Momentum Monday – Eli Lilly Crosses $1 Trillion On Heels Of Obesity Drugs and Yes Semiconductor Stocks Do Go Down

Howard Lindzon Howie Town

7 hours ago

4 MIN READ

As a reminder, MarketSurge (by Investor’s Business Daily) is a sponsor of the weekly show. All the charts you have been seeing in the videos and will continue to see are from MarketSurge. They are offering my readers 2 months for $59.95 – save $239. That’s 80% off the most powerful stock research platform for individual investors.

Good morning…

Last week I wrote…’I have no idea when the party ends, but it will end. There is a lot of sloppy investing taking place from my vantage point’.

Last Friday there was a break in the party, a very nasty day for tech stocks and specifically semiconductor and memory stocks. Today, we are bouncing and it is important to see what DOES NOT bounce. So far, Facebook/Meta and Microsoft ( $META ( ▼ 0.78% ) $MSFT ( ▼ 1.56% ) ) are down again today. I think the market is now starting to decide which companies are not spending wisely on AI or may be suffering more than originally thought long-term from AI disruption.

This week is all about the SpaceX IPO so I am going to be mostly watching and expect a lot of volatility as the markets digest all the new stock abou to hit the market and last Friday’s wake up call which spiked the VIX 30 percent.

In the meantime, there has been a bit of rotation to healthcare. Eli-Lilly is the healthcare leader. I went to the website today and it’s very slick and modern. Their Lilly Direct service is really easy to use.

I was reading today that 30 million people (nearly 10 percent of Americans) are on GLP’s. Meanwhile 140 million adults eat fast food weekly. If the results continue to be good for the obesity drugs, there is a good chance that 20 percent of Americans will take an obesity drug. That seems like a bet worth making, so I am going to start a position in $LLY ( ▲ 2.81% ) my degenerate economy index. Better late than never.

Enjoy the episode.

Welcome back to Momentum Monday!

In today’s episode of Momentum Monday, Ivanhoff and I discuss the following:

Friday’s Sharp AI Selloff & 1999 Comparisons
Massive Extensions from the 200-Day Moving Average
Upcoming Supply: IPO Mania vs. Global Macro Headwinds
The Degenerate Economy & The $CBOE ( ▼ 0.68% ) Valuation Play
Non-AI Winners: Fast Casual vs. $LLY ( ▲ 2.81% ) Trillion-Dollar Run
Leveraged Derivatives and Private Market Supply Overload

In This Episode, We Cover:

Friday’s Sharp AI Selloff & 1999 Comparisons (0:00)
Massive Extensions from the 200-Day Moving Average (1:49)
Upcoming Supply: IPO Mania vs. Global Macro Headwinds (4:03)
The Degenerate Economy & The $CBOE ( ▼ 0.68% ) Valuation Play (7:53)
Non-AI Winners: Fast Casual vs. $LLY ( ▲ 2.81% ) Trillion-Dollar Run (9:55)
Leveraged Derivatives and Private Market Supply Overload (19:14)

Here are Ivanhoff’s thoughts:

Anytime there’s a parabolic move and lasting enthusiasm in the market, the supply comes to cool things down. The supply comes in the form of IPOs, secondary offering and debt raises. SpaceX is raising $75 Billion; Anthropic – $65 Billion. OpenAI is likely a few weeks from announcing its IPO. Google just had an $85 Billion secondary offering. Amazon will probably also raise money in order to keep paying for its AI infrastructure spending. Of course, the supply will matter at some point, and it could lead to a pullback that is faster and deeper than most expect. We saw it on June 5th, when the Nasdaq 100 (QQQ) dropped almost 5% on more than 2x its average traded volume. Semiconductors ETF, SMH, declined 9% on the biggest volume since its last base. It is normal to see market leaders like MU, MRVL, DELL, INTC, ARM, AMD, SNDK, and others pull back and test their 20 or 50-day moving average. It is a different question, for most of them, such a pullback would mean a 20% to 40% correction.

The April jobs report came much stronger than expected, while March was revised higher. In the meantime, the latest inflation readings came much higher than the Fed’s target. In theory, this means more hikes ahead, which would shake the confidence in this bull market. In practice, I don’t think many of the Fed members will dare to raise rates, but the potential for it could keep the market on edge.

This bull market is not likely to be over. We might see a deeper-than-expected pullback that will scare people out of their positions. This is normal market behavior. The best thing that could happen for the sustainability of an uptrend is a multi-day pullback. It would create much better setups and entry points. I am excited about the possibility of it.