Chartsmarter Insights

11 Mar 2024

Technology Sector Review: 3/12/24

By |2024-03-12T09:38:34-04:00Monday|

Future Semi Standout?   The semiconductors have been a standout as we know and I've been vocal last week stating that I think software will outperform on a relative basis, but of course, on an absolute basis there will be selective winners in each group. Below is the chart of ADI, which one can see on the ratio chart, has been underperforming the group. Technically I am warming up to the name if it can climb above the very round 200 number and CLOSE above 201.92. That would negate the bearish evening star pattern completed on 12/18/23, the bearish harami candle on 1/24, and the bearish dark cloud cover candle from 3/8 (all of these are circled on the chart). The 200-day SMA has held three times, perhaps too many with each of those touching points retesting the former bull flag breakout from early February. The very round 200 number was also a roadblock in late July with the last week of that month recording a bearish engulfing candle there. Last week registered a long-legged doji candle, so there is a lot to overcome near the 200 level, so be patient and wait if this can CLOSE above 201.92. If so it could be off to the races.

8 Mar 2024

Technology Sector Review: 3/11/24

By |2024-03-08T16:55:00-05:00Friday|

"Stretching" The Imagination:    Unless one has been living under a rock for the last couple of quarters everyone knows how parabolic some of the semiconductors have gone. NVDA Friday came within less than 3% of touching the very round 1000 number (recording a bearish engulfing candle CLOSING 100 handles off intraday highs), and since the first week of 2024 recorded a doji candle right at the very round 500 number it almost doubled (this week did record a bearish shooting star). SMCI one-upped Nvidia is now on a 10-week win streak and it has advanced 300% in 2024 thus far and the volume expansion during this spurt is nothing short of fantastic. Looking at software some of the big names recorded some hiccups like ADBE and overall if we take a look at the ratio chart here comparing the SOXX to the IGV it is as stretched as it has been in some time. On a YTD basis, the SOXX has advanced 19%, even after Friday's rocky action, and the IGV is up by "just" 5%. The bearish engulfing candles are somewhat rare (in the boxes) and each time that has occurred there has been a setback although the last one was shallow. Will this be the same this time around? This is not a recommendation to short the semis, but a call that software names may be more attractive here.

7 Mar 2024

Industrial Sector Review:3/8/24

By |2024-03-07T16:34:05-05:00Thursday|

Transportation Clues: When one wants a good gauge of how well the economy is doing it makes sense to take a look at the IYT. It still is somewhat comical that UBER is the top holding in the ETF at more than 18% and it is trying to keep in touch with its bull flag breakout above the round 80 number here. Rounding out the top 5 is UPS, which we will examine later in this note, and the rail stocks including UNP and CSX and the trucker ODFL. ODFL is approaching the very round 450 number for the third time since in the last month and a break and most importantly a CLOSE above the bull flag there would carry a measured move to 525. The DAILY chart below of the IYT shows some constructive action even amid some bearish candles including a bearish gravestone doji candle on Wednesday. The MONTHLY chart has a nice look to it as well as it is now comfortably above a cup base pivot of 68.43 in a pattern almost 3 years long. The breakout carries a measured move to the very round 90 number and notice how the depth of the cup successfully retested resistance from 2018-2020.

6 Mar 2024

Healthcare Sector Review: 3/7/24

By |2024-03-06T16:17:12-05:00Wednesday|

Biotech Holding On:   I have stated a couple of times that bearish candlesticks in bull markets are less effective than bullish ones calling potential bottoms and that is just what the XBI is doing here. Shrugging off two negative ones here is a good start, but I still prefer to wait for PRICE confirmation with a break above the bull flag pivot. For those that did not read the WEEK AHEAD Note the very round par number where it is swimming at the moment is important on the MONTHLY chart here, which would be a hold above the 50 MONTH SMA. Notice on the ratio chart it is starting to break ABOVE a bear flag against the IBB and we know from FALSE moves come fast ones in the opposite direction. The IBB is just above a double bottom pivot of 137.64 taken out on 2/23, and notice it has moved higher following the Bollinger Bands tightening in late January and early February. Round number theory came into play for the top holding in REGN at the very round 1000 number with rejection there on 2/28, and it did not follow through lower after the consecutive bearish engulfing candles on 1/31 and 2/2 was a good sign. Another boost may be given if the fourth largest component in GILD can break ABOVE a bear flag formation.

5 Mar 2024

Technology Sector Review: 3/6/24

By |2024-03-05T16:20:55-05:00Tuesday|

Communication Issues:   We all know inside the communication services sector lies plenty of technology no matter how they try and disguise it. They reside in the "internet" subsector and there have been some names within that have been struggling mightily. More than 50% of the XLC, the top 4 holdings, emanate from the space with META GOOGL and NFLX. The top component in META makes up more than 30% of the fund and it is dealing with the very round 500 number here. The stock is coming back to retest a bull flag breakout so soon is concerning. Another top holding in NFLX completed a bearish evening star Tuesday and could be coming back to retest its flag breakout too. GOOGL has been the outlier, a laggard now 14% off most recent 52-week highs, and it could be ready to find a short-term floor, which will likely be a dead cat bounce here as it trades to its 200-day SMA registering a spinning top candle (on the MONTHLY chart one can see the reversals in January and February). The chart below of the XLC shows the combination of all these things we just discussed and it is slipping BELOW a bull flag. No need to push the envelope here on weakness. Let strength emerge before you apply a more sanguine approach.