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?
"I hope you win the war you tell no one about." -Unknown The Golden Goose: As equity markets continue their roar higher, gold does not want to be left behind. On the MONTHLY chart below Gold can be seen acting well in October, a tough one for the equity markets and a response many would have thought logical given its traditional "defensive" status. That month gold rose almost 6% and for good measure last month tacked on another 2.2% and in December will go for a rare 3-month win streak (which would be just its second time since early 2020). The reason I am bullish on gold and keep in mind it has a recent correlation to the S&P 500 is the fact that it is not acting jittery at the very round 2000 number as it has in the past. It backed off there with dubious candlesticks with a spinning top in August 2020, a shooting star in March 2022, and back-to-back spinning tops again this April and May. The MONTHLY bull flag below shows a path to the very round 3000 number if it can CLOSE above 2100 on 12/29. Overall notice too how gold bottomed last November with equity benchmarks with a bullish engulfing candle (which ended a 7-month losing streak) at the rising 50 WEEK SMA. It recorded that same candle this October.
Not Recessionary: The industrial space as a whole has come to life during this one month plus market surge. And in particular a couple are screaming no recession forthcoming. The JETS ETF is now higher 4 of the last 5 weeks, albeit from a very low trajectory, but it signals a consumer willing to spend on discretionary items. More relevant may be the chart below of the IYT, which shows some possible good things on the horizon as we know goods need to be shipped and it shows up in the PRICE action. Railroads are acting well. CSX broke above a double bottom with handle trigger of 32.74 Friday. UNP, the top holding in the fund, is building the right side of a cup base. To be frank I was surprised to see UBER as the second largest component, although perhaps a smart idea by the selection committee to inject some growth into it. UPS, which I have always liked FDX more, recorded a bullish three white soldiers WEEKLY pattern this week. Overall the industrials over the last one month are holding in there with some of the best actors with the XLI up 10%. Give the group some respect.
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.