GM
For long-term investors, the old adage "buy low and sell high" does not always apply. Often they will buy high and sell higher. What this means is that the best stocks often offer add-on buy points on the way UP. As we await the earnings from TSLA after the CLOSE Wednesday afternoon GM already did so and it was impressive. Below is how we looked at the name in our 8/19 Consumer Note. General Motors: Auto play up 26% YTD and 38% over last one year period. Dividend yield of 1.1%. Name 10% off most recent 52-week highs (rival F is 29% off its annual peak in comparison) and WEEKLY chart shows rapid reclaim of 200 WEEK SMA which was stern resistance throughout 2022-23. Nice action last week up 4.2% following through after prior weeks bullish piercing line candle off 50 WEEK SMA. Earnings reactions mixed up 4.4 and 7.8% on 4/23 and 1/30 and fell 6.4 and 2.2% on 7/23 and 10/24/23. Enter into gap fill which completed bullish island reversal. Entry GM 44.25. Stop 42.50.
Technology Sector Review: 10/21/24
Stay Openminded: Looking at the WEEKLY returns last week the two best performers were from defensive groups, in the utilities and real estate, which each screamed higher by more than 3%. Of course, that is a small sample size but after the move that technology has seen from the early August lows is there a pullback in store? PRICE action could be potentially hitting a double top with the early July time-period and some dubious candles were recorded last week. Thursday was more suspicious with the bearish filled-in black candle, and the prior example 9/26 witnessed a quick 600 handle drop before the uptrend resumed. We are also trading into the bearish engulfing candle from 7/11 which started a rapid 16% decline from top to the bottom of the range to the 8/5 intraday lows. A move below the 18250 bearish rising wedge pattern would carry a measured move to 16200. I remain bullish overall and I think that possibility is remote but something one must be cognizant of. Keep in mind on the Nasdaq WEEKLY chart we are trading into the bearish evening star pattern (doji candle in the middle), and on the MONTHLY chart we are so far negating the August doji candle which had a 3000 handle range, and that was after the huge move off the very round 10000 figure to start 2023.
Bitcoin
The first paragraph is an excerpt from our 10/10 Technology Note: No "Coin" Flip Here: Inside the software group in the Bitcoin arena, two names stand tall. PRICE action between the two is diverging. Of course, we are referring to MSTR and COIN. The former's daily chart below does show some wide and loose action but it is just 6% off its most recent 52-week highs, while COIN trades 41% off its annual peak, not a typo. The ratio chart here comparing the two demonstrates the superiority of MSTR with a surge in May, then a cup with handle breakout in August and it has acted well POST breakout too, just what you want to see if you are bullish MSTR (the divergence may be getting a bit extreme with RSI nearing a white-hot 90 number). Looking at the MONTHLY chart of MSTR one can see the firm action following the cup base breakout, and so far in October it is breaking above a bull flag pivot of 170 which carries a measured move to 290 which could be achieved sometime in 2025. I think one can enter at 185 and use a CLOSING stop below 170. As for COIN, it is below its 50 and 200-day SMAs, and the latter is now starting to flatline suggesting the long-term trend is faltering.
Consumer Sector Review: 9/30/24
Start Your Engines: The most talked about automobile name on the planet is shifting into overdrive. TSLA rose more than 9% last week, the second time it has done that in the last 3, and it has now nearly doubled in PRICE since the late April lows. That week recorded a bullish piercing line candle and round number theory played a role with a bullish hammer candle off the very round par number the week ending 1/6/23, and the top was a bearish engulfing candle at 300 the week ending 7/21/23. It now looks back in gear as last week inched above a 260 bullish inverse head and shoulders pivot. The MONTHLY chart shows the importance of candles at critical highs and lows with a doji candle in November 2021 which started the symmetrical triangle we now see. A break above here in October would carry a measured move to nearly 600, which could take 2-3 years but for long-term holders, an appetizing target. On the daily chart, one has to admire the tight trade and relatively small trading ranges since the bullish harami cross (doji) on 9/9. A new add-on above a cup base pivot of 271.10 exists and respect that this did not pause much at the upside gap fill from the 7/23 session this week. This should be set for a strong year-end run, although the PRICE path will not be a straight line up.
THE WEEK AHEAD: Starting 9/3/24
"Perhaps the worst will happen, perhaps not, until then, look forward to better things." - Seneca "Value" Showing the Way: It is no secret that on a YTD basis "value" has been outshining growth, and it may gain steam after the earnings miss by NVDA as that will likely need some time to recover. Taking a peak at the ratio chart comparing value to growth via the ratio chart of the VTV to the VUG it shows the former in firm control. This is not a new phenomenon as over the last 6 months this has been happening with a few short hiccups along the way. Peering at the action of the major 11 S&P sectors so far in 2024 it has been dominated by the likes of the financials, utilities, staples, and healthcare. The daily chart below of the S&P 500 shows solid PRICE action with an excellent CLOSE as August is now in the rearview mirror. Additional confirmation of the value over growth theme comes from the S&P 500 over Nasdaq ratio chart too. PRICE which is omnipotent is just below a bull flag pivot, which is not giving up any ground following the recent double-bottom breakout. To balance the very sanguine view, seasonality is not favorable in September (over the last 4 years it has not once CLOSED above where it started with an average loss of almost 6%) and the S&P 500 WEEKLY chart did record the dreadful doji candle last week.
THE WEEK AHEAD: Starting 9/16/24
Resilience: With everything going on at the moment let us give credit to the S&P 500 for climbing back toward all-time highs for a third time in the space of just 2 months. Will the third time be the charm for breaking above the pesky 565 area? Sagging oil PRICES, war, the upcoming election, etc, and the widely watched benchmark is beating to it's own drum. A failed double-bottom breakout above a 5566 pivot so quickly afterward, is always seen as a red flag, but again PRICE is omnipotent and is stating higher ones like ahead. The MONTHLY chart is on a 4-month win streak and since the COVID lows that has occurred four times and each time went on to gain at least one more month. The S&P 500 has gained 9 of the last 10 months and in my opinion its trajectory will take a similar path to the one which advanced 14 of 17 months from April 2020 to August 2021. It feels like many were positioned for seasonality weakness and that has to be unwound just before the start of a historically strong Q4. And the WEEKLY chart now challenging the week ending 9/6's completion of a dubious evening star (doji candle week ending 8/30 as well) and the bearish engulfing candle from 7/19 is speaking volumes about its tenacity.