Where is the top?

I’ve been doing my fair share of griping lately. Because it drives me nuts when all the strategist-types from the big investment banks, along with the mainstream financial gurus, continue to pound away at the bear market case for stocks, despite growing evidence that there is a new bull market in the works.

Next Big Thing

Don’t be surprised if there’s not a lot of upside for stocks between now and the next Fed meeting on June 14. The S&P 500 has come a long way to challenge its 52-week highs, a little breather makes sense. And if the market decides to pull back, it doesn’t mean that this rally was all BS hype. Use weakness to add quality stocks.

Bring on the Bull!

Consumer sentiment is terrible, one article said. Market breadth is much too narrow, another article said. Inflation is too stubborn and rates are headed higher, bond yields are precarious, banks are still in danger of failing, earnings aren’t rebounding, manufacturing surveys are weak, consumer credit is too high and delinquencies are spiking – they droned on and on with “proof” that there’s just no way there could actually be a new bull market in the works…

Position Updates May 15, 2023

Both of the AI stocks I’ve recommended, C3.ai (NASDAQ: AI) and Schrodinger (NASDAQ: SDGR) are looking good. C3.ai is flying today after it pre-announced a better than expected quarter. The stock was crushed 6 weeks ago by a hatchet job from short seller Hindenburg Research. But shares found support at the 200-day moving average. And this quarterly earnings report should help convince investors that the Hindenburg short report was a bunch of hooey.

Breaking Out…Or Breaking Down

The 52-week high for the S&P 500 is up around 4,300. One year ago, on Star Wars Day (May the 4th) 2022, the index closed exactly at 4,300. Then on August 16, the S&P 500 closed at 4305, after failing to move above the 200-day moving average, which, on that day, stood at 4,325. Both of the highs – May 4 and August 16 – were followed by some pretty nasty drops.

A Dull Market

I don’t mind telling you – this has been one of the least enjoyable weeks to write about the stock market in a long while. Trading has been directionless. I’ve watched at least two dozen upside breakouts for individual stocks fail. And despite the clear unwillingness to take stock prices higher, the bears have been unable to get a decent sell-off going…

Fed’s Balance Sheet Bingo

Two American banks failed. A few more – including a pretty big international bank, Credit Suisse (NYSE: CS) – weakened to the point that action was required. So the powers that be – ie the Fed, the Treasury and other banks – have stepped up to offer a backstop intended to assure account holders that they don’t need to pull their funds out.

Coming up Roses

As of yesterday, pretty much everything we’ve been talking about over the last month blossomed. We were looking for the S&P 500 to take a run at 4100. It did even better, closing yesterday at 4179. We were looking for Amazon (NASDAQ: AMZN) to make a convincing move above $100 that would carry it up to $110. Amazon finished yesterday at $112.91.

Trading Plan Update

I love it when a plan comes together. And it’s even better when that plan involves making some loot. We had been looking for the right entry point for an Amazon (NASDAQ: AMZN) trade

Today’s Trading Plan

Amazon shares have performed much worse than Microsoft over the last year. But if investors get the feeling that Amazon can put up similar metrics for its Amazon Web Services as what we saw from Microsoft, I think Amazon will rally.