17May 2024

Far East Review: 5/20/24

Friday|0 Comments

Red Dragon Awakening: It is not like the Chinese markets needed another jolt higher this week, which seemed to come after some 13F filings were released which displayed Tepper seems to be all in on the country (there was underlying strength here in previous weeks). Of course, the data is stale somewhat but his portfolio was made up of nearly one-fourth Chinese stocks. We had highlighted this fund recently in our China/Japan Note back in late April and it has been off to the races ever since. My feeling is that the ETF will feel a magnetic pull toward 35, best seen here on the MONTHLY chart, an area of former influence being both support and resistance dating back a decade. The current set up if it gets there would be an ascending triangle and a break above 35 would see a measured move to 53 (notice the top being put in with the gravestone doji candle in February 2021). KWEB is now up 15% this month so far and if that holds would be its first 4-month win streak since it did so starting in April 2020 which started a melt-up advancing 10 of the next 11 months. Another 4-month win streak in the last 10 years commenced in January 2017 and led to a 12 of 13-month win streak (one other was muted the first 4 months of 2019). Look for some big follow-through if this vibrant May gain so far holds up.

17May 2024

Technology Sector Review: 5/20/24

Friday|0 Comments

Software Time To Shine?   Over the last 2 months, there has been a melancholy feel over the software space if one were comparing it to the semiconductors. If one did want to zoom out at a different time frame, the MONTHLY chart has the look of a very clean cup with handle base 2 1/12 years long. A move above 88.92 in the near term would carry a measured move to 130. The WEEKLY chart registered a break above a bull flag Friday and the previous 3 weeks all CLOSED very taut, all within just .52 of each other and we know from that type of consolidation often comes powerful moves. For sure one would have to look at the top 3 holdings in MSFT CRM and ORCL which make up one-quarter of the fund to ponder its future. Microsoft looks best although it did record a bearish harami Thursday, Salesforce was rejected at its downward-sloping 50-day SMA with a bearish dark cloud cover Thursday, and Oracle is carving out the right side of a cup base after a gap fill last month at the 200 day SMA. Comparing the overall group to the semis, the ratio chart may have a very different look after next week's NVDA report. Software bulls want to see real strength from it's own group and not rely on a potential NVDA miss to improve the relationship.

16May 2024

Healthcare Sector Review: 5/17/24

Thursday|0 Comments

Safety Net?   When one looks at the biotech space there are two ETFs in which the focus is. The IBB which is a bit top heavy with the more mature names that often pay decent dividends, think defensive. And the other one is the more "lively", no pun intended with the XBI. One often uses them to gauge risk/reward in the space and the ratio chart here suggests the IBB is getting more attention. It has carved out a bullish inverse head and shoulders and one has to give the nudge to it following the March-April uptrend. Give the XBI credit as it has formed its own inverse head and shoulders formation and the move through 92 carries a measured move to 103, and notice how earlier in May it recaptured the 21-day EMA which is now sloping upward. I think one can have a bullish slant on both, and do not rule out the small caps as the PSCH (small cap, although illiquid, healthcare ETF is looking to break above familiar overhead resistance with the overall small-cap space catching some love).

15May 2024

Industrial Sector Review: 5/16/24

Wednesday|0 Comments

Spinoff City:   Normally when looking at the industrial space we take a look at some of the more familiar names in FDX and UPS, which quite frankly are a bit concerning. But today let us take a look at a few newcomers. With all the chatter about how utilities are becoming "growth" stories, CTRI was just spun off from SWX. Some classify it as an energy name, some an industrial with a slant on infrastructure, and this really should just be kept on a watch list as it is just one month old but it has traded in a very taut range and a break and CLOSE above 25.75 can be bought. ATMU, a recent spinoff from CMI, has acted well POST breakout from a 25.49 cup base pivot from 3/13 and then recently touched its upward-sloping 50-day SMA for the first time following the breakout, often an ideal entry add-on buy point. One can look to purchase now with a buy stop above a double bottom pivot of 31.62. Below is the chart of VLTO, a spinoff from DHR, and it now trades at "52-week" highs (has been trading since last Q3 2023) and has seemingly traded straight up since a strong 4-week losing streak last October as seen here on the WEEKLY. Since the overall market bottom in late October-early November it has lost ground on a WEEKLY basis just 9 times.

