Douglas Busch

Technology Slant: There is a saying that goes something along the lines of you are either becoming a technology company, you are a technology company or you are being left behind. TSLA is categorized as a consumer discretionary play, but one has to believe it is a technology name to some degree. It did buy Solar City (which was a renewable energy company, whose group is classified as technology), but let's get down to what really matters to me in the PRICE action. Did it benefit from its "rivals" action on Wednesday jumping 5% as RIVN added 24% on Volkswagen news (TSLA is down 20% YTD as RIVN is off by 38%)? Perhaps, but this has been rounding out a bottoming pattern now and it has been acting well since the week ending 4/24 jumped more than 14% (bullish piercing line too) and this week heading into Friday is up almost 8%, solid relative strength with the XLY up 1% and the XLK lower by the same amount. It looks like the fierce downtrend that began 11 months ago with the WEEKLY bearish engulfing candle the week ending 7/21/23 falling 7.6% at the very round 300 number is now in the rearview mirror, pun intended. Now it has to deal with the familiar round 200 figure but look for this to accelerate if that is taken out to the upside Friday.

Doji Strikes Again? I have been resolute in my belief that bearish candlesticks are somewhat less reliable in uptrends than bullish ones in downtrends, and with that conclusion, the doji candle last week after a spirited run last week may suggest it is time to shave some core positions to add back at lower PRICES. Technology may see some weakness at the open Thursday, with as of this writing MU down 8% after an ill-received earnings reaction, but the shot across the bow was the bearish engulfing candle on 6/20. Give the name credit for a powerful run doubling since the lows in late February. Semis overall have been under a bit of pressure since the NVDA split two weeks ago with weakness seen in AVGO down 5 sessions in a row before a spinning top candle Wednesday ended the streak. There is potential for this to fill in the gap near 1500 from the 6/12 session, but this name too was overdue for a prudent pullback and its uptrend is still firmly intact. We are all aware of the bearish seasonality (although that seems to come in August and September with the latter recording zero months of finishing higher than where it started the last 4 years down an average of 7%) with the semis overall and that may put some duress upon the overall technology sector and give the group a well-needed rest for a strong second-half push. Notice the 17% average MONTHLY move for the SMH in November since 2020.

Rocket Launch:   The next passenger on Jeff Bezos' Blue Origin space flight may be his own stock. The MONTHLY chart below is not budging from a potential long cup base pattern that began exactly three years ago. Although it exposes some dubious candles with spinning tops the last 3 months bears have been unable to press this name lower. One must respect that it has advanced 13 of the last 15 months and is not backing down from its current altitude. The WEEKLY chart has a familiar look to it with tight consolidation the last few months digesting the big move from last November through April. Notice it did the same thing after a nice advance in the first 8 months of 2023. Deja vu? This name makes up almost one-quarter of the XLY, almost double that of number 2 holding in TSLA, and a breakout above the MONTHLY cup has 6 sessions left in June. The name could be waiting for July as it has averaged a gain of more than 10% the last 4 years CLOSING higher than where the month started 3 of the last 4. We are nearly halfway through 2024 and the consumer discretionary space is just the 10th best major S&P sector out of 11 barely above the UNCH line. 

Feast or Famine: I often like to point out this chart of all 11 major S&P sectors to show that some groups have tendencies in how they behave. The one that pops off the chart is energy and look how the XLE has been either the best or worst performer going back to 2014 (slight exceptions were 2017 and 2023 which showed they were the 10th best of 11). On a YTD basis so far in 2024, it is lingering near the bottom of the leaderboard up 6.5%, making it the 8th best of 11. If the last decade of history is true to form expect this sector to lag in the second half. There is still plenty of time for a rebound and if it were to occur the chart below of CVX must start to act better. Tuesday it flashed some early strength but was unable to sustain that by the CLOSE finishing UNCH on the session. If one wanted to paint a rosy view the WEEKLY chart has formed a handle on a double bottom base with a trigger of 165.54. Notice the 165 area is a very familiar level of resistance in early 2022, early and late 2023, and again here in Q2. Its MONTHLY chart sports a bull flag but all of these become irrelevant with a break below 152.