Chartsmarter Insights

Dead Weight: As the SMH broke above a bull flag formation above 155 on Monday, some names within have not gotten the rally memo. Some have thrived like a NVDA up nearly 70% YTD, and currently dealing with the round 400 number (CRM and SPLK dealing with 200, SHOP 1000 and NFLX 500, and I feel this month AAPL will be magnetically pulled to 400). Below is the chart of AMD, which has received some love near 50 on a CLOSING basis on 5/27 and 6/29, but the name still trades 11% off most recent 52 week highs, while NVDA is sitting right near all time highs. For AMD, against the SMH, there was some glaring relative weakness, most noticeably the weeks ending 6/26 and 6/5. The week ending 6/26 the SMH fell 2.1% and AMD dropped 7.6%, and the week ending 6/5 the SMH rose 8.3% and the SMH dropped 1.3%. It is still reeling from the bearish evening star that was completed on 6/11, as it attempted to break above a bullish ascending triangle for a third time. The charts heaviness may be starting to wear on the bulls.

International "Rock" Star, Pun Intended? The miners have been acting well of late as BHP is battling with the very round 50 number, and if it can win that battle a cup with handle pivot of 52.96 can be bought. Problem there is the stock is now 15% off its most recent 52 week highs. Its rival RIO is acting much better as it trades just 3% off its most recent yearly peak, and the chart below shows a potential break above the 58 could be a very firm one. And RIO has the better dividend yield of the two at 6.7% (BHP is not too shabby at 5.7% either). The chart here is the WEEKLY one, and notice the beautiful 17 of 18 week winning streak between weeks ending 12/14/18- 4/12/19. Could it be readying itself for a similar move? The last 3 weeks have CLOSED in the lower half of the WEEKLY range, but it is not shying away the the lofty altitude in the 58ish area, like the prior 3 times did. On the daily chart it has the look of a bull flag, or a cup with high handle that began in late January. I think this one looks good on multiple time frames, but of course the ultimate arbiter, PRICE, must confirm new highs to have strong conviction.

Mission Accomplished? There are some names that should be owned, and not traded. AAPL and MSFT come to mind, and the chart below of AMZN can be included in the conversation. This chart was from 6 weeks ago, and to be fair I wrote something just a few days ago how the chart was showing sign of exhaustion with some bearish candlesticks. It is a good example of paying attention exclusively to PRICE action, where as candles are important to detect reversals, they are more so at bottoms as the markets have a long term bullish bias. Amazon is now higher an incredible 15 of the last 16 weeks, and to show just how strong the momentum has been it has lost ground on consecutive weeks just ONCE in the last 7 months. The stock is the largest component by far in the XLY, although many consider this name a technology stock. It is also the third largest holding in the SPY, and as money flows into these popular ETFs it boosts the share price in a significant manner. Thursday to end the week, it reversed less than 2% away from the very round 3000 figure, the measured move off a recent bull flag breakout. Do not be the least bit surprised if it takes out the number in spectacular fashion.

One For The Recent Record Books? Below is the chart from Novel Investor, of the annual returns of the 11 major S&P sectors, and incredibly no group has been the top performer in back to back years dating back to 2007. Technology is looking to do just that, and notice half way through 2020 it is doubling its nearest competitor in consumer discretionary, the only two groups positive at the half way mark (notice energy is looking at a third possible straight year of being in the cellar, which would make 5 of the last 6 the worst or second worst too). This is certainly technologies race to lose as it is being carried on the back of mega cap names like AMZN AAPL MSFT NFLX FB and GOOGL to an extent, and as these represent many ETFs in their top ten holdings, their share prices will continue to inflate. Another thing I noticed from this chart is that it may not be as impossible to beat the S&P 500 as many state. With the exception of last year, it never finished within the top three, and to me that shows if one can be concentrated not only in the right sectors, but the leaders within, strong success can be achieved.

Semi Surge Forthcoming? Software has been the best sub group within technology for sometime, but the semiconductors are trying to make a statement here. It is still a nascent move but this week the SMH thus far is nearly tripling that gain of the IGV, and over the last one month period semis are edging out software, up 8.1% while the IGV has gained 6%. NVDA sits just 2% off most recent all time highs, and even AMD seems to be making a stand at the very round 50 number for the third time since breaking above the figure on 4/13. Monday recorded a bullish hammer candle that was well underneath 50 intraday, and Tuesday displayed nice follow through. Two favorites of mine in MRVL and IPHI are acting well with the latter finding nice support at a rising 50 day SMA the last 5 days. It is now carving out a cup base pivot of 127.89. MU was one of the stars today up nearly 5%, like AMD recouping the round 50 number. XLNX will most likely be dealing with the very round par number, as it backed off there Tuesday, but is trading right at a cup with handle pivot of 98.27.