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Weekly Technology Report

The Nasdaq is now higher 4 of the last 5 weeks and all four up weeks CLOSED at the top of the weekly range and all four gained more than 1%. It has been supported by some of the big names within such as AAPL and FB which have recently broke above bull flag formations. Keep in mind these two names have a huge impact on the composite as they make up 7.2 and 4.3% respectively. The Nasdaq is now higher 9.4% YTD and although early, is attempting a 7th yearly consecutive gain which has not happened in over 50 years. In observing longer term time frames this week we highlight three "old tech" plays, two longs and one short.

Looking at the Bollinger Bands one sees how strong the move has been as it CLOSED above the upper on Friday. This illustrates how powerful as the upper and lower lines are distanced two standard deviations away from the 20 day SMA. Would not be surprised to see a duplication of the January run, that saw it hug the upper line higher through almost the entire month.

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ChartSmarter Monday Game Plan 6/4/18

Markets concluded a shortened week on a high note, as good news via the jobs numbers this morning was perceived as good news for the markets as well. Not to long ago that number would have frightened the indexes as interest rate hikes would be needed to cool down an "overheated economy". The Nasdaq took charge, almost like a champion thoroughbred who likes to be looked in the eye, before finding another gear. That is regarding the Russell 2000 that nearly caught the Nasdaq on a YTD basis, so it was good to see the Nasdaq reassert itself. The tech rich benchmark was higher by 1.5% Friday, the S&P 500 by 1.1% and the Dow and Russell 2000 added .9%. Semiconductors were the biggest contributor to technologies clout, and internet plays delivered a nice runner up showing with TWTR jumping 9% this week. The name was been on fire since filling in a gap almost precisely on 4/4 from the 2/7 session and it fell just 5 days in the month of May.

Looking at the individual groups bulls could mutter its not where you start but where you finish. The end of the week was welcome news for the bulls as technology woke up with some energy. The XLK was the best performer Friday jumping 1.7%, and just what you want to see lagging were the defensive staples and utilities as the XLP was UNCH and the XLU was an outlier off by 1.5%. The XLK busted above the round 70 number with no CLOSES above the figure although 5 sessions were above intraday since touching it recently on 5/10 (previously CLOSED above on 3/9 and 3/12 too). The ETF now has to contend with the nasty bearish engulfing candle on 3/13 that was preceded by a doji on 3/12 which was fair warning of impending weakness. On a weekly basis it was energy that was the best actor as the XLE advanced 2.4%, but it recaptured just more than half of the prior weeks 4.5% plummet. The staples look most in danger to me as the XLP is now 16% off its most recent 52 week highs and has declined 11 of the last 18 weeks. Most ominous to me is the last 5 weeks have all CLOSED very taut within just .34 of each other. The coiling action should lead to  powerful move.

There have been some real standouts in the biotech/pharma space this year. I am old enough to remember many just focusing on the "big three", AMGN BIIB and CELG (amazingly CELG now trades 46% off most recent 52 week highs). However there have been some real standouts and two that come to mind are SRPT and LGND both higher by 212 and 79% over the last one year period respectively. Below is another name that can not be left out of the conversation, NBIX and here is how it was presented in our Thursday 5/17 Game Plan. The stock is on a current 7 week winning streak with all seven CLOSING right at highs for the weekly range, a very bullish trait. It is now sniffing out the very round par number and is 5% above its breakout from a cup base trigger of 93.08 taken out on 5/16.

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ChartSmarter Friday Game Plan 6/1/18

Markets slipped Thursday and most concerning was the action in the small caps as the Russell 2000 which has been holding up well fell .9%. The action is not what bulls wanted to see one day after a good looking bull flag breakout. Today recorded a bearish piercing line candle and we know the best breakouts work out right away. A bright spot was the Nasdaq which dropped less than .3%. It did however register a bearish shooting star just below the round 7500 number, which presented problems in the past. First in late January, and then it spent some time above that, perhaps a bull trap, for 3 sessions between 3/9-13. That 7500 level serves as a bull flag and it did at one point have the look of a cup with handle but it started trading sideways. The Dow fell 1% Thursday and has now lost ground 5 of the last 7 sessions after encountering problems at the round 25000 figure with an ugly bearish engulfing candle on 5/22. On a weekly basis the Nasdaq is showing some fortitude UP a scant .1%, as the Dow and S&P 500 are lower by 1.4 and .6% respectively.

