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There’s a consistent pattern that occurs in market sentiment. When the market starts to pullback, many sentiment measures move to bearish extremes. This is important because the market tends to fool the majority and when everyone gets scared it is usually a good time to buy. I have been writing about it for the past three years and I am discussing it now because it just happened again recently.

During the second half of June, the market started to decline and many momentum leaders experienced profit taking. In my view, this was a normal pullback to the 50-day moving average for all the major indexes. What amazes me is the incredible escalation in fear recorded by several sentiment measures. For example, $20B flowed out of equity mutual funds at the end of June, one of the biggest outflows of the year so far. The CBOE total put/call ratio spiked to 1.32, an unusually high reading as people rushed for put protection. CNN Fear/Greed dropped to an “Extreme Fear” level. AAII Sentiment Survey saw one of its biggest weekly jumps in Bearish sentiment. NAAIM (a survey of active investment managers) dropped below its recent average of investment levels.

What’s more fascinating to me is WHY this happens? I have two theories: 1) the majority of market participants feel this current stock market rally is about to end any day now. I constantly hear that the market and the economy are in “late stages” so this consistent rush for the exit makes sense if most people feel this way. 2) The financial crisis of 2008-2009 is still fresh in people’s minds and no one wants it to happen to them again. I recently spoke to someone whose grandparents lived through The Great Depression of the 1930’s and they spent the rest of their lives in fear, worried that it would happen to them again.

I’ll be posting my 2018 Second Half Outlook on this blog soon. I feel that we are just starting year three of a possible five year Bull Market. Part of the reason behind my theory is that this constant fear and “one foot out the door” mentality will keep the markets grinding higher. Think about what has happened so far in July. There are non-stop headlines about Trade Wars and tariffs, but the market has ignored them and marched higher. Why? Because the market trades on psychology more than people realize. I will continue to follow shifts in sentiment because if there is one thing that has been consistent for the past 100 years and will continue to exist for the next 100 years is that the human emotions of fear and greed will never change.

I can be reached at: jfahmy@zorcapital.com.

Disclaimer: This information is issued solely for informational and educational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. None of the information contained on this site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. From time to time, the content creator or its affiliates may hold positions or other interests in securities mentioned on this site. The stocks presented are not to be considered a recommendation to buy any stock. This material does not take into account your particular investment objectives. Investors should consult their own financial or investment adviser before trading or acting upon any information provided. Past performance is not indicative of future results.

The post One Consistent Pattern In The Stock Market appeared first on Joe Fahmy.

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Here is part of my appearance on Neil Cavuto’s show on Wednesday, 6/20/18. Enjoy!

The tariffs are just negotiation tactics: Joe Fahmy - YouTube

 
I can be reached at: jfahmy@zorcapital.com

Disclaimer: This information is issued solely for informational and educational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. None of the information contained in this video constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. This material does not take into account your particular investment objectives. Investors should consult their own financial or investment adviser before trading or acting upon any information provided. Past performance is not indicative of future results.

The post Fox Business VIDEO: The Neil Cavuto Show 6/20/18 appeared first on Joe Fahmy.

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The purpose of this video is to share some of my experiences from 20 years of trading, provide education and market commentary. If you have any questions, you can email me directly at jfahmy@zorcapital.com. Thank you for watching and good luck trading!

Charts are provided by MarketSmith. To learn more or for a trial, click here!

6-17-2018 The Next Big Move - YouTube

 
Follow me on Twitter @jfahmy

Disclaimer: This information is issued solely for informational and educational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. None of the information contained in this video constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. From time to time, the content creator or its affiliates may hold positions or other interests in securities mentioned in this video. The stocks presented are not to be considered a recommendation to buy any stock. This material does not take into account your particular investment objectives. Investors should consult their own financial or investment adviser before trading or acting upon any information provided. Past performance is not indicative of future results.

The post WEEKEND MARKET VIDEO: 6/17/18 appeared first on Joe Fahmy.

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The purpose of this video is to share some of my experiences from 20 years of trading, provide education and market commentary. If you have any questions, you can email me directly at jfahmy@zorcapital.com. Thank you for watching and good luck trading!

Charts are provided by MarketSmith. To learn more or for a trial, click here!

5-28-2018 The Next Big Move - YouTube

 
Follow me on Twitter @jfahmy

Disclaimer: This information is issued solely for informational and educational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. None of the information contained in this video constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. From time to time, the content creator or its affiliates may hold positions or other interests in securities mentioned in this video. The stocks presented are not to be considered a recommendation to buy any stock. This material does not take into account your particular investment objectives. Investors should consult their own financial or investment adviser before trading or acting upon any information provided. Past performance is not indicative of future results.

