Chartsmarter Insights

Semis Showing The Way: The semiconductor group continues to thrive, and Monday the SMH recorded an all time CLOSING high, and this is with INTC, the funds second largest holding at 10% now lower by 28% from most recent 52 week highs. This week we will see the groups true colors with some heavyweights releasing earnings reports. Today after the CLOSE NXPI fell and AMKR rose, and tomorrow we get a look at AMD, which was a big beneficiary of INTC's demise last week. Will a good number already be cooked into the current PRICE? Wednesday brings QRVO LRCX and QCOM, and Thursday XLNX. XLNX will be interesting, as this name was a former best in breed name in the space, yet it has recorded FIVE straight negative earnings reactions down 3.8, 10.7, .8, 3.4 and 17.1% on 4/23, 1/29, 10/24, 7/25 and 4/25/19. It filled in a gap on 7/14 from the 7/2 session, and still trades 20% off most recent 52 week highs. Looking at the WEEKLY chart of the SMH it has amazingly traded very taut on a WEEKLY basis, with the last 3 all CLOSING within just .77 of each other. Breaks above that type of coiling tend to be explosive. So far so good this week, although it still has 4 days to go. Buckle your seat lets.

Date With 10000? The final phase of a bull market, as the adage goes, is "euphoria". I am not in the camp that that emotion is upon us (AAII bulls are in the upper 20% reading, while bears are near 50%). But there are certainly concerns going forward for technology. We have spoke about the bearish candles, and the need to CLOSE above that 7/13 bearish engulfing at all time highs. It attempted that on 7/21, and reversed powerfully with a dark cloud cover to finish weak on the strongest daily volume in July so far. The tech heavy index recorded back to back declining weeks for the first time since the weeks ending 3/13-20, and has now CLOSED near lows for the WEEKLY range 4 of the last 7 weeks. Question now is the benchmark becoming well rested for another move higher, or is this the beginning of something more sinister? I think the answer will come from the groups that are being rotated into, if they can firm up, and not sink if the Nasdaq weighs. The line in the sand is the very round 10000 number going forward into the dog days of summer.

Ready For Takeoff? Could today be an important day as the rotation from growth to "value" seems to be getting underway. Is this the hedge of the incessant chatter regarding the barbell approach, with the "low risk" names about to start outperforming? The industrials fell  noticeably less than technology Thursday, and this was the third day that technology via the XLK was the worst performing of the 11 major S&P sectors. For me on big down days like this I like to look for names that shrugged off the weakness, as it is often a tell going forward. One name that fits the bill was RYAAY today. Not only did it act well on a soft tape today, but it declined disproportionately against peers. For example it is now 24% off most recent 52 week highs, while domestic players such as DAL UAL and AAL are off off between 58-66% from their yearly peaks. Is it a case of international names doing better because passengers are flying more than their American counterparts, or is there something more to it? Just let PRICE action determine that, and so far RYAAY deserves a long look.

Nasdaq Drained? The Nasdaq has been a bit sleepy as of late. Sure under the surface there have been some big movers, with the likes of AMD today charging higher, but for the most part leaders have been digesting large moves as they determine which way they will ultimately break. Moving upward obviously is the desired move, if one is a bull, but a prudent pause would not be the worst thing that could occur. There is an ongoing battle with the reversal last Monday (remember that put an end to 11 consecutive Monday advances prior), which was also a bearish engulfing candle, but in all honesty the major averages have been ignoring candles during this historic run, and they to tend to work better near bottoming phases as the market has a positive long term bias. But candles are helpful and at some point they will return to relevance. Is this that time? If the rest of this week can not CLOSE above that 7/13 high, some short term softness may offer some that have been left out of this rally to join the party.The Nasdaq itself is still roughly 800 handles above its rising 50 day SMA. A touch off that line for give it a well needed rest.