The Weekly | Traders back momentum | Newmont & Fortescue ahead | Traders rotate from semi ETFs to TSMC & Nvidia

What’s happening in global markets? Global markets hit new record highs this week with investors binging on a sugar rush goodie bag– buying stocks with strong momentum. Before we get to what they’re buying, here are the three factors supporting the bull market and why investors are buying the dip into quality stocks before the market shoots back up again.

1. Central banks are continuing to cut interest rates (the ECB cut rates for the 3rd time). And US Fed speakers say the US central bank can keep cutting rates.

Australia’s market fell on Friday, but it’s still up about 9% on the year. On Friday, investors were spooked that the price of iron ore fell to a four-week low because Rio Tinto $Rio Tinto (RIO.US)$ and Vale $Vale SA (VALE.US)$ are ramping up production. Before buying of the key steel making ingredient ramps up from China stimulus perhaps materializing. BHP $BHP Group Ltd (BHP.US)$ shares fell 2.2%, its biggest drop in a week. BHP is the second biggest company on the ASX and pays one of the highest dividends among blue chip, paying 5.1% (consensus).

Keep an eye on iron ore major Fortescue $Fortescue Ltd (FMG.AU)$ , who reports next week and makes most of its revenue from iron ore and China.

Staying in mining, gold cracked a new record high – it’s now the best-performing asset, up 30% this year. Gold producers report next week, and with gold’s runway poised for higher levels. So you’ll want to watch stocks like Newmont $Newmont (NEM.US)$ and Northern Star $Northern Star Resources Ltd (NST.AU)$ reporting results next week. I think their outlooks will be bullish.

When the US market pulls back, fund managers go on a quality spending spree, buying almost everything and anything in the market with strong momentum. These are some of the stocks in the S&P 500 that are up the most year-to-date, and are being bought on down days, knowing that in bull markets, quality stocks can typically recover over a couple of days or maybe a week.

Vistra $Vistra Energy (VST.US)$ is another one to watch. Its shares are up 257%, outpacing Nvidia $NVIDIA (NVDA.US)$ . But this week, its shares have fallen, so keep it on your radar.

Nvidia is once again the most traded stock. FOMO is rife, and Nvidia shares appear to be breaking out and the weekly MACD suggests it could head higher. Nvidia is a key client of TSMC, so if TSMC results were something to go by, Nvidia shareholders are excited, especially as Nvidia's CEO alluded to its results being "INSANE".

What’s really interesting – going back to chips. Yes, ASML $ASML Holding (ASML.US)$ disappointed, reporting half the orders expected. But given Taiwan’s biggest company, Taiwan Semiconductor, reported far stronger profits than expected, investors are starting to move out of semiconductor ETFs and instead are being more cautious and selective with chip buying – that’s perhaps why TSMC $Taiwan Semiconductor (TSM.US)$ and Nvidia $NVIDIA (NVDA.US)$ buys are increasing.

Tesla $Tesla (TSLA.US)$ shares were sold with investors taking profits after it gained 57% from its April low, while some were worried the Cybertruck lacked detail and no concrete information came about Tesla’s new cheaper model.

Meanwhile, the levered China ETF, YINN   $Direxion Daily FTSE China Bull 3X Shares ETF (YINN.US)$ continued to see buying amid China’s roaring stimulus.

Trump trades started to dominate the leaderboard, with DJT $Trump Media & Technology (DJT.US)$ seeing a lot of buys as markets, polls, and betting companies begin to price in a potential Trump win.