The post WEEKEND MARKET VIDEO: 5/28/18 appeared first on Joe Fahmy.

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The purpose of this video is to share some of my experiences from 20 years of trading, provide education and market commentary. If you have any questions, you can email me directly at jfahmy@zorcapital.com. Thank you for watching and good luck trading!

Charts are provided by MarketSmith. To learn more or for a trial, click here!

5-20-2018 The Next Big Move - YouTube

 
Follow me on Twitter @jfahmy

Disclaimer: This information is issued solely for informational and educational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. None of the information contained in this video constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. From time to time, the content creator or its affiliates may hold positions or other interests in securities mentioned in this video. The stocks presented are not to be considered a recommendation to buy any stock. This material does not take into account your particular investment objectives. Investors should consult their own financial or investment adviser before trading or acting upon any information provided. Past performance is not indicative of future results.

The post WEEKEND MARKET VIDEO: 5/20/18 appeared first on Joe Fahmy.

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The purpose of this video is to share some of my experiences from 20 years of trading, provide education and market commentary. If you have any questions, you can email me directly at jfahmy@zorcapital.com. Thank you for watching and good luck trading!

Charts are provided by MarketSmith. To learn more or for a trial, click here!

5-13-2018 The Next Big Move - YouTube

 
Follow me on Twitter @jfahmy

Disclaimer: This information is issued solely for informational and educational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. None of the information contained in this video constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. From time to time, the content creator or its affiliates may hold positions or other interests in securities mentioned in this video. The stocks presented are not to be considered a recommendation to buy any stock. This material does not take into account your particular investment objectives. Investors should consult their own financial or investment adviser before trading or acting upon any information provided. Past performance is not indicative of future results.

The post WEEKEND MARKET VIDEO: 5/13/18 appeared first on Joe Fahmy.

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I first mentioned Nutanix (NTNX) on this blog back in December 2017. It was one of my Three Growth Stocks for 2018. Since then, the stock is up +55.1% and I believe it still has more upside.

Just to review, Nutanix pioneered a type of enterprise computing, known as hyper-converged infrastructure (HCI), that combines server, storage and virtualization software in a single machine. Their technology allows datacenters to run more efficiently. Goldman Sachs recently called Nutanix a “once-in-a-decade tech infrastructure story.” They are the one of the fastest technology companies ever to reach $1 billion in sales and their recent shift from a hardware-based model to a mostly software-based one has helped the company increase profit margins.

I am highlighting it this week because their annual user conference starts on Tuesday, May 8th in New Orleans. They will possibly announce new products, contracts, partnerships and other developments at the company. I have some colleagues who are attending the event and I will tweet any important news if it becomes available. In addition to the conference, the stock has technically held up very well during the market’s recent correction and closed near an all-time high on Friday.

In late April, the company announced that their public cloud offering would be delayed due to engineering issues. This product has been called an “Amazon cloud killer” because it would rival Amazon’s Web Services business. Some analysts defended this delay citing that any revenue from this product would be minimal this year, as it takes time for the product to come to market. Nutanix’s CEO even said that targeting Amazon is harder than expected. His team wants to take the time to do it right and not alienate customers with a flawed product.

My view is that Amazon is usually the one “killing” other companies. The fact that a company is even working on an “Amazon killer” shows confidence in their management team and their product offering. In addition, most of Nutanix’s competitors have already been acquired by tech heavyweights such as Hewlett Packard Enterprises and Cisco Systems. Whether they stay independent or eventually get acquired, I still feel the company has more upside over the next 6-12 months. Good luck!

I can be reached at: jfahmy@zorcapital.com.

Disclaimer: This information is issued solely for informational and educational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. None of the information contained on this site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. From time to time, the content creator or its affiliates may hold positions or other interests in securities mentioned on this site. The stocks presented are not to be considered a recommendation to buy any stock. This material does not take into account your particular investment objectives. Investors should consult their own financial or investment adviser before trading or acting upon any information provided. Past performance is not indicative of future results.

The post Stock of the Week: Nutanix appeared first on Joe Fahmy.

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The purpose of this video is to share some of my experiences from 20 years of trading, provide education and market commentary. If you have any questions, you can email me directly at jfahmy@zorcapital.com. Thank you for watching and good luck trading!

Charts are provided by MarketSmith. To learn more or for a trial, click here!

