Douglas Busch

Nasdaq Nausea?   Wednesday afternoon starts a 24-hour period where 3 of the 7 largest companies on the planet will report earnings. It is always wise to keep some powder dry during this time. No one knows what is going to happen and I think by the end of the week we shall have some more clarity as to the direction for the next few months. How will META GOOGL and MSFT react? On the WEEKLY Nasdaq chart, it recently recorded just its second bearish MACD crossover since late 2022 and the last one in August 2023 saw a 2000 handle decline from roughly 14500 to 12500, a drawdown of 14%. Will this one duplicate that? Who knows but one can see that it eventually found cushion at its rising 50 WEEK SMA last October before the very spirited run following a bullish morning star pattern. Notice that the line currently sits near 14500 but will travel higher as time goes on and there is no certainty that it will even make contact with the moving average. Again I think better risk/reward bets will come Friday afternoon when all the dust has settled. 

Semis On Standby: No one has to be told how vital the semiconductors are to not only technology but the overall market. They are in basically everything we use and we may have gotten ahead of ourselves with the importance to the AI recently, but the group will be tested here. The 10% haircut NVDA took last Friday did not feel normal, yet market forces are back in buying mode. Of course, that is a very myopic view as that occurred just 2 days ago. But other examples were TSM slumping 5% on a supposed "good" number on 4/18. Another reason why technical analysis matters to me, as PRICE is omnipotent. The chart below of the SMH recorded a bullish harami candle Monday and did follow through to the upside Tuesday adding 2.4%. We will hear from TXN tonight after the bell and the WEEKLY chart trades very wide and loose, hallmark bearish traits. LRCX describes round number theory succinctly with three rejections at the very round 1000 number each with a bearish candlestick including the gravestone doji on 3/21. Thursday INTC will report after the close and this one has been the dog now one-third from its most recent 52-week high, and was actually down Tuesday on a strong tape, although it did record a doji Monday. I think the SMH, and tech in general could have one more day of gains Wednesday, and then META GOOGL and MSFT could make or break the space. As for the SMH, I think it has room too the 50-day SMA and then we can reevaluate thereafter we see how it reacts.

Google It: Earnings season is going to kick off in a big way this week and it is always a good time to keep your powder dry, as markets tend to gyrate plenty. Some big tech names that will be REPORTING include SPOT before the open Tuesday. It has gained ground 4 of the last 5 times after numbers, but remember it is a very bad strategy to buy blindly into the print. It did fill in a gap Monday from the 4/2 session and found some support, although it could be temporary, and notice how the weakness began following the bearish evening star pattern completed on 4/9 (with a doji candle on 4/8). META will REPORT Wednesday after the CLOSE and it has done little since breaking above a bull flag pivot of 480, not the most bearish stance although investors are surely waiting until they hear the number. Thursday brings MSFT, the largest company on Earth, and it is holding the very round 400 number, and I could see a move toward 420 which could compete a bearish head and shoulders pattern. Below is the chart of GOOGL and it will deliver Thursday after the CLOSE too. An argument could be made that it is acting better than all that have been mentioned trading well above its 50 and 200-day SMAs, something the others can not state. Does that mean it has further to fall? We shall know by the end of the week and these should all be trading nowhere near where they currently are. Do not be a hero in front of it. 

Staples Brewing: When consumers cling to the staples sector it is thought of as defensive and a possibility of wobbly economic times as they gravitate toward what they need rather than want. The group is known for its dividend yields which also appeal to a certain demographic but some will sport solid chart action that demand one's attention. The daily chart below of the XLP shows a bit of a hiccup starting the first few days of April, however, it may be looking to end it on a positive note. Its MONTHLY chart has a nice complexion too as March completed a rare 5-month win streak (the only other one in the last decade was between June-November 2018 which did see a big drawdown in December that year). It is carving out a cup base and one can enter with a buy stop above the 77.12 trigger. The group was the 2nd best major S&P sector performer out of 11 last week, bested only by utilities, and if this conservative stance picks this may be a nice space to hide out in for the near term.