Douglas Busch

Deere In the Headlights: The phrase from the above headline is often one that refers to one "freezing" in a heavy sense of fear or confusion. This could be the mood of DE shareholders which may be confounded by the PRICE action but technicians consider that omnipotent. For a stock to be not participating in the historic November is one thing, but for it to be lower to the tune of 5% over the last one-month period is telling. Since a triple top on the WEEKLY chart at the 440 level after the bearish shooting star candle the week ending 7/28 it has gained ground in back-to-back weeks just once. It has now broken BELOW a bullish WEEKLY descending triangle and we know from FALSE moves often come fast ones in the opposite direction. Last week recorded a WEEKLY doji candle which often signals a change in the prevailing direction but this has not been the case thus far. Compare it to major rival CAT which has advanced 6% over the last month. I am not advocating for a buy of CAT, more so a short of DE if it breaks below 358.

Rotation Underway?   The lifeblood of healthy markets is sectors giving way to others to take the lead. Rotation gives the leading groups time for a prudent pause to catch their breath. Technology has recorded a massive run this year with the overall group via the XLK up almost 50%. The space is rebounding nicely after its 2022 soft performance and notice if it can be the best-behaved actor in 2023 it tends to be a good omen for tech. In the years 2017, 2019, and 2020 it was the strongest of the major 11 S&P sectors, reinforcing the notion that once a trend is in motion it is more likely to stay that way than to reverse. Looking at the chart below since the bottom on 10/27 of all groups, notice that tech (red line) has essentially flatlined since November 20th as others are playing catch up and real estate (orange line) has now surpassed it and the financials (light blue), and discretionary (brown) are in fast pursuit. The question now is will this rest give it stamina as we head into year-end or has the sector run too far too fast?

Pick Your Hemisphere:  The XLY is dominated by two names in AMZN and TSLA. The former is acting better just 2% off its most recent 52-week highs while TSLA is stuck in neutral, 20% from its annual peak made on 7/19 at the very round 300 number. Tesla attempted to break above a bull flag Wednesday and did so early on only to reverse, no pun intended, by the CLOSE. Below is the chart of AMZN which is hanging near 1 1/2 year highs. Its WEEKLY chart is sporting a bullish inverse head and shoulders pattern aligning roughly with the very round 150 number. The daily chart has recorded a bunch of bearish candles which may indicate this recent run is showing signs of fatigue. It started on 11/15 with the bearish engulfing candle, then doji candles on 11/21 and 11/24, and a spinning top on 11/27. South American peer MELI looks better as it is nearing a bull flag measured move to 1650 (can also be interpreted as a double bottom with handle base). Over the last one month period MELI has gained more than 30%, tripling the return of AMZN over the same time period. Elections have consequences.