What Should We Expect in the Second Quarter?
Just like that, the first quarter has officially come to a close. The S&P 500 and the NASDAQ are both up by more than 10% and it’s safe to say that 2024 has picked up right where 2023 left off. We are in the throws of a strong bull market and it looks to continue through the end of the year. So should we expect an equally bullish second quarter as well? Not exactly.
As much of a bull as I am, even I need to acknowledge when stocks need a breather. Tech stocks have especially been carrying a lot of this rally and a quick look at their charts shows how heavy and exhausted they look. We’ve seen some cracks under the surface lately as NVIDIA (NASDAQ: NVDA) finally saw its 11-week winning streak come to an end. Apple (NASDAQ: AAPL) continues to trade at multi-month lows and Tesla (NASDAQ: TSLA) is mired in one of its worst downtrends in recent memory.
The JP Morgan options collar came out and while many were pointing to a bearish outlook, we have to remember that this is still meant to be a hedge against the company’s long portfolio. What it looks to be saying is that we should expect a rather neutral second quarter as investors pause to see what the Fed’s next moves will be. They are still forecasting three rate cuts this year but when those will come remains to be seen.
So here’s what I’m expecting for the second quarter and I’ll throw in a couple of bold predictions as well!
Second Quarter Bold Predictions for the Market
First of all, I do expect the second quarter to be flatter than the first. That’s not to say that we’ll crash or even have a correction. I just expect the price to chop and consolidate for a bit before the next leg up. It might be a good time to sell some premiums and fund some long-dated leap calls.
My first bold prediction is that NVIDIA will not be the strongest chip stock next quarter. Look, it’s the leader in AI and GPUs and data centers and mostly everything to do with tech. Options flow has been overwhelmingly bullish but I think there is a bit of fatigue for NVIDIA from investors. Two names that I think have a chance to outperform NVIDIA are AMD (NASDAQ: AMD) and Taiwan Semiconductor Manufacturing Company (NYSE: TSM).
Another bold prediction: Tesla does not recover. Let’s see what next week’s first quarter deliveries report brings first but I am not confident in Tesla’s stock in the short-term. I’m not saying it won’t recover, but I don’t think this stock has found a bottom just yet.
My last bold prediction is that Coinbase remains one of the best-performing stocks in the quarter. There is just no slowdown in the demand for cryptos and the in-flow of funds to the spot Bitcoin ETFs has been relentless. Coinbase is building out its own Base ecosystem now and has already started to offer meme coins like the ones on Solana. If Base can ever reach the level of Solana’s DeFi popularity, Coinbase can easily break through its previous all-time high price.
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