Monday Takeaways: Sky-High FOMO

|April 1, 2024
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What a first quarter! The S&P 500 soared by a whopping 10%… and that momentum isn’t slowing down.

We’re seeing serious signs of FOMO as one group of investors chase the best-performing stocks.

Will that propel the “Fab Four” (sorry, Tesla, Apple… you’re out) to even higher highs?

Or will the second quarter be about profit-taking across the board?

Plus, as China’s economy picks up… there’s one sector that all investors should keep an eye on.

We’re going to find some good plays there.

I get into all that and more in today’s video.

Click on the image below to watch it.

 

Transcript

Hey, everybody. Shah Gilani here with your Monday Takeaways.

The market has already opened. There was not a whole lot to say before the market opened. I wanted to see how we’re gonna open.

And guess what?

As they say, it’s another record day on Wall Street.

We ended the quarter sky high. The S&P was up 10% for the quarter.

Are you kidding me?

Kinda like deja vu all over again. A little bit reminiscent of 2023, isn’t it? Doesn’t mean we’re not gonna have bumps ahead… because I think we will.

But starting out the year very similarly to how we started 2023 with a strong January, strong follow through… there could be bumps ahead, sure.

The takeaway there is, guess what? Momentum is in your favor – if you’re a long investor, that is. So keep on keeping on.

We’ve got a whole bunch of metrics coming at us this week.

We’ve got an ISM report this morning. We’ve got ADP’s unemployment report on the 3rd. We’ve got ISM, business services, PMI on the 3rd. We’ve got petroleum status on the 3rd for all of you oil watchers.

I’m an oil watcher. Prices seem to have stabilized a little bit, but there’s talk about China percolating, picking up economic growth, and therefore, more pressure, more demand pressure on oil remains to be seen.

But your takeaway there is you’d better be watching oil. There might be plays to have in oil.

We’ve got U.S. international trade goods and services as a sleeper on the 4th. Also, on the 4th, unemployment initial claims. That’s always a big one.

You’ve got gas storage report also on the 4th. And on Friday, we’ve got the big number for the week – U.S. employment report.

Now, with all of those metrics, yeah, maybe the sum total of it is gonna be, who cares?

Because last week, markets looked at everything and decided we’re gonna keep on keeping on because on Friday, at the end of the week, even though it was a closed market day, we had really good economic numbers as far as inflation.

Yes, February’s core PCE came in at 0.3%. That’s versus January’s 0.4%. So 0.4% down to 0.3%, January to February, 0.3% is right in line with consensus.

So markets were going to open up strong today. And they did do just that. How we end today is anybody’s guess. How we end the week is anybody’s guess.

But I’m gonna say this about that. With inflation trending down and the likelihood of Fed cuts on the table… momentum’s gonna continue. Momentum is your friend.

Why is momentum gonna continue?

Because we got performance chasing happening. We have FOMO happening.

Your takeaway this week is, will we continue to see it? You gotta watch to see, do we continue to go higher?

If there’s no reason for markets to come down, if they sell off for no reason, that’s odd. Because if they do nothing and there’s no reason for them to do anything, that makes sense because they can’t go up parabolic even though it looks like they have.

There may be a rest period ahead. That’s okay, or there may not. Why? Because performance chasing means if you’re an institutional investor and you didn’t have a good quarter, and the market S&P, your benchmark, is up 10%, and you’re up half of that or less than that, you better get your you know what gear, and how do you do that? You chase the ones that are working. You performance chase, and that’s what we’re probably going to see in the second quarter because those managers are hoping.

They’re probably trying to bet on the side that things go down. They wanna push things down because they don’t look as bad if things go down. But if not, they’re gonna continue to have the performance chase, which means they’re gonna have to continue to buy the winners.

So we don’t have Magnificent Seven anymore.

We have the Fab Four. Tesla, out. Tried to raise prices, said they’re gonna raise prices. That does nothing for the stock today.

Apple, listen, folks. I’m gonna say this about Apple. Much as I like Apple, just recently, we bought a little bit, bought a little bit on some call options.

Why? Because it’s come down to support. We’re at $170 and change today. $168 is support. So, yeah, I’m gonna take a shot in Apple here where there’s some support. It better hold that support, people, because if the market gives way for any reason, and I don’t see a reason, but anything is possible, including black swans, because all the gray swans, we know what they are.

If Apple gives way, you better have your stops in. Tesla, boy, good luck with Tesla, people.

Trading $175-$175, for recent lows, $160. It may go down and test that again. So Tesla, you know, and Apple, this is not part of what’s going on right now. So the other Fab Four, boy, Nvidia, Nvidia up again today. Microsoft, you know, good news on that. And Google is up again today, blah blah blah.

Momentum chasing, performance chasing, FOMO. If you’re in retail investing, there on the sidelines. You’re like, I got all this cash and money market funds. I got all this cash and CDs.

It’s coming due. What are you gonna do? You’re gonna chase fear of missing out. You didn’t get 10% last quarter in your CD, people.

I know that. Maybe you got 5% and change, but the market was up 10% in the quarter.

Alright? So if you put money back in the CD back in October, you’re way behind because you maybe put it in at 5.25% if you’re lucky and forget about what you missed because you missed it. As they say in Brooklyn, fuhgeddaboudit.

Your takeaway for the week is let the markets do what they do. Let the performance chasers do what they do. As far as FOMO people coming off the sidelines, keep an eye on that. We can continue to go higher.

All the gray swans out there, we know what they are.

So it’s about a black swan. I don’t think any of the gray swans out there, the things that people are worried about, are gonna turn this market around. We can’t go up forever.

We’re gonna see some kind of selling, some profit taking something, but a real tumble, like a real 20%, oh my gosh, is this bull market fake, or is it are we all wrong? Is the value are the valuations too? I don’t what’s gonna cause that? Anything can cause it that comes out of left field, some black swan event.

Could be could be ahead somewhere.

But right now, the gray swans, we know what they are. And, frankly, they’re not even flapping their wings. There’s nothing really in the gray swan factory, the fantasy factory, that can impact prices that much. So every dip is a buying opportunity. Every correction is a buying opportunity. And until that changes, your takeaway is you ride the tiger, baby.

I’ll catch you guys next week. Cheers.


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