottom is ahead. For example, from the COVID low in 2020 through February of 2021, all major global indexes were moving up together. When you see an all-encompassing trend, it tends to be a powerful one, much like we saw into early 2021.
Sentiment and Divergences are Pointing Up
The stock market continues to power higher on the heels of bad news. We are up over 6% since the CPI reading signaled that inflation is stickier than hoped. The last time we saw the broad market ignore bad news was in mid-June, just before the S&P 500 pushed up over 18% in less than 2 months. However, unlike the mid-June rally, sentiment today is at historic levels and it's being accompanied by multiple markets already starting a new uptrend before the S&P 500. In this week’s video, we take a deeper look at the markets that are not following the S&P 500 to new lows and also show the critical levels that will define whether we retest the August high or break down to new lows.
Big Tech Continues To Buy Semiconductors At Record Levels In 2022
Despite an enormous increase in Big Tech capex primarily driven by data centers, this line item does not get the attention it deserves in terms of follow-through to the semiconductor industry. Below, we look at FY2022 budgets to draw the conclusion that H2 spending on data center chips is equal if not greater than the first half of 2022.
Stocks are up on bad news? Now what?
Inflation data continued to surprise to the upside this week, yet the market is up nearly 3% on this information, as investors contemplate a potential end of the bear market in 2022. Also, while big tech, semis and the S&P 500 made new lows this week, biotech, transportation stocks, many high beta stocks made a higher low. The last time we saw the market shrugging off bad news with this many divergences was in mid-June, just before the last large bear market rally began. In this week’s video we dive into the possible paths this market can take into year-end, while also providing overhead levels where the risk will be high.
Will The Stock Market Bounce Last?
The U.S. Dollar is acting like a wrecking ball across global economies, and is one of the primary culprits for the current stock market crash. As the dollar continues to strengthen, other currencies get weaker, which only intensifies global inflation pressures. Once the dollar tops, which foreign central banks may force, expect a rally in equities --- specifically in beaten down growth stocks. Last week we said to expect a rally in equities as the U.S. Dollar is potentially putting in a bigger top, which we are now seeing. This week, we discuss what needs to happen, which will determine if this will be a multi-week rally or a multi-month rally.
Barron's Podcast: What the Heck is Going on with Cloud Valuations
Earlier this week, I/O Fund CEO and Lead Tech Analyst Beth Kindig joined Jeremy Owens, Tech Editor, and San Francisco Bureau Chief of MarketWatch, on Barron’s Live. They discussed cloud valuations including those that are trading at 2X above Covid lows, what metrics matter when evaluating cloud companies, and what to watch for in upcoming earnings season --- including a few comments on ad-tech.