14May 2024

Financial Sector Review: 5/15/24

Tuesday|0 Comments

European Excellence?   Of course, that subject line may be a bit misleading, but one must give credit where it is due and PRICE action currently is suggesting performance going forward may outshine our domestic peers. EUFN is putting up impressive numbers, higher by 9 and 18% over the last one and 3 month time periods compared to the XLF rising 4 and 8% respectively. Some of this could be the deterioration of BRK/B, which we will discuss later in this note, but some foreign names demand investor attention. Looking at ADR charts of some European names like DB is not shying away from an upside gap fill from the 4/26 session here which completed a bearish island reversal (it has now posted three strong positive earnings reactions in a row). BCS is up 40% YTD, and pays a dividend yield of 3.7%, and is pushing away from a bull flag pivot of 10.50 which carries a measured move to 12. Overall the group seems fine, with even the KRE breaking ABOVE a bearish descending triangle and we know from FALSE moves come fast ones in the opposite direction.

8May 2024

Healthcare Sector Review: 5/9/24

Wednesday|0 Comments

Intermarket Relationship:   Most market participants are aware of the relationship between interest rates and biotech stocks. These names are dependent on financing to stay afloat and if the ten-year yield is rising it is certainly a headwind. Tuesday it recorded a bullish hammer candle right off the rising 50-day SMA after the bull flag breakout in early April, often a solid entry point. Bears will declare that it nearly reached its measured move to 4.9%. On its WEEKLY chart, it has the look of forming a possible head and shoulders pattern, and notice the bottom of the cup successfully retested a previous double bottom breakout. Something is going to have to give as the XBI, if it can bottom here at this week's lows could be building the right clavicle on a bullish head and shoulders formation, with a break above a 92.50 pivot that would carry a measured move to 103. Or if by judging by the overlapping PRICE chart of the TNX and XBI sometimes these two instruments can trade in harmony.

7May 2024

Industrial Sector Review: 5/8/24

Tuesday|0 Comments

I Think I Can, I Think I Can:   This children's video which does contain an industrial slant to it (showing my age here) could be describing the daily chart of the XLI as it pushes toward a potential cup base breakout (it will not be easy to push above the 126ish level as there are a myriad of dubious candles including dark cloud cover, evening star and engulfing all circled). The ETF is now just 2% off most recent 52-week highs and the WEEKLY chart does show the presence of two doji candles recently, which often indicate exhaustion, but for the time being it has been ignoring them. The bulls can point to the last 2 weeks both trading inside the week ending 4/19 that slumped 2%. Referring back to the video in the opening sentence of this paragraph some of the rail stocks need to show a bit better to help guide the XLI higher. The names have more of a concentration in the IYT, with UNP the second largest component. It is now pushing up against its 50-day SMA and if it can push above that line a double bottom pattern with a pivot of 250.46 takes shape. Of the domestic players one can see this is the best of breed since last summer. It has to show the way.

6May 2024

Energy Sector Review: 5/7/24

Monday|0 Comments

Energy Well Rested?    Energy has been a very strong group in recent years, 2023 withstanding, but 2024 picked up where 2021-22 left off. Notice here it is now tied for the best-acting major S&P sector with the communication services group is now breathing down its neck. Perhaps the other groups catching up has given energy the well-deserved breather it needed. Looking at the daily chart of the XLE below it looks like a logical spot for it to bounce here and attempt to travel back to the very round par number in the near term. The WEEKLY chart here shows that the break above the bullish ascending triangle at the very round 90 number still has not met its measured move to 108. The MONTHLY chart has a blemish from April with the bearish shooting star, being rejected at the 100 area. One must look at CVX and XOM when they analyze the ETF and Chevron recorded a bullish hammer candle off the upward-sloping 50-day SMA last Friday after a recent 9-session win streak. Exxon registered a dragonfly doji last Friday (doji Thursday too) and if it can gather some steam a double bottom trigger of 121.86 awaits to add-on.

