Chartsmarter Insights

Cat Out of the Bag: The industrials as a whole are having a pedestrian YTD move thus far, now the 6th best major S&P sector up 2.4%. The XLI is trading at all-time highs as has advanced 13 of the last 14 weeks and is up another 1% this week heading into Thursday (12 of the 13 weeks CLOSED at or very close to highs for the WEEKLY range). On this chart, you can see how this group has acted better than the Nasdaq to show how firm it has been. UPS, not the bellwether it used to be, but still worth following in the group may have put in a bottom last week after a bullish hammer and dragonfly doji candle on 2/1 and 2/2 which also filled in the gap from the 11/13 session. There is still work to do there but one could remain constructive above last week's lows. Below is the daily chart of CAT, the largest holding in the XLI, and this has backed off somewhat after its most recent earnings reaction on Monday. I think this one could gravitate lower a bit in the near term, totally understandable given the more than one hundred handle run from late October after a WEEKLY doji candle. This has still yet to meet its measured move to 360 out of a bull flag. Look for that possible achievement in the second half of 2024.

Software Anything But:   If I had a dime for everyone I spoke to who is bearish, I would not need to trade. And yes plenty of "evidence" suggests a meaningful pullback could be upcoming. Seasonality has been discussed ad nauseam, breadth being weak, new 52-week highs struggling, negative divergences, etc. I think you get the picture. And to be frank I have been skeptical if this rally could continue. And to be honest all of the above-mentioned worries, none of them matter, zero, until PRICE confirms. It is the essence of technical analysis. Below is the daily chart of software via the IGV, and yes there are some dubious candlesticks in there including a doji on 1/26 and some hanging men the last couple of sessions. Now something that would get me bearish is if we witness a break BELOW the bull flag, as we know from FALSE moves come fast ones in the opposite direction. My inclination, and remember the market could care less what I think, is that this breaks higher just for the simple fact that so many are on one side of the (bearish) boat. But I am happy to wait for PRICE confirmation to direct me in either direction, long or short. Sometimes doing nothing is the best trade until the signal reveals itself. 

Semis Grooving:   The semiconductors have been on a roll recently and they may be masking some underlying weakness in the broad Nasdaq as now just 42% of all Nasdaq names are above their 50-day SMA (notice it is now touching the oversold 30 RSI number but that it was not able to stem the tide going lower last August and September). The SMH has been very resilient and the WEEKLY chart below demonstrates this. Since the end of Q3 last year it has not recorded a 3-week losing streak and general NVDA has well exceeded its measured move to 600 and is now swimming near the very round 700 figure recording a bullish hammer Monday. MPWR has constructed its flag that started at the very round 400 number and was above the 640 pivot Monday, so see if this could decisively CLOSE above that level. INTC to me looks like a good risk/reward scenario after a bullish hammer candle last Friday and showed some firmness Monday. It can be bought here with a CLOSING stop below 41.50 and add to with a buy stop above a double bottom pivot of 50.40. 

Nifty Nasdaq: I am not going out on a limb here saying the Nasdaq should feel the pull toward the very round 16000 number on the MONTHLY chart below. It is just 2% from these PRICES and PRICE has memory, as it was there just more than 2 years ago. What will be interesting is how it reacts once it is there, of course, it has to do that first. That being said it is still lagging behind the S&P 500 which is at all-time highs. I am hearing the weak seasonality patterns. Concerns about breadth, the Russell 2000 never being this far away when the S&P 500 is at all-time highs, etc. Yet the markets are grinding higher. Both the semis and software are moving in the right direction and perhaps we can use the analogy of the Nasdaq chasing the S&P 500 with the IGV trying to play catch up with the SMH. Notice here that the SMH is at all-time highs while the IGV (the lime line) is still in pursuit of its own. If it can achieve one this year, notice between 2018-22 it firmly led the SMH. My favorite chart of the top ten holdings in the IGV is PANW which is bull flagging with a buy stop above 350 carrying a measured move to 420. 

Apple Crisp:  It is mid-afternoon as I write this note for Friday's session and with AAPL reporting after the close my prediction of a sell-off could burn me (I am not involved, just a prediction), hence the "crisp". The implied move of 3% up or down in my opinion will be lower and that would shake out some of the weak holders and potentially create a new double-bottom pattern, and notice the last one that broke above a 182.20 pivot worked ok as it ran to the very round 200 number. Thursday put an end to the 6-session losing streak recording a bullish piercing line candle, but perhaps someone knows something with that prior softness before today. Compared to peer MSFT it is losing distance from the $3T market cap and is now firmly underneath Mr. Softee's. Regardless of how one feels about the name and it's losing its innovative history of the past this stock still carries a lot of weight and bulls want to see this perform. Its MONTHLY chart suggests this could be topping at the 200 area with two consecutive spinning top candles the last 2 months and another spinning top and hanging man last July and August.