Good morning and welcome to this week’s Flight Path. Equities saw the “Go” trend continue this week but we saw weaker aqua bars at the end of the week. Treasury bond prices painted strong purple “NoGo” bars as the weight of the evidence suggested the “NoGo” will continue. U.S. commodities painted aqua “Go” bars after flirting with amber “Go Fish” bars of uncertainty last week. The dollar showed no weakness this week with an uninterrupted string of bright blue “Go” bars.

$SPY Paints Weaker “Go” Bars after High

The GoNoGo chart below shows that after hitting a new higher high on strong blue “Go” bars we saw a Go Countertrend Correction Icon (red arrow) signaling that price may struggle to go higher in the short term. Indeed, price fell in the following days, and GoNoGo Trend has painted weaker aqua bars. We will watch to see if price finds support at last month’s high. GoNoGo Oscillator also has fallen to test the zero line from above and we will watch to see if it finds support here as well. If the oscillator rallies back into positive territory we will look for price to make an attempt at another higher high.

A Go Countertrend Correction Icon (red arrow) has showed itself on the weekly chart after last week saw price fall into the end of the week. GoNoGo oscillator is in positive territory at a value of 3 and so no longer overbought. We will watch to see if it falls toward the zero line from here and if it does we will monitor for signs of support. GoNoGo Trend is painting strong blue “Go” bars as momentum remains positive confirming the direction of the trend.

Treasury Rates See Continued Strength

Treasury bond yields saw the “Go” trend continue this week and after a couple of weaker aqua bars the indicator showed a return to strength with bright blue bars all week as price rallied to challenge for new highs. GoNoGo Oscillator was perhaps responsible for the rally as we saw it bounce of the zero line into positive territory at the beginning of the week. Now, with GoNoGo Trend painting strong blue bars the oscillator is in positive territory at a value of 2.

The Dollar Remains at Elevated Levels

A week of strength propelled price to new highs again this week as GoNoGo Trend painted a string of unbroken bright blue “Go” bars. We are seeing a Go Countertrend Correction icon (red arrow) on the current bar as there is some waning momentum finally.  GoNoGo Oscillator has fallen out of overbought territory and is approaching the zero line. We will watch to see if it finds support as and when it gets there. If it rallies quickly back into positive territory we will see that as a sign of trend continuation for the greenback.

As the secular bull market takes a short-term pause, now is the time to research tremendous opportunities that lie ahead. I’ve looked at more than a thousand charts and wanted to point out 3 in particular that I see heading much, much higher as we close out 2024 and move into a brand new year. There are tons of companies that have been regularly setting 52-week and all-time highs. Most of those are very overbought and carry more short-term risk. I want to instead focus on stocks that have been basing for an extended period of time and have just made a breakout.

Stock 1 – Amazon.com (AMZN)

I love this breakout. We’ve actually had two breakouts. The first was the move above the 190 area, stopping at 200. Then more recently, AMZN cleared 200 before profit taking kicked in this past week with options expiration. We’re now back close to that 200 support level. Here’s the 10-year weekly chart:

The current setup looks eerily similar to the setup heading into 2020. I trust this current breakout, considering that AMZN’s top in 2021 started a lengthy consolidation/basing period – similar to a cup formation. If we use that cup as a measurement stick for the potential rally ahead in AMZN shares, we’d be looking at 320. I’d take that 60% gain.

Stock 2 – Fortinet, Inc. (FTNT)

FTNT is another stock that has an excellent long-term track record, but struggled during a lengthy consolidation/basing period since late-2021:

It’s important to point out that software ($DJUSSW) just broke out and it’s been the 3rd best industry group since the current secular bull market was confirmed in April 2013, rising 774% over the past 11 1/2 years. The only two industry groups stronger have been computer hardware ($DJUSCR, +1019%) and semiconductors ($DJUSSC, +1488%). This compares to a 266% jump in the S&P 500. I’ll take a leading stock in a leading industry group, both of which are breaking out, ANY TIME.

Stock 3 – Home Depot, Inc. (HD)

Yep, that’s 2 out of 3 Dow Jones component stocks, joining AMZN. I love the breakout here. The patterns don’t get any nicer and more bullish than this one. HD topped in late-2021, just like both AMZN and FTNT, before proceeding to print a beautiful, symmetrical, rounded cup:

I see HD having a strong finish to 2024 and a very solid 2025. Throw in HD’s 2.2% dividend yield, a dividend that’s risen every year since the turn of the century, and I believe there are the makings of a “super stock” in the years ahead. Steady grower with rising income to boot! Yes please!

I see the Dow Jones Industrial Average being very strong for the foreseeable future, partly due to the AMZN and HD outlooks, but I still favor small- and mid-caps BIG TIME. I’m hosting a webinar later this morning at 11:00am ET, “Capitalizing on Small- and Mid-Cap Strength”. It’s completely free (no credit card required) to the public, but you do need to register for the event. You can follow the link to do so and to learn more information about the event. If you can’t make the 11am webinar, absolutely no worries. All of those who register will gain access to the recording, including those registering after the event has ended. So be sure to REGISTER NOW to find out why small and mid caps are poised to EXPLODE!

Also, my latest Weekly Market Recap video, “Monthly Options and Negative Divergences Hammer the Bulls!” has been published on YouTube. You can watch it HERE.

Happy trading!

