Rotation to Growth & Tech as illustrated by ROKU (w/ NFTRH 660 excerpt)

Market has been rotating back to growth from value and reflation-sensitive areas

It was all about long-term interest rates and the beginnings of the at least temporary failure of the inflation/reflation trades. Over the last several weeks I’ve been rotating in anticipation (with the biggest rotation being into cash), holding some big Tech and a few growth stocks like ROKU.

roku

If you look hard enough you’ll find a lot of stocks that look like ROKU did before it popped. Hint: Check out the ARKK fund, below. It’s definitely a market where we need to swallow our assumptions and especially orthodoxy and dogma and do what the market says. The interest rate view (per the Continuum indicator did the talking well ahead of time).

I am not at all promoting a headlong dive back into Tech/Growth, but so far it’s working. Aside from that, cash is the thing for now.

From NFTRH 660

As an as yet unbroken broad stock market subject to corrections and rotations of varying degrees across varying sectors (almost too perfectly to script) shifts hard away from the reflation stuff (Financials, Industrials, Materials, Commodity resources, etc.) back to Tech and Growth. A blurb showed up on my Fidelity screen announcing an analyst’s bullish views for H2 2021 on Tech. That gives me pause about its longevity, but I am going to go by the charts and the charts say that the Nasdaq 100 ticked a new high last week and remained positive on the week at the close.

Another chart, of the oh so well hyped ARK Innovation ETF shows that over-valued Tech and Growth began correcting before the peak of inflation hype and before the 30yr yield topped. But over the last couple of weeks many growth stocks have taken on looks similar to this ETF. That look, if we cancel out everything we think we know about valuations, broad market bearishness, etc… that look is the type of look a bottom feeding chart watcher can buy. As you know, I recently added some growth/story stocks (e.g. CRSP, SMAR, ROKU, etc.), some of which are or were in similar chart situations.

ARKK is just an example and probably not something I will buy (never saying never), but it nests atop the converged moving averages, has RSI nicely riding on top of its EMA 20 and MACD that just went positive. So, it is what it is. Technically constructive.

Going the other way, the reflation oriented stuff has been mostly rotated out. True believers in commodities need to get clubbed over the head. They need to feel the fear instilled by ‘bad cop’ Bullard. They need to question their assumptions. Without those things the Fed will not or cannot continue the inflation later in 2021. For now, patience.

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