Chartsmarter Insights

No Monday Blues: The saying goes, it is not where you start but where you finish in life. The same could be said about markets. Another old adage says, "amateurs open the market and pros CLOSE it". If we take a look at the WEEKLY Nasdaq chart 4 of the last 6 weeks, it CLOSED right at the top of the WEEKLY range, a bullish trait. Could that be simply a function of Fridays anticipating that SIX of the last seven Monday were higher? Most of the advancers were subdued with four of them rising between just .2 and 1.3%, but the first two of the streak rocketed higher by 4.2 and 8.5% on 3/30 and 4/6, via the XLK. On a YTD period, it remains the only one in the green, higher by just more than 1%, but the emergence of other groups like energy (XLE on a one month look back period is doubling the second best major S&P sector) and healthcare, which are leaders during the last one and three month timeframes respectively. This lag for technology in my opinion is just giving the space some well deserved rest before the next lift off higher. Could it be this coming Monday?

King Of Discretionary: The incessant chatter about how Amazon is dominating the consumer landscape seems deafening at times. Sure it has hurt many names in the group, but many more have adapted and thrived. Some stocks include a name like OLLI, which slumped after its CEO's unfortunate, untimely passing, but has risen from 30-70. CHGG has well more than doubled as online education has suddenly come into vogue. CVNA has roared higher as millennials alter the way they shop for automobiles. Even perennial laggard CWH, with CEO of The Profit fame on CNBC, has screamed higher off the March bottom. STMP broke above a good looking cup with handle of 169.10, and I could go on, but I think you get the picture. As for the behemoth AMZN it has digested the recent big move up well. That type of consolidation normally resolves itself in the same direction from which it came, here obviously to the upside. The retail supertanker trades just 4% off most recent all time highs, and on its WEEKLY chart has a couple flaws with a bearish engulfing candle the week ending 5/1, but it deserves credit for the way it has behaved overall, and give it as long as it is warranted.

Tech Inflection Point: The old saying goes "capital flows to where it is treated best". Is this why trend following is such a successful strategy? Things in motion, in the stock market as in life, tend to stay that way, more likely than they are to reverse. Holding winners is key to accumulating wealth, and yes it may be true that fewer names have been guiding this tech rally higher, but until the last couple days the number of stocks hitting 52 week highs came from a diverse amount of areas. They include ATVI HAIN PZZA GIS BMRN and NEM. However all in all technology has been the place to be, and the ratio chart below shows the performance of the Nasdaq compared to the S&P 500. And it will make the most sense to play the leaders in technology against the laggards within the S&P 500, as stock pickers will continue to thrive in this environment. If there are fewer and fewer names participating to the upside, your watchlist narrows, and it makes finding leadership a bit easier. Remember concentration builds wealth, and diversification preserves it. The Nasdaq is now well below the promising cup with handle breakout pivot of 8957 taken out just days ago. It needs to make a stand here in the coming days.

Beach Ball Held Underwater Effect: Many have been declaring how well technology has been acting for the last month and a half. And it is with good merit, as Monday followed through very nicely after Fridays cup with handle breakout, and we know the best breakouts tend to work right away. A group that has been behaving even better is the biotechs. The XBI is higher by 10% in 2020, and below is the ratio chart comparing the ETF to the Nasdaq. One can see the strength it has been exhibiting, and Monday the XBI stormed through the very round par number, which has been significant resistance for some time. Going forward that 100 figure should now act as support. The XBI also broke above a 98.86 double bottom base last Friday, after 4 sessions prior were above intraday, but failed to CLOSE above it. Let us give credit where it is due, and keep in mind there does happen to be a lot of biotech within the Nasdaq 100. Names that reside their include AMGN BIIB BMRN INCY GILD REGN and VRTX. The move today certainly felt like a beach ball held underwater, and this move higher may just starting.