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In this exclusive StockCharts video, Joe shows how the 4-day moving average can be useful especially in volatile markets. He explains the advantages of using it in conjunction with the 18-day MA to prevent buying at the wrong time and highlighting when good opportunities appear. He then goes through the commodity charts and shows the improvement taking place. Finally, Joe dives into the symbol requests that came through this week, including ASAN, FTV, and more.

This video was originally published on February 12, 2025. Click this link to watch on Joe’s dedicated page.

Archived videos from Joe are available at this link. Send symbol requests to stocktalk@stockcharts.com; you can also submit a request in the comments section below the video on YouTube. Symbol Requests can be sent in throughout the week prior to the next show.

While 2024 was defined by the strength of the Magnificent 7 stocks, 2025 has so far been marked by a significant change of character on many of these former high flying growth names.  And while most remain in constructive long-term patterns, the short-term changes make me skeptical of further market upside without the support of these mega cap players.

Let’s group these charts into three buckets: the top performers, the broken charts, and the diverging darlings.

The Top Performers: META and NFLX

This first bucket features two stocks that are moving higher in 2025 just like they did for much of 2024.  While the remaining stocks on this list have experienced some change of character, these are the names that remain in consistent uptrend phases.

Both Meta Platforms (META) and Netflix (NFLX) have achieved new all-time highs in February, with strong earnings calls serving as the latest catalyst for price appreciation.  Both charts remain above upward-sloping 50-day moving averages, and as long as they continue to make higher highs and higher lows, they should be considered innocent until proven guilty.

The Broken Charts: TSLA, AAPL, MSFT, and NVDA

2025 has been much less kind to this second group of “Formerly Magnificent 7” names, as all four of them have pulled back from a strong 4th quarter performance.  Apple (AAPL) in particular strikes me as a chart that is demonstrating a potentially catastrophic bearish price pattern, with a clear “line in the sand” to monitor in the coming weeks.

After rising to a new all-time high around $260 in late December, AAPL pulled back to find support at the early November low around $220.  While the stock has bounced higher after that sudden 16% drop, a bearish engulfing pattern at the 50-day moving average at the end of January reinforced that this is a name most likely in a distribution pattern.

Now we have clear neckline support at the previous swing lows around $220.  If AAPL is able to hold this support level, then we’d label this a consolidation phase and wait for further clarification.  But if the $220 level is finally broken, that would complete a topping pattern and also represent a break of the 200-day moving average.  A quick measurement would suggest a downside target around $190, representing a 27% drop from the December 2024 high.

The Diverging Darlings: AMZN and GOOGL

Now we’re left with two stocks that both feature a bearish momentum divergence, a pattern that has proliferated among US stocks in recent months.  When prices make new highs on strong momentum, that suggests a healthy uptrend phase.  But when prices make new highs on weaker momentum, this bearish divergence indicates a lack of upside follow-through and a high likelihood of a market top.

While Amazon.com (AMZN) still remains above two upward-sloping moving averages, the early February high is marked by a downward-sloping RSI.  This bearish pattern could easily be negated if AMZN is able to achieve further highs on improving momentum.  But the divergence looks very similar to other stocks that have experienced major tops.

In fact, Alphabet (GOOGL) featured a bearish momentum divergence going into last week’s earnings release.  And while that certainly put GOOGL on a “red flag” watch list for me, the gap lower and subsequent post-earnings drop tells me that investors are questioning the long-term bull story for this former leadership name.

Similar to the AAPL chart, I would argue that the 200-day moving average could be the most important level to watch.  A pullback to the 200-day moving average after an earnings miss could represent a decent retracement to set the stage for the next big move higher.  But if stocks like AAPL and GOOGL fail to hold that the 200-day moving average, what would that tell us about investors’ risk appetite in February 2025?

To be clear, very few of the Magnificent 7 stock look truly negative from a long-term perspective, with most of them still within close proximity to a recent all-time high.  But given how many of these former leadership names have experienced at least initial breakdowns from their recent highs, I’m starting to look elsewhere for opportunities on the long side.


