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Bearish Evening Star: Ciena: With markets potentially on the cusp of feeling tired, one can take advantage of this by selling some of their big winners. Technicians would not just sell blindly but would wait for a catalyst, and for me, I would like to introduce a candlestick pattern that I look for that could give one a good risk/reward scenario to part ways with select stocks. Today it is the bearish evening star which is a 3 candle pattern with the first often a strong move higher, the second candle showing some pause or indecision and the third falling precipitously. It often will signal a change in the prevailing direction. Below we will look at some examples of some tech names that recorded the formation and the softness they exhibited afterward. Of course, these will not always work but below is the WEEKLY chart of CIEN, and like many stocks declined sharply after the major averages started to top. The first week of 2022 fell 5% after a sharp run of more than 50% to end 2021. Notice the decline from almost 80 to 40 over the next 10 months. (This should not be construed as investment advice and the author holds no positions in stocks mentioned in this post).

"The pain of parting is nothing to the joy of meeting again." Charles Dickens Summer Cooldown: With 2 days into the new summer season, the Nasdaq may be starting to look for some shade to cool off. With a nearly 30% advance so far with one week left in Q2 it would be well deserved. Perhaps we will see some window dressing next week but technically speaking the dubious candles are starting to add up. I confess there have been more than a few that concerned me recently, and I was WRONG to be cautious a bit early, but nothing goes up in a straight line and eventually, those bearish candles do come home to roost. The SMH never gained traction after its bull flag breakout above a 150 trigger, and the IGV recorded a bearish counterattack candle Monday and followed it up with a doji candle Tuesday. With the Nasdaq and S&P 500 falling 1.4% last week, and the Russell by nearly 3%, AAPL rose 1%. With all the hype surrounding the $3T market cap perhaps that type of headline may also be some sort of near-term top. Is the 2nd largest stock on the planet in MSFT going to be a double top here on the WEEKLY in the 340-350 range from late 2021 or the start of a massive cup base breakout? Bulls are still plentiful with the highest reading among them in the last year recently. Maybe another notch in the hat for the bears salivating for a pullback. They have been parched for a long time.

"We write to taste life twice, in the moment and in retrospection." Anais Nin Desolate Dow: I spend very little time critiquing the Dow as the Nasdaq, S&P 500, and Russell 2000 all command my attention. Of course, we know that even though it is called the Dow Jones Industrials, that is an outdated reference. Just 5 of the 30 names inside the index are actual industrials. But could its PRICE action improvement be a sign that the rally is broadening out as the benchmark is now a more diverse bunch of characters? I remember when the Dow was holding up better than the other aforementioned major averages because it was a PRICE weighted and AAPL had less influence on its direction than it did on the top-heavy S&P 500 and Nasdaq where it was a top holding. The Dow did take a ding this week as its only member above 400 in UNH stated healthcare inflation could be an issue. Ironically it is the "old tech" names that are holding the Dow up with MSFT CRM AAPL, CSCO INTC, and IBM. Big Blue still pays a dividend yield near 5% and is on a 6-week win streak and CSCO flirted with a 52.66 cup base pivot. With the Dow up just 3% YTD compared to the S&P 500 by 15, Nasdaq by 31 and the Russell 2000 by 6%, perhaps its time for the selection committee to kick out laggards like WBA VZ and DIS and replace them with ORCL HPQ and TXN, all decent dividend players to boot. Technically the chart looks pretty good here on the cusp of a breakout above a bullish ascending triangle.

Technology Spent? If candlesticks could talk to us the doji is the one with the loudest voice. Keep in mind PRICE is omnipotent and in powerful bull markets, bearish candlesticks get run over as instruments continue their ascent. But when they start to happen in such quick succession after a powerful run it is time to take notice. I am nowhere near saying a bear market or crash is to occur, but remember as market participants our number one job is to protect our capital. A healthy pause in a bull market, giving major moving averages a chance to comfort the indexes or individual names is a positive development. Last weekend's WEEK AHEAD Note we looked at software, via the IGV, recording the doji candle on 6/2, and on 6/9 it made it back-to-back Fridays registering the dubious candle. They are adept at signaling fatigue or even changes in the prevailing direction. I think this is a case of the former, but looking at overall technology with the chart below of the XLK one has to wonder if the group has gotten ahead of itself just a little bit. The XLK was one of just 2 of the major 11 S&P sectors to decline last week, albeit just fractionally by .5%. 

Playing Catch Up: Some of the "old tech" names are trying to show the new kids on the block they can still learn something from them. IBM is somewhat coming to life as it has cleared a narrow range between the round 120-130 number since late February, and give it some extra credit for recapturing its 200-day SMA. INTC is trying to hold onto the round 30 number, an important one, as bulls and bears have been playing tug of war there since it lost the figure on 9/13/22. Below is the chart of another mature supertanker, which are historically difficult to turnaround, in QCOM. It is still 26% off most recent 52-week highs but did find a floor just above the very round par number recently. Both of its 50 and 200-day SMAs are tilting lower but there are some green shoots. Can these aforementioned names catch a strong bid, as dinosaur software names like ACN ADBE and INTU have? ACN is defending the very round 300 number well, ADBE blasted through 400 several sessions back, and INTU looks exhausted to me trading wide and loose with a possible quadruple top at 460 and an upside gap fill from the 5/23 session.