The past few weeks have felt like the time loop from Bill Murray's "Groundhog Day." The stock market rallies for two or three days, then we hear from an economist or a Federal Reserve speaker who reminds us that the Fed isn't about to turn dovish and cut rates, and stocks fall. For one reason or another, stocks rally again, and the cycle refreshes with a few more Fed speakers and another stock dip.
There is no denying that there are plenty of stocks rallying. While the Invesco QQQ Trust (QQQ) continues to tread water, plenty of semiconductor, solar and materials stocks continue to rally to new swing highs. Heck, while we've been distracted by the collapse of FTX and the turmoil at Twitter, International Business Machines (IBM) closed at a new 52-week high on Thursday. When was the last time IBM found itself in a list of stocks hitting new highs?
The bottom line is that while there are plenty of reasons to be concerned about the rally in stocks since mid-October, traders must recognize that there are opportunities in specific industries.
Away from stocks, the iShares 20+ Year Treasury Bond ETF (TLT) continues to bounce relatively. Still, we can't ignore Thursday's dip after TLT closed above its 50-day simple moving average on Wednesday. I'm still long TLT as I expect a significant rebound in 2023. However, traders with a short timeframe or those wanting to reduce risk might want to consider writing calls on an existing position. From a swing trading perspective, I would consider using a break beneath the 21-day exponential moving average in conjunction with a dip under 50 on the 14-day Relative Strength Index (RSI) as a dynamic stop.
I can't remember the last time I talked about shiny rocks, but this month's rally in the SPDR Gold Trust (GLD) has gold and the miners back on my radar. The only stock I currently own is Newmont Corp. (NEM) , and it looks great as long as it holds above $42.75 to $43.50. But if you're willing to consider trading GLD, I'm watching for buyers on any dip beneath $162.