RR#6,

Dave

PS- Ready to upgrade your investment process?  Check out my free behavioral investing course!

David Keller, CMT

President and Chief Strategist

Sierra Alpha Research LLC

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice.  The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.  

The author does not have a position in mentioned securities at the time of publication.    Any opinions expressed herein are solely those of the author and do not in any way represent the views or opinions of any other person or entity.

On Monday morning, President Trump announced plans to impose 25% tariffs on steel and aluminum imports — a sweeping policy move that’s certain to reshape the Materials sector. While this can negatively affect several industries, domestic steel producers are likely to benefit from increased demand.

How Markets Reacted to the 25% Tariff Announcement

The StockCharts MarketCarpets provides a clear visual of how investors reacted when the tariff announcement made headlines.

FIGURE 1. MARKETCARPETS VIEW OF THE MATERIALS SECTOR. Notice the top gainers consist of domestic metals producers.Image source: StockCharts.com. For educational purposes.

The stocks that gained the most following the announcement were Steel Dynamics, Inc. (STLD) and Nucor Corporation (NUE), both domestic steel producers, as well as Newmont Corporation (NEM), a mining company focused on gold and copper extraction.

The surge in STLD and NUE reflects investor expectations that tariffs will curb foreign competition, allowing US steelmakers to raise prices and expand market share. NEM also gained, likely due to broader market concerns over trade tensions and inflation. On top of this, copper — a key industrial metal — could see supply chain shifts or price fluctuations, depending on how tariffs impact global trade flows.

Let’s take a longer-term look at these stocks relative to the Materials sector and the broader market (S&P 500). Below is a PerfCharts view of their relative performance over the last year.

FIGURE 2. PERFCHARTS OF THE S&P 500, XLB, STLD, NUE, AND NEM. Though NEM outperformed, the other stocks and the Materials sector underperformed the broader market.Chart source: StockCharts.com. For educational purposes.

Global steel production decreased in 2024. So it’s no surprise that the Materials Select Sector SPDR Fund (XLB), our sector proxy, underperformed the S&P 500, and that many steel producers and miners would also underperform the broader market and sector. Interestingly, NEM outperformed the S&P 500, XLB, STLD, and NUE in 2024 due to surging gold prices, strong financial performance, increased gold production, and free cash flow.

Still, if the new tariff environment remains unchanged, then NEM and especially STLD and NUE may have plenty of room to run. Let’s take a look at the sector and all three stocks to see if there are any present trading opportunities.

Let’s start with XLB. Take a look at a 5-year seasonality chart of XLB to get some context.

FIGURE 3. 5-YEAR SEASONALITY CHART OF XLB.  Sector performance tends to follow a cyclical pattern, with March, July, and November historically seeing the highest close rates and average gains.Chart source: StockCharts.com. For educational purposes.

Geopolitical shifts under the new administration will likely reshape seasonal trends. Nevertheless, historical context remains valuable. Over the past five years, March has been XLB’s second-strongest month, with a 75% higher-close rate and an average gain of 4.8%. That’s the seasonality picture.

Now, let’s look at the price action from a longer-term trend perspective. Below is a weekly chart of XLB.

FIGURE 4. WEEKLY CHART OF XLB. While the Materials sector has lagged behind the S&P 500, it’s been trending upward nevertheless.Chart source: StockCharts.com. For educational purposes.

This five-year chart shows XLB underperforming the S&P 500. If you go back a few decades, this negative performance has been steady. Yet XLB, due to overall market growth, inflation, and sector-specific cycles, has been trending up in absolute terms.

Demand for materials is cyclical, and the Materials sector Bullish Percent Index ($BPMATE), a breadth indicator, illustrates this clearly. Currently, the BPI is moving upwards, with 31% of stocks within the sector flashing Point & Figure buy signals. Typically a crossover from below to above 30% would issue a bull alert; a move above 50% would strongly favor the bulls, signifying that buyers have the edge. Understanding XLB’s broader trend helps contextualize whether the stocks within the sector are moving with or against the sector’s trend relative to their trajectories.

