Stock AnalysisTop News

Bubble Trouble Or Not?

US equity markets regained its footing with most key benchmarks gaining 3% for the week. The NASDAQ 100 is up over 8% YTD while the IWM (Grandpa Russell) is down -18.58% during the same period. This divergence in price action between small caps and growth stocks mirrors the issues facing the nation on both the political and economic front. Depending on whom you speak to about the markets, we are either in a massive bubble or it is the greatest buy opportunity since 2009.

The bull camp can point to FANG stocks, big tech, biotech, and social media names that have been able to profit handsomely during the quarantine and are running away in price (some hitting new highs). On the bear side of the coin, small caps lag with the Financial and Service sectors languishing and unemployment soaring to depression-era levels. Hertz (NYSE:HTZ), Pier 1 (NYSE:PIR), and many retailers filed for bankruptcy.

Furthermore, the NASDAQ 100 is just 1 1/2 ATR’s from its all-time highs, which seems remarkable. Can both theories be true? If so, how will this resolve?

This past week’s highlights:

  • Risk Gauges returned to 100% Risk On
  • The NASDAQ 100 regained it bullish phase, just 3% off its all-time highs
  • Biotech continues to lead and is in a bullish phase
  • Market Internals continue to lag overall market strength
  • Volume was light, not confirming price action
  • Volatility (VIX) bounced off their lower Bollinger Bands(R) and need to hold 24 price level to keep the bear case alive
  • XRT (Grandma Retail) is showing good relative price action
  • The Energy sector continued to bounce from its historic meltdown, a bet on the economy re-opening

Bubble Trouble Or Not?

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Related Articles

Back to top button

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.

Your information is secure and your privacy is protected. By opting in you agree to receive emails from us and our affiliates. Remember that you can opt-out any time, we hate spam too!