Chartsmarter Insights

Industrial Force:   The industrials truly have been a force to be reckoned with as the XLI, and looking at its top components shows why. GE, the largest holding at almost 5%, has gained 19 of the last 21 weeks, after breaking ABOVE a bearish gravestone doji candle the week ending 10/27/23. It is now 2% off most recent 52-week highs and is on an 11-week win streak. Notice the heavy volume in 2024 during its run, and we know accumulation is an institutional footprint. The second largest holding in CAT, which has been outshining peer DE seen here, has gained 65% over the last year period (I feel DE could be shorted here right at the very round 400 number as it pauses after attempting to break above a double bottom base with 3 consecutive spinning top candles which indicate a potential change in the prevailing direction). Perhaps the strongest move has been seen by FDX with the bullish island reversal completed with the gap up on earnings on 3/22 after the gap down on the prior report on 12/20/23. We wrote about FDX here, and it is trying to distance itself above a cup base trigger of 284.19. We know the best breakouts tend to work right away so look for follow through the next couple weeks. The daily chart of the XLI is doing exactly what it needs to do. This overall group should continue to outperform for 2024.

Nasdaq Compliance: The swing trader's playbook revolves a lot around the 21-day EMA. It is a good momentum tool that can keep investors in positions that tends to eliminate a lot of the noise. Below one can see on the daily chart of the Nasdaq that it has found comfort at that line since the lows made last year, and with the exception of the first couple of days in 2024 it has been extremely reliable. And even then if one was stopped out they could have gotten right back in a few sessions later to ride the uptrend. This push has been very robust, with the tech-heavy benchmark now almost 2000 handles above its rising 200-day SMA, and many including myself have been waiting for a pullback that just does not seem to be coming. The classic definition of a bull market rally. This market does not seem to be bothered by higher interest rates, at least not yet. Higher crude PRICES too. At some point it will matter, but perhaps not for some time, or will it occur Wednesday with the Fed? I have taken very small short positions on the tech ETFs as a hedge against individual equities but continue to be stopped out. 

Apple Crisp? Could the world's second-largest company on the planet in Apple be ruffled enough to make a stand and try to reclaim the top spot? Monday was a good start for the name, but it CLOSED well off intraday highs, recording a mild bullish island reversal (gap up following a recent gap down). The stock added a pedestrian .6% although it encountering resistance at the 21-day EMA, and look for a possible move toward the round 180 number which was the site of a bearish descending triangle or head and shoulders pattern. April is around the corner and seasonality-wise, starts a strong run into summer last normally lasts until September, which curiously has a very bad track record over the last 5 years falling almost 10%. On its WEEKLY chart, last week did register a bullish harami, and I think these levels offer good risk/reward going into year-end with a stop below last week's lows. Another caveat is the MONTHLY chart which has sported three consecutive spinning top candles and is now back below the 180.42 cup base breakout from last June. The 180 level is important and must see a CLOSE above on March 29th, the last day of the month.

Amazon Vulnerable? Within the XLY there are two dominant forces in AMZN and TSLA. We know the latter has been lagging and AMZN is doing its best to keep the ETF afloat, but what if that pressure is weighing on the psyche of the stock? The daily chart below of the XLY shows it clinging on to its 50-day SMA, but the failure of the cup base breakout, lasting just 5 sessions, is notable. On a YTD basis, it is just one of only two major S&P sectors in the red down .4%, and TSLA has been one of the culprits (this is nothing new and notice here how the WEEKLY chart shows how soft it has been since hitting a wall at the very round 300 number last summer and it could be headed to par with all the big WEEKLY losses CLOSING near lows). The WEEKLY chart of AMZN shows back-to-back spinning top candles and the possibility of a bearish MACD crossover which occurred last September and witnessed a quick 20% haircut. Rounding out the top 4 components it should be no surprise there is bifurcation there, with HD bull flagging, and MCD clinging to its 200-day SMA.