Chartsmarter Insights

Slippery Slope:   It is well known that technology has not been living up to its traditional leadership role. On a YTD basis, it is still in the middle of the pack up 7%, and of course, with tomorrow's CPI a lot could change quickly. The daily chart of the Nasdaq feels like it is stalling, although give it credit for being just 2% off its most recent all-time highs even though it has declined 4 of the last 5 weeks (one could interpret that as churning too). The WEEKLY chart shows it is also still nearly 2000 handles above its 50 WEEK SMA. Peering inside the sector semis are bending, but have not buckled yet with the SOXX hanging in and CLOSING positive Tuesday even with NVDA and SMCI off 3%. The latter is now about 100 handles below the very round 1000 number which we wrote recently about the level being a bearish island reversal (notice now it is clinging to the 50-day SMA and it does not feel like it has a very firm grip). If one were to look at the Bollinger Bands they are tightening which speaks to a big move coming the direction however ambiguous. Tighten your seat belts for the rest of this week.

Undeterred Ascent: Industrial strength is nothing new as it has powered higher and if one wanted to cherry-pick a timeframe over the last 6 months it is the second-best major S&P sector out of 11 up 25%, bested only by financials. Heavy construction has led the way and perhaps we should not be surprised with wars around the globe and bridges collapsing. If one looked to the bottom of the subsectors within, they would see the only one in the red, albeit very fractionally, was the delivery services. Airlines have been a bit of a laggard, if you could say that as they have advanced 13%, and give the JETS ETF credit for holding its rising 50-day SMA following the break above the bullish inverse head and shoulders breakout. Overall the XLI, via the daily chart below, has been minding its business and climbing upward. With the exception of the first couple weeks of 2024 and and last 2, it has advanced in a very orderly fashion. The WEEKLY chart shows the fund up 20 of the last 23 weeks and last week recorded a bearish hanging man candle, but notice it brushed off the doji the week ending 3/15. Would not be surprised if it brushes off last weeks pause.

These Arches Are Not "Golden": The casual dining space which we have discussed in length has had its share of losers. JACK for one, a former leader in the group, is now 38% off its most recent 52-week highs, after slumping more than 10% this week. It was the stock's second double-digit WEEKLY loss of 2024 after the first week of January lost the same amount. It is down 13 of the last 15 sessions and its fortunes changed after a break below a bull flag with two bearish shooting star candles on 12/19/23 and 1/5. PBPB is now 25% off its own annual peak and could be looked at as good risk/reward after Friday's spinning top just above the very round 10 number as a double bottom base takes shape with a potential add-on trigger above 12.81. Below is the chart of the fourth largest XLY holding in MCD (twice as big as the company it spun off in CMG which represents 2% of the ETF). On its MONTHLY chart, it is certainly plausible that sometime in 2024 this could trade down toward its rising 50 MONTH SMA.

No One Talking About It:   As this week comes to a conclusion, the XRT is down 6% this week so far, and if that holds it would be its worst WEEKLY showing in 13 months. The WEEKLY chart shows an ugly bearish engulfing candle heading into Friday, and perhaps a retest of the ascending triangle breakout near 72.50 is in store. It is a broader retail ETF than the top-heavy XLY, which was cruising, but the AMZN bearish dark cloud cover candle today after it registered 3 consecutive doji candles between 3/27-4/1 makes this fund fell ready for lower PRICES. The top 2 holdings in the XRT in GPS and GES both represent just 1.7% of the fund and the former is lower 8 of the last 9 sessions, and the bull flag that looked in place may now turn out to be some back and filling into the cup base breakout pivot of 22.02. The weakness in the XRT should be looked as meaningfully as it represents a large swath of the consumer group. Maybe chatter will start to heat up that AMZN is just too dominant eating market share among its smaller peers in the sector.

Consumer Rebellion:   The XLY has been showing some signs of softness with recent sloppy earnings reactions from some former leaders. Names like PVH Tuesday in the apparel space dropped more than 22% after the day before it was acting robustly trading at 52-week highs. Perhaps it will find some comfort at the rising 200-day SMA which aligns with the very round par number in the coming days. LULU cratered 16% on 3/22 and it too may find some bids in this area as it fills in a gap from the 10/13/23 session, although it has the look of a bear flag breakdown. MELI fell by double digits on 2/23 and has now carved out a bearish head and shoulders formation with a neckline at the very round 1500 number, and it continues to be outshined by domestic peer AMZN. Looking at the chart below of the XLY it sits just 3% off its most recent 52-week highs, but it feels important that it holds today's intraday lows. On the MONTHLY chart of the XLY, notice March recorded a doji candle which often indicates at best indecision and worst a change in the prevailing direction. While not discussing AMZN or TSLA, which we have plenty the last few weeks, now HD has undercut its 50-day SMA for the first time in 5 months after a recent bull flag breakout. Is the consumer on edge?