Douglas Busch

Nvidia Makes a Stand: If the market ever needed a frontman to stand up NVDA would be the one. Wednesday it put the market on notice that it is not fooling around. The stock recorded a long-legged doji candle which is adept at signaling trend changes from the prevailing direction. We all know the phrase, that in new bull markets, fresh leaders rise to the occasion instead of older mature names, but Nvidia will be in the picture going forward. I am not saying a burgeoning bull is awakening by any stretch, but for the bulls to come out of a prolonged hibernation confidently they need to commence with baby steps. I still think this is a market that will take some time to recover as we all have been conditioned to expect V-shaped recoveries, but this is likely to be a trader's market for some time. Tactical trading, looking for 4-5% moves, as the WEEKLY chart suggests this break below the bearish rounded top will be tough to penetrate to the upside. Thursday will record its seventh straight WEEKLY CLOSE below the 50 WEEK SMA, but the bullish engulfing candle last week felt capitulative. I think one can play this on the long side as long as it remains above the very round par number. If that level is undercut all bets are off. In fact it is a low percentage possibility but on the MONTHLY chart there is no reason it can not travel toward its 50 MONTH SMA sometime in the second half if markets continue a sideways to down path for the rest of 2025 (would probably be in the mid-70s as that upward sloping line would catch up in PRICE). It tends to come into contact with the secular line every few years.

No "Crowded" Problems With Breakouts Currently:   Last week in looking for potential green shoots for the bulls, where it has been very difficult too say the least, I brought up PLTR. The reason being that it had shown solid overall relative "strength", in not even coming into contact with its 200-day SMA. Names that exhibit this type of strong behavior will usually come out far better than peers once the dust settles. Remember in a healthy bull breakouts will flourish, and vice versa. Below is the daily chart of CRWD, which should be mentioned in the same sentence as PLTR, and if this can demonstrate some resiliency and decisively take out the double bottom pivot and act well POST the move that could go a long way in improving investors bearish psyche. This would be a good start, but only a handful of names thus far achieving this should have market participants cautious, but curious. The WEEKLY chart is a bit wide and loose and notice the bull flag breakout (which started at the very round 200 number) never met its measured move to 550 and the bearish engulfing candle the week ending 2/21 that slumped 10% will loom large in 2025. First things first and let's see how this acts around the current double-bottom pivot into this weeks-end, which is a traditionally bullish holiday-shortened one.

Retail Rebound? With constant media banter about the R-word, it is possible that the sector that could be most sensitive to it flashed a bottom last week. The daily chart of the XRT below, which is a more diverse and more balanced ETF than the XLY, flashed brilliant action to end last week. Technicians believe, as in life and markets, it's not how you start but how you finish (CLOSE). There is still plenty to prove looking at the WEEKLY chart it has not recorded back-to-back gains since late November and early December, the first of which was a bearish shooting star candle not long after a bull flag breakout (notice the bullish piercing line last week with very robust trade). Of course, if the big boys in the XLY in TSLA and AMZN get going it will boost not only discretionary but the overall market too. The former is sporting a bear flag, but if it could break ABOVE the 270 area that could get it driving in the right direction, pun intended. The MONTHLY chart of AMZN has some green shoots depending on how it could CLOSE out April. Thus far it is bouncing off the 50-MONTH SMA, reminiscent of the bullish hammer candle last August which set off a 5-month win streak. All bets are off if the XRT and XLY undercut their intraweek lows from last week.

Mister Softee Firming? With MSFT and AAPL vying for the largest market cap company on the planet (notice there are no $3T names after the recent carnage and Apple nearly crossed the $4T threshold at the end of 2024) the former looks poised to take over the top spot. Technically it looks superior to many of its mega-cap peers as heading into Friday it is carving out a bullish WEEKLY engulfing candle. AAPL on the other hand is showing relative weakness up just 1% this week so far, looking likely to register a bullish counterattack candle, as MSFT has advanced 6% outshining the Nasdaq gaining 5%. Softee's WEEKLY chart has some green shoots and these "Mag7" stocks are out of favor making them good risk/reward here with few believers and a potential bull catalyst setting up. If this can get its act together look for this in the latter half of 2025 to trend toward a double bottom trigger of 455.35. Its MONTHLY chart is bouncing off the 50 MONTH SMA, much like it did in late 2022 and early 2023. Notice how the back-to-back doji candles in November-December 2021 started a 130 handle drawdown and the bearish gravestone doji last December started a current 4-month losing streak (it is down 7 of the last 9 too so the burden of proof is on the bulls).

Bazooka: April may be just a few sessions in but could have felt like a career for many. Indexes surged in historic fashion and perhaps that was the bottom, but let us remember nothing goes up, or down in a straight line. Days like Wednesday will remembered for decades, but I have always been taught that bottoms were a process that occurred in a steady and gradual way. Tops happen in volatile trade, so although I do not think we are out of the woods bulls have to be feeling good about themselves. This market was obviously levered to the short side, and they feasted as of late, and a lot of that was unwound yesterday. How much more needs to be covered? Were longs active Wednesday, many were likely deer in the headlights after the recent tattooing they endured. The next couple of sessions will be very telling. If we can get the recipe of more covering and big organic buying this run has legs. The MONTHLY chart of the Nasdaq below shows a bounce technically in the right area, off the 50 MONTH SMA. There is a lot of air between here and there now and let the tug of war begin. This will be a very interesting Q2 with earnings just around the corner. Will they surprise to the upside, or have the "valid" tariff and "self-inflicted" excuse to fall back on?