1/20 Best Idea For The Week Ahead

The SPY just had its highest weekly close ever as you can see below. It’s been a long 3 years nearly since we were here during the covid fueled bubble of 2021. We’ve been green 11 of 12 weeks, this has been a rally for the ages up 15% in those 3 months.

We had a big headfake earlier this week where that arrow below is, we dipped below the 21 ema and in my writeup that day I said we’re either going to close below that and it would be time to close up a lot of trades or we bounce there and go to the moon. The market chose to hammer right above the 21 ema and continue the 3 month trend of not breaking it and we followed up with a strong 2 days higher. This is exactly why none of that macro stuff matters, if it did, we’d be much lower, the data remains horrible but the charts are the charts and they show the real picture of what is occurring in the markets. For now, buyers keep defending every dip and there is nothing else to say. When that trend changes it will be clearly seen.

Small caps have pulled back to the rising 50 day. This week I chose a small cap for my best idea because they have been hit hard early this year. ARKK in particular is down nearly 20% from where it was days before new years and below the IWM is down nearly 10% in that same timeframe.

With small caps gearing up for a move higher, the name I like for this week only has a $12.5B market, but it is a leader in its space and is well off its 2021 highs. It’s close to breaking a downtrend and so far this year of the 12 trades I’ve noted on it, 10 have been bullish so the option players are in agreement.