Let’s look at the daily chart of NEM.

FIGURE 5. DAILY CHART OF NEM. Is it a new bullish trend or a bear rally?Chart source: StockCharts.com. For educational purposes.

NEM is attempting to recover from a steep selloff that began in October. The key question is whether the bullish reversal signals the start of a robust recovery or a temporary bounce within a sustained downtrend.

To gain insight into this question, let’s examine a couple of indicators: one that measures momentum and another that analyzes volume. Volume-wise, the Accumulation/Distribution Line (ADL) plotted behind the price shows strong money flow into the stock, its buying pressure supporting NEM’s recovery. The Commodity Channel Index (CCI) is showing strong bullish momentum, yet indicates that NEM may be sailing into overbought conditions.

The key levels to watch are near the top line (Leading Span B, red cloud) and the projected bottom line (also the Leading Span B, but in the green section) of the Ichimoku Cloud. If price declines at or near the top, but bounces at the bottom, the bullish reversal thesis remains intact, signaling a potential early buying opportunity for those looking to get into the stock. If prices fall below the bottom level, the downtrend is likely to resume.

Now let’s look at the domestic steelmakers on the list, starting with a weekly chart of STLD.

FIGURE 6. WEEKLY CHART OF STLD. The stock price looks like it’s in a volatile ascent.Chart source: StockCharts.com. For educational purposes.

I’m highlighting a weekly rather than a daily chart for two reasons: First, you can’t see the larger (trend) context on a daily chart, and second, the key levels are just as apparent in the weekly as in the daily chart.

Over the last six years, of which the last three are shown on the chart, STLD has been trending upward with increasing volatility. Steel production in the US may have decreased significantly in 2024, yet STLD prices continue to cumulatively rise. This trend underscores the inherent cyclicality of the steel industry, as evidenced by the fluctuating prices.

NOTE: Although “seasonality” and cyclicality can be related, the latter refers more to macroeconomic, industry, and supply-demand shifts. These typically drive fluctuations in a manner that gets smoothed out in seasonality charts. So, when I use the term “cyclicality,” I’m referring to these fluctuations before them being “averaged out” in a seasonality calculation.

The ZigZag line illustrates the major swing highs and lows that define the trend, as well as key support and resistance levels. If STLD’s uptrend were to maintain its trajectory, price must stay above the swing low level slightly above $110 (see magenta line) and eventually break above resistance at the most recent swing high at $155. Given this is a weekly chart, it may take months to play out (assuming the longer-term uptrend sustains itself).

Note, however, that the selling pressure appears to be the dominant driver for near-term volume, according to the Chaikin Money Flow (CMF). If volume precedes price in this particular instance, then a pullback may be imminent.

Last, but not least, take a look at a daily chart of NUE.

FIGURE 7. DAILY CHART OF NUE. The stock is in a downtrend and all the indicators spell a bear rally.Chart source: StockCharts.com. For educational purposes.

NUE may have jumped 6.24% on Monday, but what are investors rushing into? While Trump’s 25% tariffs on steel and aluminum imports are likely to boost domestic steel producers, NUE is amid an arguably robust downtrend.

Its response to the 61.8% Fibonacci Retracement (drawn from the December high to low) isn’t promising either, making the recent surge look more like a bear rally than a bullish trend reversal. Additionally, the CMF has remained largely negative, dipping well below the zero line and recently crossing it again, indicating that selling pressure continues to dominate.

However, there are shoots of hope, as NUE appears to be rising against the broader Dow Jones U.S. Iron & Steel Index ($DJUSST) of which NUE is a component (see magenta line). If NUE stays above the $115 level (the most recent swing low), then such a level may signal a bottom. Of course, you’ll want to make sure that volume and momentum support are aligned with this potential reversal.

