Uncategorized

Builder Breakdown? Within the diverse consumer discretionary space, investors like to keep a close eye on the homebuilding sector. Of course, homeowners overall feel better about themselves the more valuable their properties are, but looking at the individual names the group feels heavy. That could change very quickly but the daily chart of the XHB below shows very little to like since the election last year. The ETF is down 25% from those highs and its WEEKLY chart shows how it undercut the very round par number, with consecutive doji candles, like a hot knife through butter the weeks ending 2/28 and 3/7. This will be influenced by the 10-year yield which did complete a bullish morning star pattern on 5/1, reclaiming its 200-day SMA in the process. Looking over the top 10 holdings is always an interesting endeavor with just one pure-play homebuilder within with PHM at number 9 (the ITB is a much better representation but the chart looks identical to the XHB). Imagine what the chart would look like if top-holding TT, which is on an 11-session win streak was not current. Notice how it has traded between the very round 300 and 400 numbers over the last month and it has acted strong since the completion of the bullish island reversal with the gap up on 4/30 (after the gap down on 1/27). 

International Internet Slugfest: Scouring the planet and comparing mega-cap heavyweight internet players shows some interesting divergences. As a whole one could look at a ratio chart of our domestic names via the FDN and lay it over the KWEB and one would see a very soft start to 2025, but the FDN is carving out a bullish inverse head and shoulders pattern. If one wanted to look at domestic versus the southern hemisphere, with individual names, they would highlight MELI against AMZN which is lower after hours on a soft earnings reaction. The ratio chart here is clearly in favor of "the AMZN of South America" in MELI since last December, and if the after-hours action is any indication it will take another leg lower. While MELI came within a sniff of 52-week highs Thursday before a small reversal, AMZN is still 23% off its own annual peak made in early February. MELI is yet another example of the growing number of emerging breakouts as it took out a double bottom pivot of 2202.10 on 4/25 but Thursday did record a small bearish dark cloud cover candle into the filled-in black candle from 2/21. Let's see how AMZN CLOSES Friday to end the week. I think as long as this remains above 180 this will take out the add-on double bottom later in the second half of 2025.

Two Long Ideas: Nutrien: Agricultural inputs play up 27% YTD and 8% over last one year period. Dividend yield of 3.8%. Name 6% off most recent 52-week highs and MONTHLY chart shows first bullish MACD crossover in more than 4 years. Double bottom base taking shape (79.40 trigger) and look for May to record first CLOSE above 50 MONTH SMA since September 2o23. Enter on pullback into double bottom breakout.  Entry NTR.TO 77.  Stop 73.

"Depositing" Gains?   Unless one has been living under a rock since the start of 2025 they would know the defensive stance the market has taken. As of Wednesday's CLOSE, the best-performing major S&P sectors were utilities, staples, healthcare, and real estate, followed by the financials. Not endearing to growth investors, who are looking for some reversion to the mean from tech and discretionary which make up the cellar. The daily chart below of the XLF shows it taking baby steps toward potential leadership with a reversal off the 21-day EMA and 200-day SMA. A break above 49 would put an end to lower highs in 2025 and put a double bottom pivot of 51.01. It is also no secret that domestic banks have been underperforming international with the ratio chart against Europe via the EUFN showing a stiff downtrend since last December. Perhaps US banks are ready to start showing some strength against their European counterparts with the bullish hammer candle on the MONTHLY ratio chart and with some more follow through will carve out a double bottom base. Everyone likes to cite JPM and GS which are of course important, but BRK/B is still the top holding in the XLF at 14%, and April recorded a bearish hanging man candle.

Flying at High Altitude: Boeing may not command the relevance in the PRICE-weighted Dow as it once did when it traded above 400 in February-March 2019, but it is certainly making its presence felt as of late. It is still a top 5 holding in the XLI which is hitting some resistance in the 130 area at a downward-sloping 50-day SMA after a bearish death cross (notice the back-to-back spinning top candles last Friday and Monday which speak to fatigue after the 17 handle run off 4/7 the lows). Below is the daily chart of BA and it has enjoyed a rapid rise and is it too easy to think that this move into the 180-185 area for the sixth time in 6 months will fail? Of course, no one knows the answer to that question but a CLOSE above the 184.50 would be a good start. A 55-point move off the early April lows is a lot and some consolidation up here may be in order but on the WEEKLY chart bulls would love to see a pop above the 200 WEEK SMA where it has been rejected four times (notice since the election it has acted well against XLI peers on the ratio chart). The MONTHLY chart is forming a bullish hammer candle and the last 2 times it touched near the 125 level on a CLOSING basis back in 2020 and 2020 it eventually rallied to well over 250.