Chartsmarter Insights

All Aboard:   The rails have been perking up and for whatever reason you want to assign to it does not matter. PRICE is firming in the group and below is the daily chart of UNP. Truth be told it is not acting as well as NSC, but UNP did break ABOVE a bearish head and shoulders formation and we know from FALSE moves come fast ones in the opposite direction. Its MONTHLY chart sports a cup with handle pattern and since 2022 has been essentially digesting the big former uptrend that began in 2016. Sure tariffs are playing a role as seen on this performance chart contrasting NSC CNI and CP, as our neighbor to the north's names are floundering. Periphery plays will be lifted along with the pure play rails, and continuing to look at small and mid-cap plays shows us the daily chart here of RAIL. It is dealing with round number theory and I would be interested here with a CLOSE above 10.25. Monday's bullish hammer was a good start. Notice it is holding up near the 40 RSI level where leaders will not trade below. TRN has formed a bull flag and a move above 38.25 should get one long. That would negate Monday's bearish gravestone doji candle and avoid a derailment (a weak stab at humor).

New Sheriff in Town: Or did TSLA just make a comeback? Its PRICE action should make everyone stand up and pay attention, even with today's later selloff. Comparing it to former best-of-breed RACE one can see why TSLA is now calling the shots in the auto space. Its daily chart below shows the bull flag breakout which carries a measured move higher of more than 100 handles. Regarding other best-in-breed automobile plays GM must be in the conversation. It is not as flashy (we spoke about it here last month), but it hit the round 60 number Monday which was the measured move from the breakout above the bullish ascending triangle. It is now crushing F which is now 23% off its most recent 52-week highs as GM is 2% off its annual peak. An old leader in TM may be looking to drive higher in 2025, pun intended, as it has recorded a very pedestrian 2024. This name looks ready to make a big move suggested by the tautness of the Bollinger Bands which are as tight as they have been in at least 6 months. The move, which should be powerful, can go either way but above 170 remain constructive.

"Stick to the Plan. Not your Emotions" - Unknown Round Number Rodeo Again: Long-time readers of mine know my affinity for round numbers and the fact that the S&P 500 is ready to challenge 6000 so quickly after retreating there just a couple of weeks ago speaks volumes. Last week ignored the bearish island reversal with the gap down from 11/6 (after the gap up from the 11/5 session). Looking at the Nasdaq that too is dealing with round number theory at the 19000 area but is acting well POST breakout above the cup with handle breakout pivot of 18785 from 11/6. Curiously notice, it has not surpassed its gap down from the 11/14 session. Peering at some of the other major benchmarks the IWM has not yet met its measured move to 258 from the ascending triangle breakout of 227 and that was retested precisely and held last Tuesday. Even the Dow has been acting well since the start of Q4 as seen here, slightly besting the S&P 500 and Nasdaq. And this is all occurring with gold and the dollar marching higher. And of course, how can we not speak about round number theory without mentioning bitcoin? It traveled to within a hair of 100K, but on the MONTHLY chart looks great above the cup with handle pivot of 73,800 or the flag trigger of 72,000 which carries a measured move to 123,000.

Equipment Check: On a YTD basis, healthcare via the XLV, while higher, is the weakest of the 11 major S&P sectors. In a group so diverse, you can play defense with pharma (supposedly) or offense with small-cap biotech, there is bound to be strength in some sliver of the space. The performance chart below comparing the major ETFs shows a clear leader in the IHI against the XLV, XBI, or the IHF. The IHI is just 1% off its most recent 52-week highs, while peers XLV, XBI, and IHF are off about 10% from their respective annual peaks. This slow-moving supertanker of an ETF looks poised to trade up to a cup base pivot near 65 on its MONTHLY chart and notice how it just broke above a 2 1/2 year downtrend on the ratio chart against the XLV. Could it be ready to outperform similar to how it did between 2015-22? Leaders in the niche group include MASI PODD and ISRG. All 3 are sporting bull flags and as we come toward the end of November I will be paying close attention to the MONTHLY chart of MASI and if it can CLOSE above the 50 MONTH SMA and a double bottom base that will take shape. If it finishes next week above 175 enter and add to above 198.10 double bottom pivot. Then a possible trip to the very round 300 number later in 2025, a level last touched in late 2021.

"Mobil"izing the Troops:   Is the energy space getting its cues from the huge, top two holdings in the XLE? In our last energy note on 11/12 we discussed CVX and today we will take a look at its rival XOM. These two make up nearly 40% of the water-logged XLE. Below is the daily chart of XOM, and Thursday nearly broke above a double bottom with handle pattern, and November interestingly has found support at the top of the intraday range from its last earnings reaction on 11/1 (the stock has recorded 6 consecutive negative earnings reactions, not a typo). The MONTHLY chart, is having a strong November and that is not surprising given the fact that the last 7 months have all CLOSED very taut between 113.26 and 116.98 starting with the strong March push off the very round par number. It will be interesting to see if November with 5 sessions remaining can CLOSE above the October bearish shooting star candle. The debate about whether this group overall is going to be heavy under Trump comparing the underperformance from 2016 to 2020 to Biden from 2020-2024 is negligible in my opinion as 2020 came from such a low trajectory (and basically everything rallied off those 2020 lows). Intriguing over the last week with all the tech "excitement" (NVDA SNOW) by far the best major S&P sector performers have been the underappreciated utilities and energy.