12th February 2024

The market remains extended on almost every metric, with some tech stocks reaching parabolic levels. However, small caps ($IWM) have just started to kick into gear with a nice weekly breakout taking place. The real test will be once $QQQ pulls back, do we see other sectors take the lead or are we just at the stage of “all boats rise”.

$ARKG Cathie wood has been under scrutiny as of late due to the dire performance of her funds. Morning star rated her as the worst fund manager ever, destroying the most amount of wealth within a specific period of time (I’m sure her clients are ecstatic). She recently admitted that the “higher interest rate environment” is a net negative for her investing strategy, a bit of an understatement. However, as these extreme levels of negativity take place both $ARKK & $ARKG are attempting to breakout.

I’ve flicked through the holdings of ARKG, her genomic fund, and a lot of the holdings themselves are setup in similar patterns. Indicating buyers are finally stepping in after a long bear market in the sector. Whilst I’m cautious on how it will react when $QQQ pulls back I’d like to get a position risking the low $28s.

$KWEB China markets are closed this week and the Hong Kong exchange doesn’t open until Wednesday, yet it’s hard to ignore the strong bottoming price action. Three higher lows and a strong close last week. If we break $25 over the coming days there’s a very good chance this could put in an aggressive move. The news cycle remains extremely pessimistic despite the continued efforts of the Chinese government. I’m already long but will happily increase exposure over $25.

$FRO A nice Oil & Gas name attempting a weekly breakout with little resistance ahead. Oil has been pretty strong the past 2-3 trading sessions, so any leaders in the sector remain on watch. If you compare the weekly close to $OXY and $CVX you’ll notice the relative strength across all time frames.

EGO A leading gold name with good relative strength and a tightening weekly flag. Obviously this will be hugely affected by rates, if we start to breakout to the upside it’s a buy for me.

In summary: I remain extremely cautious in big tech, would prefer to see how these names react as the market pulls back. CPI tomorrow and FOMC Wednesday could effect any new entries negatively. I’d like to see some good news and then the market sell into it, that would indicate a local top and a nice short opportunity in QQQ.