Douglas Busch

Toppy Behavior: I will state once again that I feel 2025 will be the year of stock picking, against the individual indexes. In this light, some stocks will advance despite a potential soft benchmark. Sure a rising tide lifts all boats, and vice versa, but names that exhibit relative strength should be admired. That being said the Nasdaq continues to trade in a very volatile fashion which is indicative of toppy behavior. My mind will be changed when the very round 20000 number is decisively taken out to the upside. Until then call me skeptical. The rest of this week will see the tech heavyweights REPORT earnings and the Fed tomorrow morning could announce a cut which would give a bid to long-duration assets. My opinion, not advice, is the gap from late last week, which completed the bearish island reversal (after the gap up last Wednesday) will be filled then more softness to follow. Of course, I could be very wrong and PRICE will let me know. 

Budding Biotechs? The biotech space via the XBI has put up a nice showing as of late. Perhaps investors are anticipating some nice M&A activity, or some tax selling pressure relief, falling interest rates, etc. The daily chart below shows the illustration with a break above the bullish falling wedge pivot of 91 carrying a measured move to 105 (bullish inverted hammer candle Monday). Now it must hold that trigger or all bets are off as we know the best breakouts tend to work right away and those that struggle and falter fast are big warning signs. The MONTHLY chart will produce a new candle Friday and this week is chock full of earnings and the Fed meeting Wednesday. The break ABOVE the bearish head and shoulders pattern is hanging on by a thread, but the 50 MONTH SMA has been a formidable blockade. Remember 2025 will be the year of the stockpicker and if one does their homework will find plenty of names shining in the overcast market shadow. Below is the daily chart of RPRX which was oblivious to Mondays PRICE action and broke above a bull flag pivot of 31, that carries a measured move to 36. Notice how the 12/20 bullish morning star gave the green light rising 2.6% that session is monster volume. 

Service Interruption:  The energy equipment plays have lagged their production peers, but are they about to enter into the strong sectors 2025 fray? The daily chart of the OIH below shows a lukewarm positive session Thursday as a taut candle was recorded and bears were unable to press the pedal lower after Wednesday's drop of 3%. Round number theory has been a thorn in the ETF's side at 300 but it is not losing too much altitude from the level. Its first objective would be to reclaim the 50-day SMA and then if it can catapult 300 look for a beach ball held underwater type breakout. Large holdings within will have to do some of the heavy lifting, pun intended, if this is to occur. SLB completed a bearish evening star pattern Wednesday with a pushback at its downward-sloping 200-day SMA, and bulls do not want to see this give up the 1/16 gap. HAL has shown 3 straight days of CLOSING upon the lows. On the other hand, former leaders turned into laggards like TDW and VAL, look like they are offering good risk/reward here. We looked at the former in our 12/30 Energy Note here. Not much is expected from this space and that is precisely the reason it may surprise. Wait for a move above 295 then add to through 300. Let it prove it to you. 

January Delivery:  Can TSLA deliver a CLOSE in January above the MONTHLY cup base pivot of 414.60 on the chart below? This name is in the crosshairs of the new administration and looks like it has the wind behind its back. Often when a stock records a breakout during a certain period, but can not CLOSE above it it can spell disaster. The fact that bears have been unable to push this lower after December's bearish shooting star, has to be considered a victory for the bulls. It finished 85 handles off the intramonth highs and in January is going for a rare 3-month win streak (just two have happened since Q4 '21, in January-March 2023 and May-July of the same year). The WEEKLY chart sported a bullish engulfing week adding 8% last week and since the election has produced other robust gains of more than 20%, the weeks ending 10/25 and 11/8. Adding to the bullish theme is the bull flag on the ratio chart against AMZN and the bullish WEEKLY golden cross. Getting back to the MONTHLY chart below with the bounce off the very round par number at the nadir of the cup base a CLOSE above the 414.60 trigger next Friday would carry a measured move toward the low 700s, not out of the realm of possibility as call activity has been in that area. Can it deliver?