Don't Get Addicted to Johnny Cakes...or Growth Stocks

There currently exists a certain cognitive dissonance in markets at the moment, particularly when it comes to richly valued growth stocks which have rewarded bulls handsomely for years on end amid a ZIRP, NIRP, TINA environment. All of those acronyms led to the biggest of acronyms, FANG, surpassing several trillion in market cap alongside AAPL and TSLA, all the while Cathie Wood broke out as the superstar manager in her flagship ARKK ETF. 

But the seemingly long overdue bounces in various growth stocks which have been pounded since the winter have been far from inspiring. Bulls do not seemed overly concerned that the likes of TDOC and ZM will recover in due time. But the longer these names go without a vigorous rally to recover more meaningful chunks of losses since the winer, the higher the risk that the last few weeks have amounted to yet another bearish consolidation before many growth names break lower yet as we approach one of the more horrendous parts of the year in terms of bearish seasonality later this month. 

And with TSLA showing signs of just that, perhaps, below on its updated daily chart, I am warming up to a two-way trading strategy again of shorting the likes of ARKK paired off against longs in the stronger energy/materials complex. Again, I recognize the macro experts are steadfast in their anti-inflation beliefs, but the price action right now begs to differ.

Until that changes, as we have been noting with Members, this is likely a good moment in time to defer to the message of the market.