Chartsmarter Insights

Biotech Bounce?   This possibility has been discussed ad nauseam and that could be one of the reasons that this time may prevail. No one really left with belief, and this can catch market participants by surprise. Of course, hope is not a strategy, so we need to rely on PRICE and technicals. Below is the daily chart of the XBI and it is putting up a fight, but has done this plenty of times before only to falter. I like the way it is fighting here, but it has to clear the downward-sloping 50-day SMA decisively for me to think this time is for real. On its MONTHLY chart here notice how this has bounced forcefully at the round 70 number as it did in April, and the last 3 times swimming in that area PRICE moved upward to 175, 95, and 103. Could a similar run be in the cards? Top ten holdings in the XBI that could help are GILD which is quickly building the right side of a cup base after filling in a gap from the 2/11 session on 4/25. A bearish evening star was completed on 4/11 and look for the heights to be achieved before Q2 comes to an end. INCY has carved out a bull flag and a break above carries a measured move to 74, but these formations below the 200-day SMA tend to be failure-prone. Perhaps waiting for a CLOSE or two above the secular line makes sense.

HACK Attack: There has been a bifurcation in action among the cybersecurity stocks after REPORTING earnings this quarter. Many have disappointed, or at least recorded weak reactions, including one of my favorites in FTNT. On 5/8 the leader gapped down to the tune of 8% and since it has been having issues with the upside gap fill from 5/7 session. On the positive side it has formed a bull flag and a break above 106 could carry a measured move to 119. OKTA was shelled Wednesday by 16% after an ill received number, but should settle in here as it has filled in a gap from 4/28. PANW dropped 7% on 5/21 and there is nothing to do here until it can CLOSE above a double bottom with handle trigger of 195.52. Best in breed CRWD, all four of these names are all top 10 components, REPORTS next Tuesday after the CLOSE and its last 2 reactions fell by 6 and 5% respectively. This has broken above the 450 bull flag trigger would could see a measured move to 540. Interesting that two top ten holdings in the ETF are actual defense names, many think pure play software, and the MONTHLY chart on NOC is carving out a cup base pivot of 534.16 in a base dating back to Q4 '22. Respect the comfort being given at the 50 MONTH SMA here which also occurred in 2019-2021. GD needs a CLOSE above 283 on the WEEKLY to start rounding out the right side of a potential cup base. 

"Juicing" Up the Fund: Looking at the top holdings in the XLI the selection committee certainly became very creative adding UBER to the fund back in 2019. It is the second-largest holding in the ETF at more than 4% and its recent run has helped the benchmark handsomely. The stock is up 48% YTD and the MONTHLY chart below shows it looking for a cup base breakout in May if it can finish above 82.24 this Friday. The potential breakout to 110 which quite frankly the way it is going could happen in late 2025. Its daily chart is well extended above the double bottom trigger of 77.68 and Monday ended a 4-session losing streak, its first since the last 4 days of 2024. The streak began with a bearish counterattack candle on 5/20 just above the very round 90 number, but remember the vast majority of stocks that trade through the very round 90 number often go on to trade to par and beyond. The XLI has a solid 1-2 punch with top component GE at 5% and I am still in awe of its MONTHLY chart which has nearly met its measured move to 257 from its cup base breakout above a 142.11 pivot in a pattern 8 years in duration. Since October 2022 it has declined just 7 months and back-to-back times just once. 

Semiconductor Hiccup: Just as one was complimenting the reemergence of the semiconductors they recently hit another roadblock at the 200-day SMA, its 4th since the start of 2025. The daily chart below of the SOXX shows it on a current 7-session losing streak and Friday did bounce precisely off the very round 200 number for a mild 1% bounce. But is more pain to come? Its MONTHLY chart needs to distance itself from the 50 MONTH SMA here as last 3 times it touched the secular line it used it as a springboard (notice how the semis overall softness for the last one year can be seen by the decade long break below the uptrend against the Nasdaq). Of course, NVDA REPORTS this week Wednesday after the CLOSE, and it is the second-largest holding in the fund. It is right back to the level of its last release on 2/27 which slumped 8.5%. I do not have a firm conviction on the name heading into the report but the doji candle last Tuesday is something to be aware of (notice the two dojis on 4/16 and 4/22 correctly called a strong upcoming move). For the bull take on NVDA the MONTHLY RSI shows the last 2 times it undercut the overbought 70 RSI number it held firm, unlike the prior 2 that traveled to the 40 area in 2018 and 2022. Top-component AVGO is sporting a bull flag and continues to outshine NVDA, and a break above a 232 pivot carries a measured move to the very round 300 number. It was UNCH on the week with NVDA down 3% and the SOXX by 5%.