Douglas Busch

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?

Rotten Apple:  With the recent softness in AAPL and strength in NVDA, the fruit has surrendered itself as the world's largest company by market cap, and it has MSFT breathing down its neck (these 3 stocks are the only ones with market caps beyond $3T). NVDA is now trading into the ugly bearish engulfing candle from 1/7 that cratered more than 7% (trade has been a bit wide and loose, hallmark bearish traits). As we have been doing this week taking a look at the top holding in a major S&P sector ETF, today we analyze AAPL for the XLK. The WEEKLY chart below of AAPL shows how it has fallen precipitously from the tree. The bears will state the market is on fragile ground because of Apple's softness, but the bulls will correctly declare tech is holding up despite it. Its daily chart shows a bullish hammer candle Monday after nearly touching its 200-day SMA, which should provide a little cushion. It is now quickly 15% off its peak made less than one month ago, and notice on the ratio chart against the XLK it has in 2025 already given up its entire contribution from the election into year-end 2024.

We Bring Good Things to Life: I am old enough to remember that slogan when it was a conglomerate. It has since spunoff some major players to unlock shareholder value with GEV a leader in the sustainable energy space, and GEHC which is now sporting a bull flag, which did record a bearish counterattack candle Friday. As both of these names look attractive so does the largest holding in the XLI and below is the daily chart of GE. Last week the stock scored a robust advance of 6.5% in well above average WEEKLY volume. Just 5 weeks ago it recorded a bullish WEEKLY hammer candle off the 50 WEEK SMA, its first touch in more than 2 years. On RSI it is now touching the bullish zone threshold 50 number and the last 2 times it did that in late 2022 and 2023 PRICE responded in a vigorous fashion. To show its consistency between the start of 2023 and May 2024 it never registered a 3-week losing streak (and fell in back-to-back weeks just 6 times). Watch for a WEEKLY bullish MACD crossover (although there was a false whipsaw last October). The MONTHLY chart of the largest holding in the XLI recently put up a bullish golden cross, is bull flagging, and has room to a measured move to 230 based on the long cup base breakout above a 135.17 pivot (from July 2016 that recorded a bearish gravestone doji candle). 

Banks Brimming:  Banks, although not the most exciting space, have continued to make nice progress. The daily chart below of the XLF shows nice action since the bullish piercing line candle on Monday. The fund is now right at a 49.27 double bottom breakout pivot and may take a temporary pause at the very round 50 figure. Like most other sectors it traded back into the election gap from early last November and looks ready to head higher once again. The WEEKLY chart, heading into Friday is showing a bullish engulfing candle up 5%, which would be its third-best gain since the week ending 11/3/23 jumped 7%. The MONTHLY chart, shows a break above a cup base pivot that traded between the round 30-40 number from the start of 2022 to the beginning of 2024. Of course, the big names started REPORTING and JPM is moving above its cup base pivot of 253.10, from the intraday high on 11/20's bearish shooting star candle (Thursday's candle was not too convincing with a spinning top). Top-holding BRKB is moving its way back above its 50-day SMA and that could go a long way to giving the overall group power to venture upward. It has been a drag on the fund as seen on the ratio chart against the XLF, but Tuesday completed a bullish morning star and is a good level to play against on the long side (notice the short-term tops were called with shooting star candles on 9/3 and 11/27).