16Mar 2024

THE WEEK AHEAD: Starting 3/18/24

By |Saturday|

"He will win who knows when to fight and when not to fight" - Sun Tzu Dodgy Dow? As the hype with technology reigns, more specifically the semiconductors meteoric rise, the Dow that was gaining some of the spotlight in the latter part of 2023 has subsided. And its chart is displaying that melancholy. Perhaps one would say the Dow is meaningless but on this chart, one can see it has had the propensity to lead in years past as seen here. Truth be told since the start of the year the Dow has been lagging and could this be a canary in the coal mine if it breaks below this recent digestion and its 50-day SMA? On a YTD basis, the Dow has advanced by 3%, while the Nasdaq and S&P 500 have risen by 6 and 7% respectively. This is a PRICE-weighted index (and the higher-priced names are more influential) so particular attention should be paid to UNH, which is below its 200-day SMA and 12% off its most recent 52-week highs. MSFT, the second largest component which we spoke about in our Friday Tech Note is the one to watch as it may have recorded a failed breakout Friday. It registered a spinning top candle the day after a CLOSE above a cup base pivot of 420.14, but give it the benefit of the doubt and remain bullish as triple witching may have skewed the technical picture Friday. One can see that UNH has done the damage and the Dow has held up but if Microsoft buckles that could be a shot across the bow.

2Mar 2024

THE WEEK AHEAD: 3/4/24

By |Saturday|

"Indecision is the Thief of Opportunity." - Cicero Small Caps Stand Tall: The Russell 2000 looks ready to join the rally parade with the IWM jumping 3% last week, CLOSING at highs for the WEEKLY range and respect that it is now making it a habit finishing in the upper half of the WEEKLY range, doing so for the last 4 weeks. I will not disagree with anyone calling this a "rolling" bull market, as now the small caps take their turn showing some real strength. My opinion is that the area of former resistance just below the very round 200 number should now be support, or at least a very good risk/reward stance going forward. To me this chart looks similar to the XBI with both being sensitive to interest rate fluctunations and notice Q4 2023 the correlation between the two was almost perfect at a value of 1. The MONTHLY chart shows nice digestion of the November-December surge and is now well rested for a possible powerful move upward (notice the low of this budding cup base found support at a prior double bottom breakout from November 2020. Since the start of February it has kept pace with technology as seen here, and perhaps another sign of "risk on" is the stalling nature of the old stodgy Dow Jones, even as they attempt to spice it up with the recent addition of AMZN (the index now has just five true industrials).

23Feb 2024

Consumer Sector Review:2/26/24

By |Friday|

AI Footwear Winner? Of course, the above statement is a weak stab at humor, but the chart below shows how closely DECK has been trading to NVDA since the late October lows last year. Each has essentially doubled in PRICE and one should expect these leaders to continue to flex their muscles because we know that stocks once in motion, whether up or down, tend to remain that way, more likely than they are to reverse. In the small footwear niche arena DECK is not surprisingly being held hostage, most likely temporary, to round number theory. A bull flag is now in place and a move above 900 carries a measured move to 1050. CROX is sporting a bull flag formation of its own and a move through 120 could see a target of 145. BIRK is attempting to solidify itself above the very round 50 number and Friday almost precisely retested a double bottom trigger of 50.29 taken out on 2/12 (former resistance at the round 50 figure now looks like support). SHOO is north of its double bottom pivot of 43.68 taken out on 2/15.

18Feb 2024

THE WEEK AHEAD: Starting 2/20/24

By |Sunday|

"It usually takes more than 3 weeks to prepare a good impromptu speech." Mark Twain Nasdaq Brick Wall? In our last WEEK AHEAD Note we opened with the quote "Whenever you find yourself on the side of the majority, it is time to pause and reflect." To be frank many market participants were very hyper-bullish given the big tech move in November-December last year, however, January failed to deliver on the "Santa Claus rally" and the January barometer as well with the Nasdaq up 1% (much different to January 2023 that jumped almost 10%). It feels like the benchmark is at a stalemate here as sentiment has become negative. With seasonality bearish and the Nasdaq coming into contact with the round 16000 figure (on 2/9-12 both CLOSED below though), last touched with the MONTHLY bearish gravestone candle in late 2021 is a double top on hand? The vast majority of smart investors I communicate with are bearish now, myself included, and the daily chart seems to confirm this belief. We are seeing negative RSI divergence, with PRICE beginning to confirm, with dubious candlesticks too with a shooting star and engulfing candle on Monday and Friday. I think one should be positioned with plenty of cash, but be open to the idea of another leg higher. One can always get back in with a firm break above 16000. Patience here, with no need to be a hero.

10Feb 2024

THE WEEK AHEAD: Starting 2/12/24

By |Saturday|

"Whenever you find yourself on the side of the majority, it is time to pause and reflect."  Mark Twain Size Matters? It was refreshing to see last week's small caps put up the best showing with the Russell 2000 gaining 2.4%, compared to the Nasdaq up 2.3%, the S&P 500 higher by 1.4%, and the Dow UNCH. They are often thought of as leading indicators and of course, they often can give clues to the direction of interest rates, as most small-cap names need financing to survive in their formative years. Like most of the major averages, the Russell 2000 is dealing with round number theory as it inched above the very round 2000 figure Friday. The WEEKLY chart has the look of a bull flag which also recorded a bullish engulfing candle, but I would love to see a decisive break above 202, which would carry a measured move to the 240 area. Interesting to see here how in 2024, while small caps are in pursuit of the big three major averages, it is catching up first to the Dow which is beginning to flatline. The top holding in the Russell 2000 ETF is SMCI which at just more than 1%, is three times the size of the second-largest component in ELF. Wonder how much that is skewing the performance of the IWM? The bottom line is above the 200 number keep a constructive bullish point of view. The MONTHLY chart shows a cup base possibly taking shape which could travel toward 240 by the end of 2024, which would confirm the measured move of the WEEKLY bull flag.

30Jan 2024

Healthcare Sector Review: 1/31/24

By |Tuesday|

Biotech Feels Firm:   As with an abundance of big tech firms REPORTING earnings this week, it may be wise to pivot one's attention to some overlooked parts of the market to potentially capitalize. The biotechs did record a powerful run last year in harmony with the overall market and they have since stalled. No one would fault those who are skeptical given their history, and therein may lie the opportunity. The WEEKLY chart below shows just how well the fund has been holding up at the very round 90 number. The prior 3 times it has tested that level witnessed drawdowns to 75, 72, and more recently 64 late last year, and note it started descending almost immediately. This is now the 6th week it is "glued" to 90 and I think that is encouraging for a move toward par in the near term. The period of the summer of 2022 and the present move to 90 was very similar, each taking roughly 9 weeks, and again the fact that it is keeping this altitude near the figure is a good sign. Some of the large names in the IBB are behaving themselves very well too with the AMGN bull flag, which has found support at the very round 300 within the formation. VRTX has broken above a bull flag and there has been plenty of M&A activity in the entire biotech arena. Taking a peek at the annual returns of the XBI over the last several years shows last year was the first single-digit move since 2017. Is it ready for another strong double-digit advance in 2024?