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Slim pickings in stock market, but big cap "Magnificent 7" types could fly...or die
I did my usual review of hundreds of charts, as I do multiple times a week. And I have some thoughts below.
Most significantly to me this week, I am running through that same process I’ve been doing for decades, but not alone. I’ve been doing so with Emma Johnston, who has been working with us at Sungarden Investment Publishing all year, and is quickly growing into an awesome “co-pilot” for me, especially on the ETF-related research we do.
Emma has already established herself as a Master’s Degree holder and a successful career at SSGA, which for those who don’t know, is one of 3 biggest ETF managers in the world (Blackrock’s iShares and Vanguard are the other 2). So she knows a lot of the stuff I have long forgotten! More recently, she has emerged on the Seeking Alpha platform as a strong ETF analyst. And she is learning from me and vice-versa, all of which should be to the benefit of our subscribers.
I will be away and in a different time zone next week, but I’m never too far from markets and communicating. We’ll have Emma in the driver’s seat for next Tuesday’s and next Thursday’s posts, where she will merge my updated thoughts with those of her own. I just hope I don’t lose my job :-)
While I’m in the “hot seat” as usual this week, here’s what I see:
The word of the day, week and last few months is PARABOLIC. Because that’s where QQQ is threatening to go. I have seen this movie before (1999-2000) and it has been one of the few potential scenarios I have focused on since I penned my 2024 preview. And here it is, right before our eyes.
Parabolic is how I describe when an ETF or stock that is going higher continues to do so, but at a stronger pace. I often compare it visually to looking at the top of the Empire State Building, where it gets increasingly narrow.
And, while it can always turn on a dime at any time…and that’s likely what happens when the parabolic move higher ends…this creates potential for a narrow part of the stock market, which is already carrying the rest, to continue to do so at an accelerated rate.
What does this set up down the road?
Related: The Most Lopsided Stock Market in My Career Continues