Earnings Hangover: With the largest week of earnings reports behind us, let us take a look back at some that impressed this week, and others that fell flat. Below is the chart of FB that slipped 4% on Thursday, but still looks attractive. It is just 6% off all-time highs and this week lost 3.6%, giving back less than half of the prior week's advance. The ones most highlighted are often the biggest losers and they were delivered by AMZN and PINS this week. SHOP lost 9% this week following a bearish engulfing candle on Monday and fell every day last week. It did meet a measured move to 1600 from a bullish ascending triangle break above 1300 (pattern began at very round 1000 number on 3/26). Others worth mentioning are AAPL, which could not penetrate the round 150 number to the upside on 7/15 or 7/26, but above that carries a measured move to 175 through a bull flag. Less heralded moves last week were LOGI which looks good on a risk/reward basis near its 200 day (I was WRONG about this name recently), and AMKR among a strong semi group just above a 24.10 double bottom pivot, and has added 12% alone the last 2 weeks. Finally, one to watch this coming week is CGNX which broke firmly above the very round 90 number and double bottom pivot of 88.96 (it REPORTS Thursday after the close). The stock showed solid relative strength up 5% last week as the Nasdaq fell 1.1%.
"Old Tech" Bifurcation: Friday witnessed some contrasting action in some of the bigger, mature tech players. Big Blue was feeling blue to end the week falling almost 5% in the second-largest daily volume of 2021, trailing just the negative earnings reaction on 1/22 that slumped 10%. If the name gets close to filling the gap from the 4/19 session consider that a gift. On the other hand, ORCL put up a combined 5% advance the last 2 days this week, and it filled an upside gap from 6/15. It CLOSED above the former bullish ascending triangle pivot of 80, and for me, there are better stocks to play. Below is one of them with the chart of QCOM. It is 15% off most recent 52 week highs, lagging as the SMH is just 1% off its peak. The stock has registered back-to-back 3.5% WEEKLY gains, not long after 3 very taut WEEKLY CLOSES all within just .28 of each other the weeks ending 5/28-6/11. This name could be a big 2nd half winner.
Farmers Helper: Spending a lot of time out on the North Fork of Long Island, we are privy to just how hard farmers work. They are often up before sunrise and do not finish until after sunset. Anything that could benefit them and make life somewhat easier is much appreciated. John Deere comes to mind, and its chart is a bit weak at the moment as it trades between the round 350-400 numbers this month as a bear flag below the 50 day SMA takes shape. AGCO is another name in the niche space that also now trades in correction mode lower by 11% from most recent 52 week highs. Below is the chart of TSCO, and in my opinion is the best of the triumvirate. Wednesday it registered a bullish engulfing candle right at its 50 day SMA (the other two names mentioned here are both underneath it), a line that has given the name some comfort in 2021. Decent risk/reward scenario exists right here with a possible move back to all-time highs. The last 3 times touching the 50 day SMA this year witnessed subsequent spurts higher of 23, 33, and 26 handles higher.
Taking Different Routes: The top two holdings in the XLY veered off in different directions on Friday. The end of the week displayed some interesting action within the top-heavy retail ETF. AMZN and TSLA are the only double-digit percentage components in the fund and the former recorded an ugly intraday reversal with a bearish engulfing candle on Friday. It CLOSED nearly 90 handles, off highs for the session. This is a rather myopic look, but the chart below of TSLA refused to give any ground and CLOSED near highs for the daily range on a depressing tape. Notice it was another higher low and a bullish engulfing candle that CLOSED above both its 50 day SMA and a prior break above a bullish ascending triangle pivot of 700. The last time it went on a powerful price run following a bullish engulfing candle at the round 600 number on 3/30. Make no mistake about it AMZN is the better acting stock at the moment, just 2% off all-time highs. TSLA is still in bear market mode off 21% from a peak made in late January. With TSLA however, you now have a clearer stop to play against, the devilish 666 figure, Friday's intraday low.
Equipment Check: The energy space continues to put on a solid display of "leadership" in 2021. I put that in quotation marks since many would question that "dubious" command. Often investors like to see strength in technology or consumer discretionary. The overall energy space still has a single-digit representation in the S&P 500, which traditionally is in the mid-teens, so there is plenty of room for the space to move higher. The XLE on a YTD basis is still the best performing major S&P sector up 35%, maintaining a double-digit lead over the second-best actor in the financials. Like any other group, there will be some bifurcation within, and that is illustrated by the ratio chart below comparing the XOP to the OIH. Presently the OIH is 17% off its most recent 52 weeks highs, while the XOP is 10% off its own peak made back last month. The XOP is above its 50 day SMA, while the OIH is not, and on a YTD basis the XOP has advanced 41%, nearly double that of the OIH (OIH has a larger dividend yield of 4.1% compared to XOP at 2.1%). Many may be looking to play mean reversion, but let PRICES confirm that first. If anything one can own both as a "barbell" approach.