Traders Go Cuckoo For Commodities

Tech stocks' correction, Cocoa's crazy move, marijuana high-flyers, and AMD finding support.

NEWS
Traders Go Cuckoo For Commodities

Stocks experienced their second straight down week, albeit losses were marginal relative to this year’s gains. With that said, as tech and crypto rest, commodities continue to capture traders’ attention. Let’s see what else you missed. 👀

Today's issue covers tech stocks hanging in the balance, why breakfast could soon break the bank, marijuana stocks catching a high, and AMD shares potentially finding support. 📰

Here's today's heat map:

4 of 11 sectors closed green. Energy (+0.30%) led, & technology (-1.51%) lagged. 💚

U.S. consumer sentiment ticked down slightly in March, reaching levels about halfway between its June 2022 all-time low and its pre-pandemic average. 🔻

Zillow and other real estate stocks were hit hard today when The National Association of Realtors settled a group of commission lawsuits brought by home sellers. The settlement is expected to change how brokers are paid, potentially putting an end to the 5% to 6% standard commission. 🏘️

Apple stock fell marginally on news that the consumer tech giant settled a 2019 class-action lawsuit from shareholders alleging CEO Tim Cook made false comments about China sales during a 2018 earnings call. Apple denied wrongdoing but will pay $490 million to settle the litigation. 🍎

Biotech company Geron Corp. soared 92% after the U.S. Food and Drug Administration (FDA) advisory panel voted in favor of its blood disorder treatment, with management expecting a regulatory decision in June. 👍

Electric vehicle maker Fisker tried to walk back news that it’s exploring a bankruptcy filing, saying it’s instead trying to raise more capital by striking a deal with another automaker. 🪫

Crypto and related stocks continued to experience profit-taking after this week’s meme coin mania pushed sentiment to a short-term peak. ₿

Other symbols active on the streams: $CDLX (+77.15%), $JRVR (+17.48%), $GCT (+23.32%), $MDAI (+16.94%), $ADBE (-13.67%), $STLNF (-1.33%), $APAC (-8.43%), $AKBA (+24.09%), $OTLK (+43.80%), & $BTC.X (-3.26%). 🔥

Here are the closing prices: 

S&P 500

5,117

-0.65%

Nasdaq

15,973

-0.96%

Russell 2000

2,039

+0.40%

Dow Jones

38,715

-0.49%

STOCKS
Tech Stocks Hang In The Balance

While sentiment and asset price moves have become somewhat extreme over the last few weeks, divergences have been building in some of the market’s leading stocks. 🚨

A good example of what technical analysts are pointing to is Jabil, Inc. The tech manufacturing giant experienced a period of time during 2021 where prices rallied and momentum (as measured by RSI) moved lower. That’s what technical analysts like to call a “bearish divergence,” and could signal a potential trend change ahead. 🧭

As the chart above shows, prices eventually began correcting after that divergence went on for some time. And now, Jabil is experiencing something similar. 👀

With prices falling sharply today on earnings, traders say the stock is close to confirming that bearish divergence and a change of trend. A break of this week’s low and the uptrend line from mid-2022 would be a signal that the current uptrend has shifted to a down (or sideways) trend.

With many leading tech stocks experiencing this divergence, it’s no surprise that the Nasdaq 100 index looks similar. The daily chart of $QQQ shows prices closing right at their uptrend line as momentum creeps lower. 🔻

Traders say that if prices break this uptrend line, the short-term momentum in the market will have shifted to the downside. And with the Fed and Bank of Japan making interest rate decisions next week, many see those events as potential catalysts to accelerate the selling if bears take control. 😟

We’ll have to wait and see how next week begins. Because as Stocktwits user microm pointed out, there have been several instances where it looked like bulls had lost control just for them to come roaring back.

Time will tell if that pattern repeats itself. 🐂

STOCKTWITS CONTENT
A Can’t-Miss Market Event 👀

We will be live with the one and only Tom Lee of Fundstrat & Bitwise CEO Hunter Horsley to discuss all things markets & crypto on Tuesday, March 19th at 3PM EST! 🗓️

Beluga Founder Sonny Singh will be joining as well to moderate this marketing-moving conversation. Save your spot by clicking here.