At the Close

If you’re bullish on U.S. steel producers, consider adding these stocks to your ChartLists, keeping a close watch on the MarketCarpets Materials sector view, and staying informed on industry news. With these tools and insights, you’re likely to spot a market opportunity.


Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

Do you remember when NVDA stock had a very high StockCharts Technical Rank (SCTR) score for most of 2023 and 2024? If not, that’s OK. You’ll remember when you look at the chart of NVDA later in this article. 

The chip company we know so well — NVIDIA Corp. (NVDA) — has seen its share of euphoria and panic. NVDA’s stock price gained 239% in 2023 and 171.24% in 2024. Mega tech companies plan to increase their AI spend in 2024, which could boost NVDA’s stock price, given NVDA’s dominance in AI chips. But this doesn’t make the stock price immune from selloffs. We saw how the news on January 27 about DeepSeek’s ability to build AI models more cost-effectively sent investors scrambling to sell off NVDA shares.

The NVDA stock price fall was the biggest one-day loss the stock market has seen as of this writing. This price action gave investors a dose of reality — even the best-performing stock can go through a steep plunge when you least expect it. Fortunately, investors overcame the initial DeepSeek scare and NVDA’s stock price is on its path to recovery.

Let’s walk through NVDA’s stock price charts, starting with the weekly chart (see chart below).

FIGURE 1. WEEKLY CHART OF NVDA STOCK. It’s been in a steady uptrend since the end of 2022. After the recent pullback to its 50-week simple moving average, the stock has been struggling.Chart source: StockCharts.com. For educational purposes.

After the pullback from November 2021 to October 2022, the stock has been on a relatively sustained uptrend. At the end of January 2023, NVDA’s SCTR score crossed above 76, a threshold level I use to identify a stock that’s gaining technical strength. For the most part, the SCTR score remained above this threshold until the end of 2024.

The SCTR score is now inching toward the 76 level, and NVDA stock’s price is at its 21-week exponential moving average (EMA).

Let’s see what the daily chart is displaying.

FIGURE 2. DAILY CHART OF NVDA STOCK. After the massive fall on January 27, NVDA’s stock is showing signs of recovery. It still needs more upside momentum to push the stock price higher. However, if the stock price moves to the downside, there are clear support levels to monitor.Chart source: StockCharts.com. For educational purposes.

When NVDA’s stock price fell on January 27, the close was below its 200-day simple moving average (SMA), which caused a big drop in the stock’s SCTR score. Even after recovering from the fall, the stock price again dipped below its 200-day SMA on February 3. The stock is now on its way to filling the DeepSeek down gap.

The SCTR score is less than 70 and looks like it’s stalling. The stock price is between the 21-day EMA and 50-day simple moving average (SMA). Both are relatively flat. The stock needs more momentum to break through the resistance of the SMA.

Other criteria to consider are:

  • The rate of change (ROC) is still in negative territory.
  • The percentage price oscillator (PPO) has just crossed above its signal line. The PPO histogram is just above the zero line.
  • The relative strength index (RSI) is just above the 50 line.
  • Volume is still tepid.

Overall, NVDA’s stock price is showing hesitancy and could move in either direction. A push to the upside would move the stock price higher, hitting its previous highs. But the momentum behind it has to be strong.

If the stock price falls, watch the following support levels:

  • The 21-day EMA.
  • Price action between $127 and $129.
  • Price action between $113 and $115.

A reversal from a pullback with follow-through is a great place to accumulate positions. Make sure to monitor the chart and get a feel for when the bulls become more dominant.

The Bottom Line

NVDA’s stock price movement is leaning toward the downside, which isn’t unusual in an uncertain investment environment. You’re better off looking at the overall trend and applying objective analytical tools, such as the SCTR Reports and technical indicators, in order to identify strength and momentum in a specific stock, exchange-traded fund, or index. Make your investment decisions based on what the charts and tools are indicating; not on the noise you hear.


Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

In this video, Dave breaks down the formerly high-flying Mag 7 stocks into three distinct buckets. These include long & strong (META, NFLX & AMZN), broken down (TSLA, AAPL, MSFT & NVDA), and questionable (GOOGL). He also shows how GOOGL is not the only leading name featuring a bearish momentum divergence in February 2025, and what that could mean for the broad equity markets!

This video originally premiered on February 11, 2025. Watch on StockCharts’ dedicated David Keller page!

Previously recorded videos from Dave are available at this link.

Have you ever held on too long to a winning position?  You watch as that former top performer in your portfolio slows down, and then rotates lower, and then really begins to deteriorate, and you just watch it all happen without taking action?

If the answer is “yes” then you have fallen victim to one of the more frustrating of the behavioral biases called “endowment bias”.  Basically, we feel unable to let go of this position because of our emotional attachment, and we hold on to a losing position despite very clear technical signs that we should do otherwise!

Today I’ll share three technical analysis techniques that I’ve found helpful to cut my losses, minimize the crippling impact of endowment bias, and preserve my portfolio through challenging periods.  

When In Doubt, Follow The Trend

The biggest issue I find when it comes to endowment bias is that investors simply ignore clear signs on the chart.  As my mentor Ralph Acampora once told me, “Analyzing the chart is the easy part.  Actually doing what the chart tells you?  That’s the tough part!”

The chart of Intel Corp. (INTC) in early 2024 shows how a stock can rotate from a period of accumulation to a period of distribution.  In late 2023, INTC was making higher highs and higher lows, the price above two upward-sloping moving averages.  The RSI was mostly above the 40 level, representing a bullish range for this momentum indicator.  The relative strength (bottom panel) was steadily trending higher, demonstrating that INTC was outperforming the S&P 500.

By April of 2024, literally all of the previous bullet points had changed from bullish to bearish.  INTC was now breaking down through moving average support, the moving averages were beginning to slope lower, the RSI had moved to a bearish range below 60.  

Think of technical indicators like a checklist, and go through the process of evaluating each indicator on the chart to determine whether the current reading is bullish or bearish.  And when you get to a point when the bearish evidence outweighs in the bullish, then move on to better opportunities!

Relative Strength Can Bring Additional Clarity

Sometimes a stock will stop going higher, but instead of breaking down it enters a new consolidation phase.  Microsoft Corp. (MSFT) showed this particular phenomenon in 2024, as it entered a trading range between $400 and $460 after a new all-time high in July.

Now even though the price trend was now sideways, note how the relative strength line began to trend steadily lower.  This pattern emerged because MSFT was holding support, so the price trend was still in decent shape, but other stocks were continuing to pound out a strong second half to 2024.

When you’re holding a stock with deteriorating relative strength, your “opportunity cost alarm” should be going off big time.  Basically, while you’re not necessarily losing money holding this particular stock, there are other stocks out there that are still moving higher.  So by tying up your capital in this particular stock, you’re missing out on other opportunities to outperform!

Institutional investors tend to be laser focused on relative strength, as that is pretty much exactly how they are evaluated as active managers.  So think like an institutional investor, and if your charts begin to feature weakening relative strength, look around for other places to outperform.

Divergences Are Often An Early Warning Signal

Parts of the technical toolkit can be used more as leading indicators than lagging indicators.  I’ve found bearish momentum divergences to provide excellent early warning signals, because they will raise a red flag while the primary uptrend is still in place.

The chart of Synchrony Financial (SYF) still appears in decent shape, with a pattern of higher highs and higher lows continuing through early 2025.  But notice how the RSI has actually been making lower peaks since early November, despite the stronger price action?

SYF and similar names will usually find a place on my “potential topping patterns” ChartList, helping me focus on charts that are still going higher yet demonstrating similar characteristics to previous market tops.  I’m happy to still own a chart like SYF as long as the price keeps showing strength, but the bearish divergence tells me to be ready to take profits if the impending drop becomes a reality.

Mindless investors ignore clear signs of price deterioration because endowment bias prevents them from admitting a change in the technical evidence.

Mindful investors have a consistent process for evaluating their holdings, and are more easily able to admit when a chart is no longer helping them achieve their portfolio goals.