5-5-2018 The Next Big Move - YouTube

 
Follow me on Twitter @jfahmy

Disclaimer: This information is issued solely for informational and educational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. None of the information contained in this video constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. From time to time, the content creator or its affiliates may hold positions or other interests in securities mentioned in this video. The stocks presented are not to be considered a recommendation to buy any stock. This material does not take into account your particular investment objectives. Investors should consult their own financial or investment adviser before trading or acting upon any information provided. Past performance is not indicative of future results.

The post WEEKEND MARKET VIDEO: 5/5/18 appeared first on Joe Fahmy.

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There is an overwhelming feeling among market participants that this Bull Market is about to end any day now. I keep hearing the same phrases over and over: “We are obviously late in the economic cycle” and the Bull Market is in its “late stages.” One thing I’ve learned from 20 years of experience is that moves in the market can go on MUCH longer than most people expect. Here are three reasons why we are not “late stage.”

1) Psychology. The market tends to fool the majority and almost everyone thinks we are late stage. I understand why they think this way because most people’s minds are wired for stress and fear. Many are constantly focused on what can go wrong next. I’m not saying there aren’t any challenges, but considering all the negative news over the past few years, the market and the economy have been very resilient. It’s tough to see a market top when most people are fearful and expecting it.

2) Earnings. The recent quarterly earnings reports from many market leaders showed incredible acceleration in growth and profit margins. A few examples: No one thought Facebook would survive its recent scrutiny but they beat expectations and didn’t hint of any slowdown in users. Amazon was expected to earn $1.25 per share and reported $3.27! That’s not a beat, that’s annihilation! The analysts should be embarrassed. Seven analysts came out very cautious ahead of Apple’s numbers and were once again proven wrong. Betting against Apple is like betting against the Harlem Globetrotters. Netflix has beat new subscriber estimates by 1-2 million in the past two quarters and they are just starting to expand internationally. No way anyone would touch Chipotle going into their last quarter and they beat estimates by 36%. One consistent theme going into these and many other reports was the negativity and doubt that companies cannot continue to execute at high levels. Once again, they proved us wrong.

3) Slow and Steady. Over the past 8 or 9 years, the economy was never in an explosive growth stage. We have simply been growing GDP at 1.5-2.5% per year. Why can’t this continue for a while? Why can’t it accelerate to 3% or higher? The economy has never gotten overheated during this time and when stock market bullishness gets too excessive, the market has a unique way or correcting itself.

Bottom line: We are about to head into what I believe will be year three of a possible five year Bull Market. I’ve been writing about this for a while now and presented the 1987-2000 analogy in the chart above. We are not in a nine year Bull Market. The new Bull Market started in July 2016 after Brexit and can continue to accelerate for a while. Here’s the catch: It won’t be easy. There will be corrections, shakeouts and pullbacks along the way, similar to the one we are having now. Many of these corrections will be sharp and very convincing that the Bull Market is over. The biggest challenge for investors will be sticking to your investment process and having conviction during the corrections. While many have called for a top, I’m one of the few saying this Bull Market still has a long way to go. It might even accelerate and surprise to the upside if you have some patience.

I can be reached at: jfahmy@zorcapital.com.

Disclaimer: This information is issued solely for informational and educational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. None of the information contained on this site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. From time to time, the content creator or its affiliates may hold positions or other interests in securities mentioned on this site. The stocks presented are not to be considered a recommendation to buy any stock. This material does not take into account your particular investment objectives. Investors should consult their own financial or investment adviser before trading or acting upon any information provided. Past performance is not indicative of future results.

The post Why the Economy and Stock Market are Not “Late Stage” appeared first on Joe Fahmy.

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The purpose of this video is to share some of my experiences from 20 years of trading, provide education and market commentary. If you have any questions, you can email me directly at jfahmy@zorcapital.com. Thank you for watching and good luck trading!

Charts are provided by MarketSmith. To learn more or for a trial, click here!

4-22-2018 The Next Big Move - YouTube

 
Follow me on Twitter @jfahmy

Disclaimer: This information is issued solely for informational and educational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. None of the information contained in this video constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. From time to time, the content creator or its affiliates may hold positions or other interests in securities mentioned in this video. The stocks presented are not to be considered a recommendation to buy any stock. This material does not take into account your particular investment objectives. Investors should consult their own financial or investment adviser before trading or acting upon any information provided. Past performance is not indicative of future results.

The post WEEKEND MARKET VIDEO: 4/22/18 appeared first on Joe Fahmy.

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