COMMODITIES
Breakfast May Soon Break The Bank

Commodities have been a major theme in this newsletter for quite some time now, and we don’t see that changing anytime soon, especially not when the mainstream media is finally catching onto some of the crazy moves happening. 🫨

Below is a one-year chart of cocoa and orange juice futures, showing them up 202% and 52%, respectively. 📈

Two years of bad weather conditions have pressured the cocoa crop so much that African cocoa plants are running out of beans. Meanwhile, a bleak production outlook in the U.S., Brazil, and Mexico has kept frozen orange juice futures in an upward trend for much of the last year. 🥵

Unfortunately for these two markets, there’s little hope in sight for the underlying conditions to materially improve. Combine that with speculators getting involved and driving prices even higher, and you’ve got a runaway market.

As with all runaway markets, when conditions do improve, there’s a lot of potential to unwind and give back gains very quickly. ⏪

But for now, traders are going crazy for commodities, especially those whose prices seem to rise daily. 🤪

POLICY
Marijuana Stocks Catch A High

Marijuana stocks were back on their high today on rumors that regulators will soon reclassify marijuana as a less dangerous drug. 📰

For those who need a catchup, last August, the U.S. Department of Health and Human Services prompted the Drug Enforcement Agency (DEA) to rethink its classification of Marijuana as a Schedule I drug (along with LSD, heroin, ecstasy, etc.) to Schedule III with less-dangerous substances like anabolic steroids, among others. 🕵️

Additionally, the Department of Health and Human Services Secretary Xavier Becerra testified before a U.S. Senate committee on Thursday to defend the Food and Drug Administration’s review of cannabis’ scheduling status.

Overall, the perceived progress towards the drug becoming legal nationwide and opening up a much larger market for these businesses is enough to get people excited. With the sector remaining heavily shorted and beaten down, these stocks gain traction very quickly, even on rumors. 🏃

Below is a popular ETF, $MSOS, which popped nearly 15% as investors and traders debated the rumor’s merits. 🥦

For now, the Stocktwits community is bulled up on the sector, so these stocks will remain on people’s radars in the coming days and weeks as long as their upward momentum continues. 🔍

STOCKTWITS CONTENT
Your Final Days To Enter 🚨

Stocktwits co-founder Howard Lindzon chops it up with pals JC Parets and Phil Pearlman every Thursday on "Trends With Friends."

In this week's episode, the friends discuss:

  • Crypto: Meme coins as an established asset class and crypto ETF action hitting records 🤑

  • Traditional Markets: Precious metals on the move as money rotates into consumer staples and energy 🛡️

  • Social: The changing social media landscape, creator economy, and taking control of personal data 🤳

  • Giveaway: Secure your chance to win a Macbook Pro on March 17 by entering here 🚨

Watch it now on YouTube and Spotify, and subscribe to catch each episode when it goes live!

Stocktwits Spotlight

With many high-flying tech stocks pulling back this week, some traders are looking for opportunities to “buy the dip” in a way where their risk is well-defined. 🤔

Stocktwits user David Blair shared a chart of Advanced Micro Devices (AMD), which appears to be pulling back towards former resistance and an uptrend line in the low/mid 180s. If the strength in this stock (and the broader market) is going to continue, traders would expect prices to stabilize here and head higher. 🛡️

For updates on this short-term view and more analysis like this, follow crosshairtrader on Stocktwits! 👀

Bullets From The Day

🛒 Target to limit self-checkout, as retailers try to limit shrink. The big-box retailer recently closed several stores due to an increase in shoplifting activity as the broader industry struggles to deal with its shrink issue. Now, it’s rolling out another change to its 2,000 stores nationwide, closing self-checkout lanes during certain hours and only allowing ten items or less when they are open. To accommodate the change, it’s adding more traditional lanes staffed by employees to help improve customer experience. NBC News has more.

📺 FCC clamps down on cable TV “hidden fees.” The Federal Communications Commission (FCC) says its new rule for “all-in” pricing will make it easier for customers to compare prices against competing providers and streaming services. Specifically, it will cut down on cable providers disguising programming costs as a tax, fee, or surcharge on top of a base price. Now, providers must display the cost as a single price inclusive of any “hidden” fees. More from The Verge.

Honda and Nissan will work together on EV technology. The two Japanese automakers are working together to develop electric vehicles and auto intelligence technology, hoping to play catchup in an area they’ve both lagged behind competitors. The details of the non-binding agreement are still being worked out, but executives said they will develop core technologies together, but their products will remain different. AP News has more.

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