VRA Weekly Update: ATH's Beget New ATH's. Semis Are KEY. VRA Investing System Flashing BUY

Good Friday morning all. 

Yesterday's trading brought fresh ATH in the S&P 500 with the Dow and Russell 2000 less than 1% from ATH and Nasdaq starting this AM at 1.3% from ATH. And while yesterday's internals were nothing to write home about (meme wars), we continue to like what we see as the semis and Nasdaq/tech/growth/momentum stocks are leading the way higher. SMH (Semi ETF) +1.31%, Nasdaq +.78%. Textbook, really. 

As Tyler’s been known to say on our podcasts, “new ATH’s beget new ATH’s”…and he’s exactly right, as analytics prove that there is rarely a better time to invest than when markets are hitting ATH (no resistance!)> 

As we’ve covered in these pages, rather religiously, the 5/12 capitulation lows in semis/tech/growth have served as the springboard for this short covering move to new ATH’s. Since 5/12 (twenty trading days), SMH is up 13.4%. Semis lead Nasdaq, Nasdaq leads the broad market. 

What Happens Next in Semis is KEY

In the chart of SMH below we see a trend line that has served as hard resistance from those mid-Feb highs. Since then, on each rally attempt, SMH has lost the battle to the line, resulting in a series of lower highs.

This pattern must change, IMO, for Nasdaq/growth to continue moving higher and to hit new ATH’s as well. Here at the VRA we’re roughly 70% fundamental and 30% technical but this is one of those times that I’d say “price action truly matters most”. A move through $252 (preferably on strong volume) should help get the breakout in SMH cooking with gas. This morning SMH is trading at $251.30 (+.30%).

A breakout in semis would be a key technical event for bearish investors. A “throw in the towel” kind of moment. A melt-up like event in tech/growth/momentum could then kick in (I continue to expect that will be the case).

On the heels of ATH’s in SPX, our markets are looking higher this AM. Dow futures + 80, higher but quiet elsewhere. 

And here’s an interesting market tidbit. The last 5 Fridays have been green for the Dow and 10 of the last 11 have been green as well. 

Impressive! Investors bidding up markets headed into 2 days where they cannot unload their positions is among the most bullish of votes with their money an investor can make.

Our VRA Investing System remains at 10/12 screens bullish. Anything above 6/12 bullish screens means that we remain buyers on pullbacks. But 10/12 bullish screens means that we want to be “aggressive buyers on pullbacks” as we expect the markets to push sharply higher.

The VRA System has 12 Propriety Screens. Today, 10 screens remain in bullish mode. 1 Screen is in bearish mode (valuations) and 1 screen is neutral (market internals).

70% of the screens are fundamental and 30% of the screens are technical. Here’s the breakdown of our 12 screens:

VRA Quick Hitters:

1) GDX (Miner ETF): immediately following its golden cross (50/200 dma), GDX had a solid day yesterday with gains of 2.5%. We expect a sharp move higher in miners.

2) AMC (AMC). Combined (VRA and Parabolic) we’ve booked better than 300% profits in AMC in ’21 (+148%profits in VRA). But we’re not ready to buy AMC again. We’re looking for the “ideal” buy here…no need to rush. A shake-out in AMC (if we get one) should take AMC back to the mid $30’s (last $44.50) to give us a double bottom. 

Heres’ what happened yesterday in meme war stocks. Steep losses across the board. Of this group, at this point, I only have an interest in one stock; AMC. But also know this; gamma squeeze as an investment strategy is very real and its here to stay. It worked with Tesla, it worked with Gamestop and its working with AMC. Here at the VRA we intend to use this strategy to print profits in the months and years to come. Remember, this is “that” bull market.

3) Finally for this morning, its no secret that we remain hyper-bullish. Here’s some color on that via my Twitter account.

Until next time, thanks again for reading…

Kip

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