IBD Live First Look: Friday, June 4

TL;DR

The market has seen a split with the NASDAQ in a correction while other sectors in the S&P 500 have been in a strong bull market, causing frustration among those who primarily trade growth stocks.

Transcript

been uh up until you know the last couple of months really been focusing our analysis on the nasdaq but with growth by and large out of favor there are of course some pockets of strength we've really been shifting our attention more to what the s p 500 is doing uh so what do you think about what we're seeing in this market that is still split even ... Read More

Key Insights

• 🎭 The market has been split, with the NASDAQ in a correction and other sectors in the S&P 500 performing well.
• 📈 The NASDAQ's correction is due to tougher year-over-year comparisons, while other sectors benefit from sector rotation and anticipation of future trends.
• 🎁 Pullbacks to moving averages can present buying opportunities, but market conditions should be closely monitored.
• 🐿️ Chip equipment makers, such as Applied Materials, ASML, and Lam Research, are showing relative strength and benefiting from the ongoing chip shortage.
• 🎭 Software stocks have been correcting as they digest their previous gains, while other sectors are currently performing better.
• 💩 General Motors (GM) has shown positive action and relative strength, with a strong move and hitting new highs.
• ✋ GM's current third-stage base should not be a concern, considering its recent all-time highs and overall positive performance.

Questions & Answers

Q: Why has the NASDAQ been in a correction while other sectors in the S&P 500 have been performing well?

The NASDAQ's correction is a result of tougher year-over-year comparisons and the market's discounting mechanism, which anticipates future trends. Other sectors have benefitted from sector rotation and improved conditions.

Q: Are pullbacks to moving averages considered buying opportunities?

Yes, pullbacks to moving averages can often be seen as buying opportunities. However, the timing and direction of the market are uncertain, so it's important to monitor the market closely for signs of a rebound.

Q: What are some chip equipment makers to watch?

Applied Materials (AMAT), ASML, and Lam Research (LRCX) are chip equipment makers showing relative strength. They are benefiting from the ongoing chip shortage, but it's important to wait for bases to form before considering buy points.

Q: Why have software stocks been correcting while other sectors are performing better?

After big moves and gains, stocks and markets typically need time to digest those gains. Software stocks had significant gains due to the work-from-home trend, but now they need time to consolidate. Other sectors are performing better currently.

Summary & Key Takeaways

• The NASDAQ has been in a correction since early February, while other sectors in the S&P 500, such as financials, energy, retail, steel, and other materials, have been in a strong bull market.

• The market's correction in growth stocks is due to tougher year-over-year comparisons, while other sectors are benefitting from sector rotation and anticipations of future trends.

• Recent market action has seen the NASDAQ attempting to catch up, but there are still uncertainties about whether a broad market rally will occur or if the split rally will continue.