Before the Open 12/12/2022

China ADRs leading

I. Earnings season is over!

As I have written, earnings season is over, and you can see how macro news are taking over.

II. No broad leadership (—> means momentum continuation is not in play!)

There is no real broad and strong leadership in this market. Leadership means, that a higher beta industry group (or a whole higher beta country) has a huge leadership to the SPY (like biotech in June, oil / biotech in October). That is not the case now. IGs move more or less with the SPY, correlations are high. Fundamentals have been priced in for the time being and the market waits for macro data to be priced in.

The IGs that have a little (!) lead are mostly defensive IGs (besides Semis and Solar):

III. China (and other countries)

The only very strong pocket of strength is China right now:

If you want to see how a bull and working breakouts behave like, analyze the following stock list (China ADRs out of stronger industry groups):

API ATHM BABA BEKE BIDU BILI BNR BZ BZUN CAAS CD CJJD DADA DAO DDL DOYU EDU EH EPOW FINV GDS GGE GLG GOTU HTHT HUYA IMAB IQ JD JKS KC LI LU LX MNSO MOMO NIO NIU NOAH NTES PDD QFIN QTT RERE RLX STG TAL TCOM TME TOUR TUYA UPC VIPS WB WDH XNET XPEV YGMZ YI YMM YSG YUMC ZH ZLAB ZNH ZTO

Have a look at MOMO 0.00%↑ (saw it on both strong days, but not take since I was in the delirium), PDD 0.00%↑ , TAL 0.00%↑ , HUYA 0.00%↑ . Look at the volume and train your eyes!

Stock systems that only pick ADRs (Stocks listed in the US but foreign) are stronger too. Value momentum based on the ADR stock universe:

There are opinions that say: this will go on like between 2003-2008, an outperformance from stocks outside of the US.

I can tell you; this is one of the best markets you can get! When China for example is strong and the US is in a moderate bull market, there is tons of money in the street (trading the China ADRs!). Also, this corresponds with very good working small cap value momentum (Word > US —> value in play!) So, no worries, if (!) that happens!

IV. Sentiment

Sentiment is bleak, lots of bears back to Fintwit. So called leaders (that have been tired since weeks) “breaking down bitching” all over the place. Very well noted, momentum continuation is not the play here!

Summary:

All in all, a mixed bag, I think it is o.k. here to take breakouts with extreme high (relative) volume (>1 Mill. in the first 15 min.), episodic pivot stuff time. This strategy is more independent from the overall market in general (and I am thinking about this more and more in a way: “why do I anything else?”). They have been plenty of those last week which worked (China, and some Biotech). And the seasonals are strong for such type of moves (until mid-March).

But this is not the time to chase beta (momentum continuation —> Goldilocks and Reflation type of market, not what we see here!). I only play episodic pivot breakouts with huge (relative) volume.

If you have a scanner, use something like this, copy to your platform (for example TC2000 or whatever) and sort the stock list by volume.

Or use an intraday scanner on TC2000 (or other platforms).

Here are interesting looking stocks, still a lot, please curate further.