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Trade Prep: Pinpointing a Stealth Tech Rally

Stocks gave back some of their post-election gains on Friday, encouraging another quick round of selling into the weekend.

The Dow lost 200 points, yet finished the week higher by nearly 3%. Meanwhile, tech stocks absorbed the brunt of the damage. The Nasdaq Composite led the averages lower with a drop of more than 1.6% on Friday.

The great FAANG unwind continues to cast a shadow over the tech-heavy Nasdaq. Facebook (NASDAQ:FB) shares are showing no signs of life as they sink back toward 52-week lows. Amazon.com (NASDAQ:AMZN) lost more than 2.4%, giving back a chunk of its midweek rally. And Netflix Inc. (NASDAQ:NFLX) shares remain a volatile mess, tanking more than 4.5% to finish the week in the red.

Yet not all tech stocks are cratering as these household names take a hit.

I showed you last week how strong earnings sparked some insane rallies in the software space. Tableau Software Inc. (NYSE:DATA) and Twilio Inc. (NYSE:TWLO) both delivered impressive earnings beats that shot shares higher by 15% and 30%, respectively.

The software sector continues to make waves this week as SAP SE (NYSE:SAP) shells out $8 billion to buy Utah-based Qualtrics just days before the firm was set to go public.

“SAP CEO Bill McDermott said in a conference call that the Qualtrics IPO was already over-subscribed, and that he views this deal will mean for SAP what buying Instagram meant for Facebook — with SAP being able to merge its massive trove of operational data with Qualtrics’ collection of user experience data,” Axios reports.

The Instagram-Facebook comparison is a lofty one. True or not, software stocks are becoming must-watch names heading toward the end of the year.

Meanwhile, pot stocks are giving back a big chunk of their post-election gains.

Impressive post-election spikes in popular marijuana stocks Tilray Inc. (NASDAQ:TLRY) and Canopy Growth Corp. (NYSE:CGC) ran into heavy selling to close out the trading week.

There’s a lot of confusing news swirling around the pot sector right now. That’s why my colleague Ray Blanco hopped on the phone late last week with a breaking update on the state of the post-election marijuana market.

That’s where things get interesting. Ray says Jeff Sessions’ resignation is about to send the marijuana story accelerating at a rate he never thought possible.

There’s no time to wait…

Cancel everything you are doing right now and tune in here.

Ray’s pulling this call offline TODAY AT NOON. Click here now—you only have a few hours left.

Despite the gloom and doom, we’re still seeing pockets of strength in this market.

Select retail stocks continue shine in the face of difficult market conditions.

That brings us to one of the biggest lessons we’ve learned this year:

In the consumer space, strong brands can still thrive as Amazon continues its quest for world domination. Even some of the more ridiculous fashion trends are finding success this year.

Just look at Crocs Inc. (NASDAQ:CROX).

You probably have seen (or purchased) some squishy sandals from the nice folks at Crocs. But I’m not here to judge your shoe choice — I’m much more interested in the footwear brand’s comeback story.

Crocs have become a bit of a fashion joke since the company took the market by storm more than 16 years ago. But the company is getting its act together. It’s strengthening its niche by closing stores while increasing sales and margins.

All the hard work is paying off. Crocs just posted another strong quarter, helping push shares to a gain of more than 20% on the week.

CROX

We first tuned into the Crocs comeback story this spring after the company beat earnings estimates. The stock is now up more than 100% year-to-date. That’s an amazing comeback, especially when you consider how well shares have performed during this year’s market weakness.

I’ll keep a close eye on this stock — and other opportunities in the retail space — as we settle into the new trading week.

Sincerely,

Greg Guenthner

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Greg Guenthner

Greg Guenthner, CMT, is the editor of Rude Awakening PRO and Seven Figure Signals. He has been with Agora Financial/Seven Figure Publishing for 13 years. In 2018, Greg’s Rude Awakening PRO portfolio beat the S&P 500 by 14%.

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