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Signs of a Crazed Market

These are some stocks to watch for signs of a crazed market.
 
   
     
A Crazed Market

For the past few days, we’ve seen stocks flipping back to the upside. But as of today this recent rally looks to have lost some steam and is grinding to a halt.

This loss in momentum is attributed to the Minneapolis Fed Chief, Neel Kashkari’s comments that rates are likely to stay at these historic highs for quite some time. This crushed some of the hope investors gained a little over a week ago following the FOMC meeting. 

Remember, a lot of optimism has been dangled like a carrot for months on end with the hope of rates coming back down. We have seen that optimism play out with surges on a regular basis each time the carrot is dangled.

But according to Kashkari’s comments yesterday, that was likely a misplaced hope. 

As I’ve spoken about many times, we are still seeing a market where we can't quite agree on what value is. Traditional valuation metrics aren’t holding water.

We are now entering the final stretch of earnings season. The overall result of this quarter’s earnings? Lack of clarity.

Uber (UBER) missed its earnings mark slightly earlier today and shares dropped 8%.

Shopify (SHOP) reported its slowest quarterly revenue growth in two years and shares plummeted 19%. 

Disney (DIS) beat its earnings expectations and yet still dropped yesterday. Another sign that valuation metrics are out the window right now.

After hours today we have a couple key stocks to watch: 

Both AMC (AMC) and Robinhood (HOOD) are reporting. Now these are two stocks to watch as indicators of a crazed market. 

I’m sure we all remember the meme stock ride in 2021. And these two were some of the biggest names involved with Gamestop (GME) being the most famous. 

Now, Gamestop isn't reporting its earnings until June. But the king of meme stocks did something very troubling just the other day… Its stock price rose over 50% in two days on absolutely no news!

Once again, these are signs of a confused and volatile market with no clear direction.

Typically, when investors begin bailing on the highest risk assets (microcaps and meme stocks included) it’s a flight to safety… Yet, we’ve also seen gold dip during the last few weeks at the same time.

Have I convinced you the market is confused yet?

I doubt today’s earnings will provide the much needed clarity, but let’s keep our eyes on both AMC and Robinhood’s earnings after hours this evening to see what happens next.

If we see subpar earnings with share prices soaring in after hours trading and at the market open tomorrow, then it shows some confidence in the highest risk sector of the market which likely bleeds into the overall market as well.

If we see the opposite — good earnings and investors fleeing — it accentuates a flight to safety within the overall market…

But that begs another question: Where is safety?

It looked certain it was gold just a month ago… It looked like it was energy earlier in the year…

Is it cash now? 

We’ll dive into that next time.

For now, sit back and watch the meme stock show!
To your trading success, 
 
 

Nate

P.S. Speaking of safety, my dividend portfolio is my steadiest strategy.

If you haven’t taken advantage of the Ultimate Dividend Portfolio, I highly recommend it! 
 
   
 
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