Who’s Watching Who?
We are all aware of how ads pop up on our technology devices even after the slightest whisper in the near vicinity of one. Shhhh. Many market participants are watching the chart below of GOOGL. It is the fourth largest component in the Nasdaq, at 5.8% of the index, so it can easily have an impact on the benchmark. Of the FANG names it is quietly acting the best just 5% off most recent 52 week highs, while FB AMZN and NFLX currently sit 10, 12 and 32% off their most recent yearly peaks (no chatter recently about how these names were almost singlehandedly responsible for the bulk of the markets advance months ago). The stock filled in its most recent earnings gap from the 7/25 session, and last week digested a prior 3 week winning streak that rose by a combined 7.3%. I wonder if Google is an adept tape reader or “watcher”. If so a breakout could be a self fulfilling prophecy. A little humor never hurt.
Former Leader Resetting:
All good things must come to an end. For leading stocks when they hand off the baton, to a newer, more innovative name to take the reins, sometimes they never reassume that general status. Often they will rest and attempt to recapture that former glory. Below may be a good example of that with the chart of AVGO. It now trades in correction mode down 12% from most recent 52 week highs, poor relative strength as the SMH sits just 3% off its most recent yearly peak. The stock is in no mans land here, but should be kept on a watchlist, as although it may not carry the same weight over the space, it will have an influence on it IF it can break above the very round 300 number in a significant way. Patience is a virtue.
There is no question semiconductors have been the brightest spot within technology recently, but the equipment names themselves have been very strong. KLAC has been on a tear since bouncing off the very round par number in early June. LRCX is trading right at all time highs, and ASML is doing its part too. Below is the chart of AMAT, and how it appeared in our 9/5 Technology Note. That session it CLOSED above the very round 50 number, and it has held firm ever since. On its WEEKLY chart one can see the add on above a 52.52 cup with handle pivot, in a pattern dating back to the middle of March 2018.