Flash Update: QQQ Outperformance Short-Term
Technical Market Outlook 1/11/2022
Markets holding up firmly from our "buy dips" mantra. Negative real yields are still very much here and the "rate of change" shock from hypergrowth ARKK names appear to now have been exhausted on the downside. We are seeing many, many tech names show DeMARK countdown exhaustion.
ARKK completed the DeMARK TD Sequential 13 Countdown and held the TD Risk Levels on that countdown. We would be looking for a bounce in these tech names, regardless of profitability or not. However, the ratio between ARKK/QQQ is not giving any buy signals and in fact we want to avoid after the short squeeze is over. Focus on high quality, profitable tech like FANG's.
FNGG was up ~5% with many large cap tech names leading the charge, confirming what we are seeing on the QQQ/SPY ratio, which is a TD 9 Buy Setup.
What does this ratio signal us? Tech should continue to see a rotation back into the high quality QQQ names. We currently have long positions in AMZN and FB and will continue to hold those.
AMZN had one of these best runs off lows in years, luckily, we were buying into the declines over the last few days. We are still looking to hold for 3800 TD Propulsion to meet the upside targets. Ironically, the 3800 level is also the quarterly range projection up for Amazon.
With fintechs, I'm not looking to stick around for too long. Yes, the ratio between them and the tech market is oversold, but it is oversold for a reason. I'm not eager to pounce on high multiple unicorns in an environment where they are likely to continue to be punished. The chat is open for now, but let's use some common sense when approaching 2022.
Shopify is a good name in the space that I think will be worthwhile. The average analyst target on this one is up to 1650 and we are now very oversold relative to that target on a Z-score basis. Our models show that this pullback is a buying opportunity.
With regard to commodities, we want to stay long. My favorite play is still copper. We are getting trend confirmation via a breakout today after a TD Sequential 13. If you are not in it, don't chase.