RR#6,

Dave

PS- Ready to upgrade your investment process?  Check out my free behavioral investing course!

David Keller, CMT

President and Chief Strategist

Sierra Alpha Research LLC

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice.  The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.  

The author does not have a position in mentioned securities at the time of publication.    Any opinions expressed herein are solely those of the author and do not in any way represent the views or opinions of any other person or entity.

The market rebounded to start trading on Monday, but indicators on Friday suggest internal weakness. Carl gives us his latest analysis on the market as well as taking a look at Gold which is making more all-time highs. Get Carl’s perspective on the Gold rally.

Besides looking at the market, Carl walked us through the DP Signal Tables and took a look at the Dollar, Gold, Crude Oil, Bonds, Yields, Gold Miners and Bitcoin.

Once he finished with his market review, Carl walked us through the daily and weekly charts of the Magnificent Seven which have mixed reviews on future price action.

Erin took the reins and analyzed sector rotation, concentrating on Energy, Technology and Utilities. She took a look under the hood to see if today’s rallies will catch on or not based on internal participation.

Symbol requests finished out the trading room with looks at various symbols of interest. Erin walked us through the daily and weekly charts with a few looks at 5-minute candlestick charts to time entries and exits.

Join us in the free trading room live to have your symbols reviewed and analyzed by registering ONCE at: https://us06web.zoom.us/webinar/register/WN_D6iAp-C1S6SebVpQIYcC6g

We are also running a free two week trial of any of our reports. Use coupon code: DPTRIAL2 at checkout!





The DP Alert: Your First Stop to a Great Trade!

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Technical Analysis is a windsock, not a crystal ball. –Carl Swenlin

(c) Copyright 2025 DecisionPoint.com


Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.


Helpful DecisionPoint Links:

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On Balance Volume

Swenlin Trading Oscillators (STO-B and STO-V)

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SCTR Ranking

Bear Market Rules




No Changes In Top-5

At the end of the week ending 2/7, there were no changes in the top-5, but there have been some significant shifts in the bottom 5 sectors.

Most notably is the Consumer Staples sector which moved from 10th to 7th and the Healthcare sector which moved from 11th to 8th.

Real Estate remained unchanged at the 9th position. While Energy dropped to 10th from 7th and Materials dropped to the last position from 8th.

New Sector Lineup

  1. (1) Consumer Discretionary – (XLY)
  2. (2) Financials – (XLF)
  3. (3) Communication Services – (XLC)
  4. (4) Industrials – (XLI)
  5. (5) Technology – (XLK)
  6. (6) Utilities – (XLU)
  7. (10) Consumer Staples – (XLP)*
  8. (11) Health Care – (XLV)*
  9. (9) Real Estate – (XLRE)
  10. (7) Energy – (XLE)*
  11. (8) Materials – (XLB)*

Weekly RRG

On the weekly RRG, the tails for XLY, XLC, and XLK are, still, inside the leading quadrant. XLK just crossing over from improving. XLF is inside weakening but at a negative RRG-Heading. And XLI is moving deeper into the lagging quadrant at a negative RRG-Heading.

The most interesting observation on the RRG is that no sectors are currently positioned inside the improving quadrant. The Healthcare sector seems closest to crossing over but at the same time, it is the sector with the lowest RS-Ratio reading.

Daily RRG

On the daily RRG, we can see why Staples and Healthcare made such big jumps. Both tails are pushing deeper into the leading quadrant on long tails.

Communication Services and Financials are confirming their positive outlook by continuing to move up on the RS-Ratio scale with only a minimum loss of relative momentum so far. XLY has returned to the leading quadrant but has already started to roll over. The positive thing for this sector is that it is all happening very close to the benchmark and on a very short tail.

Technology is the problem child on this RRG. This sector returned into the top-5 last week but is now again showing weakness on this daily RRG at the lowest RS-Ratio reading.

As I mentioned last week. The entry of XLK into the top 5 is not because of its strength but more as a result of weakness in other sectors. It’s all relative.

