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Technology Sector Review: 5/30/23
Widow Maker: Many I speak with hailed Wednesday afternoon as a seminal moment for not only NVDA but technology, and therefore the market as a whole as it had been doing much of the heavy lifting. A good number and a sell-the-news event had some market participants confident of a bearish reversal, which never it came close to materializing. Thursday the stock added 24%, and Friday another 2.5%. With just a bit more strength it may become the 6th company to achieve a $1 Trillion dollar market cap. But for those that were smart enough to sit on the sidelines, a tactical short may make sense with the spinning top candle Thursday which often indicates fatigue. And the fact that it occurred just below the very round 400 number, after being at 300 just one session before gives the idea a bit more credibility. Do I think this will fill in the gap near 306? Absolutely not, but is the next 10% down in this name? I believe that answer is yes. This uptrend could be very far from over but those not involved presently I feel will get a better entry PRICE.
Consumer Discretionary Sector Review: 5/26/23
Deterioration Under The Hood?: Glancing at the chart below of the XRT, an ETF whose largest holding is almost "equal weighted" at 2% feels waterlogged. Thursday as tech broke meaningfully higher, the XLK was up 4%, and the XRT fell 2%. Is that an indication of real investor bifurcation or is there simply not as much capital around to spread around to other sectors? All that matters is PRICE action and it is pretty clear that the XRT is in trouble at the moment. It is now back to the start of 2023 when the overall market roared higher. The XLK is now firmly above the dreadful February highs in comparison. Some froth has come to the surface which captures my attention with possible negative implications. Examples include SG LL GRWG and ANGI all have which have gained between 60-80% in just the last couple of weeks. The XRT is lower 10 of the last 15 weeks, with 9 of the decliners CLOSING at or near the lower half of the WEEKLY range. The real trouble began just above par for the XRT in late 2021, and the "sideways" action for the last year between 55-75 may be ready to resolve to the downside. Recession speaking.
Technology Sector Review: 5/25/23
Security Issues: Stirring fear is often a good way to get one's attention. It can produce more "clicks" for business. I recall when the HACK ETF was first introduced it was hailed as a way to beef up national security with all the things that could go wrong in the world. There was a headline just today that China hackers attacked US infrastructure. But for all the hoopla that HACK ETF never lived up to its billing and it has for the most part been a laggard. This brings up the conundrum of whether to buy something that is already showing strength, like the IGV, as opposed to something which has been lagging. Technical analysis 101. Buy strength, sell weakness. On a YTD basis, HACK is up "just" 8% compared to the IGV which has advanced more than 20%. But the chart below shows a possible bottoming pattern with a bullish ascending triangle in place. A move above 48 could put this one-year-long range trading roughly between the round 40-50 numbers behind it and start the potential right side of a WEEKLY cup base, not to fearmonger anyone.