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Far East Review: 5/20/24
Red Dragon Awakening: It is not like the Chinese markets needed another jolt higher this week, which seemed to come after some 13F filings were released which displayed Tepper seems to be all in on the country (there was underlying strength here in previous weeks). Of course, the data is stale somewhat but his portfolio was made up of nearly one-fourth Chinese stocks. We had highlighted this fund recently in our China/Japan Note back in late April and it has been off to the races ever since. My feeling is that the ETF will feel a magnetic pull toward 35, best seen here on the MONTHLY chart, an area of former influence being both support and resistance dating back a decade. The current set up if it gets there would be an ascending triangle and a break above 35 would see a measured move to 53 (notice the top being put in with the gravestone doji candle in February 2021). KWEB is now up 15% this month so far and if that holds would be its first 4-month win streak since it did so starting in April 2020 which started a melt-up advancing 10 of the next 11 months. Another 4-month win streak in the last 10 years commenced in January 2017 and led to a 12 of 13-month win streak (one other was muted the first 4 months of 2019). Look for some big follow-through if this vibrant May gain so far holds up.
Technology Sector Review: 5/20/24
Software Time To Shine? Over the last 2 months, there has been a melancholy feel over the software space if one were comparing it to the semiconductors. If one did want to zoom out at a different time frame, the MONTHLY chart has the look of a very clean cup with handle base 2 1/12 years long. A move above 88.92 in the near term would carry a measured move to 130. The WEEKLY chart registered a break above a bull flag Friday and the previous 3 weeks all CLOSED very taut, all within just .52 of each other and we know from that type of consolidation often comes powerful moves. For sure one would have to look at the top 3 holdings in MSFT CRM and ORCL which make up one-quarter of the fund to ponder its future. Microsoft looks best although it did record a bearish harami Thursday, Salesforce was rejected at its downward-sloping 50-day SMA with a bearish dark cloud cover Thursday, and Oracle is carving out the right side of a cup base after a gap fill last month at the 200 day SMA. Comparing the overall group to the semis, the ratio chart may have a very different look after next week's NVDA report. Software bulls want to see real strength from it's own group and not rely on a potential NVDA miss to improve the relationship.
Healthcare Sector Review: 5/17/24
Safety Net? When one looks at the biotech space there are two ETFs in which the focus is. The IBB which is a bit top heavy with the more mature names that often pay decent dividends, think defensive. And the other one is the more "lively", no pun intended with the XBI. One often uses them to gauge risk/reward in the space and the ratio chart here suggests the IBB is getting more attention. It has carved out a bullish inverse head and shoulders and one has to give the nudge to it following the March-April uptrend. Give the XBI credit as it has formed its own inverse head and shoulders formation and the move through 92 carries a measured move to 103, and notice how earlier in May it recaptured the 21-day EMA which is now sloping upward. I think one can have a bullish slant on both, and do not rule out the small caps as the PSCH (small cap, although illiquid, healthcare ETF is looking to break above familiar overhead resistance with the overall small-cap space catching some love).