Consumer Discretionary

XLY is still holding above support, but last week formed a new peak. slightly lower, against the resistance offered by the mid-December peak. This makes the area between 235 and 240 an even more important barrier now.

First important support remains located around 218.

Relative strength is rolling over, but there is enough leeway for a correction after the strong move from August 2024 to now.

Communication Services

Communication Services is continuing to perform well and even managed to close higher than last week, confirming the uptrend in price.

As a result, and given the weakness of other sectors and the SPY, relative strength for XLC is continuing to push the XLC tail further into the leading quadrant.

Financials

Financials also managed to put in a higher close for the week, confirming the current uptrend in price.

Relative strength has also taken out its previous high. When both price and RS can hold these trends, the RRG lines will soon turn up again and complete a leading-weakening-leading rotation, underscoring the attractiveness of the financials sector for the time being.

Industrials

Industrials did not manage to reach or take out its previous high and has now put a lower high in place. This still happening inside the rising channel but it is not a sign of strength so to say.

A similar thing can be said about the relative strength for XLI. With both RRG lines below a 100 and falling the tail is being pushed further into the lagging quadrant.

Technology

The technology sector recovered well after a test of the lower boundary of its rising channel.

This is holding relative strength within the boundaries of the trading range which supports the slow improvement of the RRG lines. With RS-Ratio at 100.04, XLK has now just crossed into the leading quadrant.

Portfolio Performance

Shortly after the opening this Monday the portfolio is at a 4.01% gain vs 3.23% for SPY since the start of the year, picking up 0.78%.

Summary

The top-5 remains unchanged this week but in the bottom part of the list some noticeable changes are taking place. Mainly in favor of defensive sectors like Healtcare and Consumer Staples, after Utilities already rose to the #6 position last week.

For the time being the top-5 is still dominated by offensive sectors like XLY,XLC, and XLK. But how long will this last?

#stayAlert and have a great week. –Julius



Sometimes an industry group looks good technically, sometimes fundamentally, and then other times seasonally. But what happens when they all line up simultaneously? Well, we’re about to find out with the travel & tourism group ($DJUSTT). On Friday, Expedia (EXPE, +17.27%) soared after reporting blowout quarterly results after the bell on Thursday. Revenues easily surpassed consensus estimates, $3.18 billion vs. $3.08 billion and EPS did the same, $2.39 vs. $2.07. Here’s how EXPE looked on its chart after Friday’s surge:

EXPE now has excellent support in the 191-195 zone, in my opinion. 191 was the price resistance prior to Friday’s gap higher and 195 (actually 194.72) was the gap opening on Friday on over 8 million shares, its 3rd largest volume day of the past year. Booking Holdings (BKNG) is set up to potentially do the same – report blowout numbers and soar to all-time highs – when it reports its quarterly results on Thursday, February 20, 2025.

The DJUSTT had been consolidating after an earlier run higher in 2024. This now looks like an uptrend, followed by a potential cup pattern:

In the bottom panel, watch the relative strength line for the DJUSTT vs. the benchmark S&P 500. A breakout here to a multi-month high would bode well for the group.

I certainly don’t want to leave out seasonality. Travel & tourism THRIVES beginning in February and running through . Check this out:

The next 3 months – February through April – averages gaining 10.6% per year for the past two decades! These 3 months also rank the highest for the DJUSTT, in terms of the odds of these months ending higher than they began. February and March have both moved higher roughly 75% of the years since 2005.

This is the TRIFECTA – fundamentals strengthening, technicals lining up, and seasonal tailwinds.

But What About The S&P 500?

Well, that’s another story. Obviously, the DJUSTT would likely do better in a strong overall market environment and we just received another clue on the S&P 500 via the “January Effect”. There’s an old adage on Wall Street that says, “So goes January, so goes the year.” There’s a lot of truth to this statement and it generally depends on how the S&P 500’s January performance ranks vs. all the Januarys past. Exactly where did January 2025 rank and what does it tell us about the balance of 2025?