Looking at individual sectors Thursday it was an unlikely couple that led with the utilities and technology dancing to the top of leaderboard. The XLU rose by .2% and the XLK was UNCH on the day and the utilities are popping up more and more at the top of the sector rankings. If one thought energy was a suspect leadership group, then what do they think about the utilities? Technology needs to get going and in rapid fashion. Lagging were the industrials and staples as the XLI and XLP lost 1.5 and 1.6% respectively. The cyclicals were the third best actor as the XLY fell just .5% buoyed by automobiles and some decent earnings reports by retail names. GM drove higher by nearly 13% Thursday and looks poised to easily achieve a four week winning streak tomorrow which would be its first in nearly 8 months.

The financials continue to see a confusing space overall as the traditional banks are acting softer than bulls want to see. Looking a little deeper into the group some of the exchanges are working well. NDAQ now sits just 3% off its most recent 52 week highs, but CBOE is down 8 of the last 11 weeks and off by an astounding 30% from recent 52 week highs, and it trades down this week by 5.4% heading into Friday. Below is the chart of CME and how it was presented in our Tuesday 5/14 Game Plan, which sits 5% off its own most recent 52 week highs. The stock is higher by more than 3% this week, showing strength after the previous 4 weeks all CLOSED very taut within just .62 of each other. It has broken above its 50 day SMA Wednesday gaining more than 4% on robust volume and now look to add to or initiate a position through the double bottom trigger of 166.75.

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Under Followed Security Play

The cyber security space has been awash with winners recently. We have mentioned HACK many times recently and the ETF is higher by an impressive 19% YTD. CYBR and PANW charts, the third and fourth largest components in HACK, were highlighted in Game Plans this week which both have broken away from very long cup base patterns. Below is the chart of VDSI which again highlights how leaders will offer additional entry points on the way up. Here is the chart of how the name was presented in our Friday 4/27 Game Plan then the second chart will give a current view.

Bifurcated action among peers SYMC and CHKP which disappointed WednesdayVDSI is a security play higher by 11% YTD and 13% over the last one year period. Earnings have been mostly lower with losses of 11.2, 3.5, .7, 12.9 and 2.6% on 2/22, 7/28, 4/28, 2/15/17 and 10/28/16 and a gain of 11.2% on 10/27 (it REPORTS 5/8 after the close). The stock is higher by more than 18% the last 2 weeks and this week has tacked on another 2% heading into Friday. This name is just 2% off most recent 52 week highs, solid for a software stock these days, and did put up a very respectable run gaining 14 of 19 weeks ending between 9/22/17-1/28. On its weekly chart it broke above a bullish inverse head and shoulders trigger of 15, and the measured move brings it to 19. Enter VDSI at 15.30.

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ChartSmarter Thursday Game Plan 5/31/18

Markets did their best Wednesday to overcome a sinister start to the week Tuesday. The Russell 2000 has to be considered the "ace", even though it is still underperforming the Nasdaq on a YTD basis, although the lead is now less than a stick. Looking at a shorter time frame however shows just how dominant the small cap benchmark has been with a gain of more than 9%, while the Nasdaq's advance is just beneath 3%. Today it broke above a bull flag trigger of 1640 and the measured move is 90 handles higher. The Nasdaq more than recouped Tuesdays loss of .5% gaining .9%, the S&P 500 was nearly even as it rose 1.3% today compared with the 1.2% loss yesterday, and the Dow was the only major average that was unable to recapture Tuesdays losses as it rose 1.3% after dropping 1.6% yesterday.

Looking at individual groups the rally today was very broad in nature with all nine of the major S&P sectors finishing in the green. The energy space led a vicious rally as the XLE rose by 3% (XOM its largest component had its best day in nearly 2 years) ending a 5 day losing streak and the ETF is attempting to put the ugly bearish engulfing WEEKLY candle last week behind it which slumped 4.5% in active volume. Keep in mind this occurred near highs not seen in 3 years. The financials were the second best actor as the XLF rose 1.8% and trade was a bit soft compared with Tuesdays volume as it recaptured more than half of the 3.3% loss. Lagging Wednesday was technology as the XLK rose .7%, just below the second worst performer in the utilities which added .8%. The question begs to ask is energy quality leadership, or are we seeing a long triple top?

The cyber security space within software has been rewarding patient longs. We recently looked at PANW and it is vying for a 6th advance within the last 7 weeks. That round 200 number it broke above should be a floor if one sees the pullback. Below is the chart of CYBR and how it was presented in our Thursday 5/10 Game Plan. There are some parallels with PANW that broke above a cup base nearly 3 years in duration. CYBR dealt with a long cup base pattern and the round number theory as well. It is now trading north of the round 60 figure for the first time in nearly 3 years and is looking for an 8th consecutive weekly gain and a rise 18 of the last 22 weeks. Again the adage goes the longer the base, the larger the space in which the stock can move after its breakout. The pattern below stretched more than a year and a half and should have some legs as it moves away from the 59.38 pivot.

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