The Nasdaq is flirting with all times highs once again, and there is the tendency to think a double top is being formed. It pays to be a skeptic as investors should always try to manage risk and take care of the downside. Other than that savvy market participants let their winners run. I happen to be a big fan of the candlesticks, although there are always secondary to PRICE action by itself. But they can give good clues as to what can potentially happen. This week the Nasdaq CLOSED less than 2 handles under the very round 8000 number. Monday, Wednesday and Friday recorded doji candles (Thursday a bearish engulfing) which often signal a fatigue of the underlying trend. Will they end up being yellow birds in a coal mine?
The last couple of weeks we have been stressing the importance of strength in AAPL to the overall markets being the Nasdaq’s largest component. It has acted very nicely up better than 2.5% this week. This week lets see another “old tech” influencer in MSFT. These two names have leapfrogged each other recently for the worlds most valuable company. The behemoth will report earnings next Thursday after the close (last report fell 1.8% on 1/31, after the prior FOUR all rose by 5.8, 1.8, 1.6 and 2.4% on 10/25, 7/20, 4/27 and 1/31/18). On its WEEKLY chart it has acted well POST breakout from a nearly 5 month cup base pivot of 116.28 taken out the week ending 3/2.
Below is the chart of HPE and how it appeared in our 4/8 Technology Report. This name is higher now 15 of the last 17 weeks, and is acting much better than HPQ which spun the name off in November ’15 (HPQ is now 24% off most recent 52 week highs and has made lower highs and lower lows since the beginning of October last year as the Nasdaq has been doing just the opposite). HPE has lost ground just 3 sessions in all of April thus far, and is now 2.7% above a double bottom breakout pivot of 16.22 taken out on 4/10. The best breakouts tend to work out right away and this one is showing good action POST breakout.