3May 2024

Technology Sector Review: 5/6/24

Friday|0 Comments

Apple of My Eye:   This name has been in the penalty box for some time, but it may have come out with some gusto Friday after a well-received earnings reaction Thursday after the CLOSE. We were cautious on the name with the clever title "Apple Crisp" in our 3/19 Technology Note. In that note, we discussed how it was being pushed back by its 21-day EMA, but the current daily chart below shows how it registered three strong moves in March and April, and looking back now that may have been institutions building a position with confidence that earnings would be unexpectedly pleasant. AAPL is now back to being the second-largest stock on the planet and now has its sights set on MSFT. If one was to take a look at the MONTHLY chart they would see this may have simply been a prudent pullback in a nice uptrend. Twice it was rejected at the very round 200 number in July and December 2023. A break above 200 in the coming months would carry a measured move to 276. 

2May 2024

Healthcare Sector Review: 5/3/24

Thursday|0 Comments

"Risk Back On":   This Monday we wrote up about the XBI, how we thought in the presence of some bottoming candles and familiar PRICE memory one should look for confirmation above 83.50 to get long. This has now occurred and perhaps we could see another leg higher in the fund. Looking at the updated chart now it has catapulted above its 21-day EMA and now has its focus set on the 50-day SMA and perhaps a double-bottom pivot above that. Probably the best thing this ETF has going for it is that no one believes it can accomplish any of these things. The WEEKLY chart if it can hold in this area Friday will also complete a bullish morning star and remember that doji candle last week after the 22% decline from the first week in March's bearish dark cloud cover candle was a good sign a change in the prevailing direction was likely. The big boys like AMGN and BIIB seem to be acting better as of late and perhaps this nascent bullish narrative will be backed up by some M&A. Never base an investment thesis on this but respect the PRICE action, and for the time being it says stay long with CLOSES above 86.50.

1May 2024

Materials Sector Review: 5/2/24

Wednesday|0 Comments

Material Information:   We like to mention very frequently that the best breakouts not only tend to work right away but act well POST the move. If that is the case one has to be skeptical about the long MONTHLY cup base that occurred in March as it was followed by that dubious dark cloud cover candle in April. April witnessed some large bifurcation as you can see here with steel plummeting more than 15%, yet Gold behaved itself jumping almost 10% (chemicals and packaging were also lower and these groups are economically sensitive, so not the best overall sign). NUE fell victim to round number theory at the 200 figure in April with a bearish engulfing candle and finding some resistance at the top of a bearish rising wedge pattern dating back to the start of 2022. CLF which has other things going on besides just watching the technicals was unable to record back-to-back up days for the whole month of April. Markets could care less about what I think but the past of least resistance to me would be a pullback to retest the recent cup base breakout near 86. Then a potential double bottom base could play out with a run toward the very round par number into year-end.

30Apr 2024

Consumer Discretionary Sector Review: 5/1/24

Tuesday|0 Comments

Clarity Tonight: Another of the mega caps REPORTS earnings after the bell and this will have a big effect on the XLY. AMZN is the largest holding in the XLY at almost one-quarter of the fund, will release numbers, and on the MONTHLY chart below look at how this chart is setting up. Of course, Tuesday ended April and the MONTHLY candlestick was a spinning top which often indicates fatigue, but the reaction on Wednesday will tell the real story. This could be on the verge of a massive cup-base breakout with a measured move of 100 handles. This will take time if it even happens at all, but this could be a good start for the XLY as we mentioned yesterday on the backs of a possible TSLA turnaround. At some point, we will need help from the other 60% of the XLY (AMZN and TSLA make up nearly 40%) and this may not come from the third largest component in HD which is now bear flagging along the 200-day SMA. One feather in the bear's cap on the XLY MONTHLY chart is the March doji candle.