That’s the subject of our “January Effect” members-only webinar on Monday, February 10th. If you’d like to be part of this webinar, simply CLICK HERE to learn more about the event and take advantage of our FREE 30-day trial!

Happy trading!

Tom

In what can be called an indecisive week for the markets, the Nifty oscillated back and forth within a given range and ended the week on a flat note. Over the past five sessions, the Nifty largely remained within a defined range. While it continued resisting the crucial levels, it also failed to develop any definite directional bias throughout the week. The Nifty stayed and moved in the 585-point range. The volatility significantly declined. The India VIX came off by 15.77% to 13.69 on a weekly note. While trading below crucial levels, the headline index closed flat with a negligible weekly gain of 51.55 points (+0.22%).

A few important technical points must be noted as we approach the markets over the coming weeks. Both the 50-Day and 50-Week MA are in very close proximity to each other at 23754 and 23767, respectively. The Nifty has resisted to this point, and so long as it stays below this level, it will remain in the secondary corrective trend. For this secondary trend to reverse, the Nifty will have to move past the 23750-24000 zone, one of the critical market resistance areas. Until we trade below this zone, the best technical rebounds will face resistance here, and the markets will remain vulnerable to profit-taking bouts from higher levels. On the lower side, keeping the head above 23500 will be crucial; any breach of this level will make the markets weaker again.

Monday is likely to see a quiet start to the week; the levels of 23700 and 23960 will act as resistance levels. The supports come in at 23350 and 23000 levels.

The weekly RSI stands at 46.20. It remains neutral and does not show any divergence against the price. The weekly MACD is bearish and stays below its signal line. A Spinning Top occurred on the candles, reflecting the market participants’ indecisiveness.

The pattern analysis weekly charts show that after violating the 50-week MA, the Nifty suffered a corrective decline while forming the immediate swing low of 22800. The subsequent rebound has found resistance again at the 50-week MA at 23767, and the Nifty has retraced once again from that level. The zone of 23700-24000 is now the most immediate and major resistance area for the Nifty over the immediate short term.

Unless the Nifty crosses above the 23700-24000 zone, it will remain in a secondary downtrend. On the lower side, keeping head above the 23500 level will be crucial; any violation of this level will take Nifty towards the 23000 mark. The markets may continue to reflect risk-off sentiment overall. Given the current technical setup, remaining highly selective while making fresh purchases would be prudent. All technical rebounds should be used more to protect gains at higher levels. At the same time, staying invested in stocks with strong or at least improving relative strength while keeping overall leveraged exposures at modest levels is important. A cautious and selective approach is advised for the coming week.


Sector Analysis For The Coming Week

In our look at Relative Rotation Graphs®, we compared various sectors against CNX500 (NIFTY 500 Index), which represents over 95% of the free float market cap of all the stocks listed.

Relative Rotation Graphs (RRG) show defensive and risk-off setups building up in the markets. Nifty Bank, Midcap 100, and Realty Indices are inside the leading quadrant. But all these pockets show a sharp loss of relative momentum against the broader markets.

The Nifty Financial Services Index has slipped inside the weakening quadrant. The Nifty Services Sector and IT indices are inside the weakening quadrant. The Pharma Index is also inside this quadrant but is seen as attempting to improve its relative momentum.

The Nifty Media, Energy, and PSE indices are inside the lagging quadrant.

The Nifty FMCG, Consumption, and Commodities groups have rolled inside the improving quadrant, indicating a likely onset of the phase of relative outperformance. The Auto, Infrastructure, Metal, and PSU Bank indices are inside the improving quadrant. Among these groups, the PSU Bank Index is seen rapidly giving up on its relative momentum.


Important Note: RRG™ charts show the relative strength and momentum of a group of stocks. In the above Chart, they show relative performance against NIFTY500 Index (Broader Markets) and should not be used directly as buy or sell signals.  


Milan Vaishnav, CMT, MSTA

Consulting Technical Analyst

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