Tom

In this StockCharts TV video, Mary Ellen reveals what took place last week and how the markets closed. She also revealed what drove price action, and what to be on the lookout for next week. In addition, she shares several stocks that broke out of powerful bases on bullish news.

This video originally premiered November 15, 2024. You can watch it on our dedicated page for Mary Ellen on StockCharts TV.

New videos from Mary Ellen premiere weekly on Fridays. You can view all previously recorded episodes at this link.

If you’re looking for stocks to invest in, be sure to check out the MEM Edge Report! This report gives you detailed information on the top sectors, industries and stocks so you can make informed investment decisions.

“The economy is not sending any signals that we need to be in a hurry to lower rates.” These words from Chairman Powell impacted the stock market much more than this week’s inflation data.

The stock market started selling off on Thursday afternoon and continued to do so Friday, with the broader stock market indexes closing lower. The Dow Jones Industrial Average ($INDU) closed down by 0.70%, the S&P 500 lower by 1.32%, and the Nasdaq Composite ($COMPQ) lower by 2.2%.

It’s also options expiration Friday, which generally means increased volatility. The Cboe Volatility Index ($VIX) gained 12.79% on Friday, closing at 16.14. That’s a big jump from earlier in the week.

Nasdaq’s Fierce Selloff

The Nasdaq experienced the biggest drop of the three indexes. The chip makers got smoked. Applied Materials (AMAT), the largest US chipmaker, was down 8.76% on a disappointing revenue forecast. Nvidia (NVDA) was down over 3%, Micron Technology (MU) was down almost 3%, and Intel (INTC) fell 1.70%.

The daily chart of the VanEck Vectors Semiconductor ETF (SMH) gives a clear picture of the semiconductor industry.

FIGURE 1. DAILY CHART OF THE VANECK VECTORS SEMICONDUCTOR ETF (SMH). The sharp selloff in semiconductor stocks resulted in a technical weakness in the chart of SMH. It’s close to a support level, while its SCTR score, MACD, and relative strength with respect to the S&P 500 weaken.Chart source: StockChartsACP. For educational purposes.

Although SMH is still within the sideways range (grey rectangle), it’s very close to the bottom of the range, which aligns with the 200-day simple moving average (SMA). The StockCharts Technical Rank (SCTR) score is at a low 29, the moving average convergence/divergence (MACD) indicates a lack of momentum, and SMH is not outperforming the S&P 500 like it once did.

Looks like investors are rotating away from semiconductors, either taking profits or investing in other asset classes — but which ones? It’s certainly not healthcare stocks, which also got pounded on Friday. Perhaps cryptocurrencies. However, there’s more brewing beneath the surface.

The Yield Rally

The economy is still strong—retail sales data shows that consumers continue to spend, which is pushing Treasury yields higher. The 10-year US Treasury Yield Index ($TNX) closed at 4.43% (see daily chart below). TNX has been trending higher since mid-September and since the end of September has been trading above its 20-day SMA.

FIGURE 2. DAILY CHART OF THE 10-YEAR US TREASURY YIELD. Treasury yields have been on a relentless yield since September. A stronger US economy would keep yields higher.Chart source: StockChartsACP. For educational purposes.

Fed Chairman Powell and Boston Fed President Susan Collins’ comments lowered the probability of a 25-basis-point interest rate cut in the December FOMC meeting. According to the CME FedWatch Tool, the probability is now 58.2%. It was close to 70% on Thursday, before Powell’s speech.

The relentless yield rally may have been one reason the Tech sector sold off. Higher yields don’t benefit growth stocks.

Dollar’s Roaring Rally

One asset class that is gaining ground is the US dollar. When the words “Dollar sets 52-week high” appear in my predefined alerts dashboard panel, it’s something to analyze. The US dollar ($USD) has been in a relatively steep rally since October (see chart below). With a strong US economy and the Fed indicating a more neutral stance in their policy decisions, the dollar could continue to strengthen.

FIGURE 3. DAILY CHART OF THE US DOLLAR. The dollar has been in a roaring rally since October. A strong US economy supports a strong dollar.Chart source: StockChartsACP. For educational purposes.

At the Close

With the exception of the Dow, the other broader indexes have fallen to the lows of November 6, the day after the US presidential election. The broad-based selloff could continue into early next week. There’s not much economic data for next week, but Nvidia will announce earnings after the close on Wednesday. That should shake up the chip stocks.

If you have cash on the sidelines, there could be some “buy the dip” opportunities. However, because there are some dynamics between stocks, yields, and the US dollar, the three charts should be monitored to identify signs of a reversal. When you’re confident of a reversal, jump on board.

If you want to be notified of new articles published in the ChartWatchers blog, sign up on this page.

End-of-Week Wrap-Up

• S&P 500 down 2.08% for the week, at 5870.62, Dow Jones Industrial Average down 1.24% for the week at 43,444.99; Nasdaq Composite down 3.15% for the week at 18,680.12
• $VIX up 8.03%% for the week, closing at 16.14
• Best performing sector for the week: Financials
• Worst performing sector for the week: Health Care
• Top 5 Large Cap SCTR stocks: Applovin Corp. (APP); Palantir Technologies (PLTR); Summit Therapeutics (SMMT); MicroStrategy Inc. (MSTR); Redditt Inc. (RDDT)

On the Radar Next Week

• October Housing Starts
• November Michigan Consumer Sentiment
• Fed speeches
• Nvidia earnings

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.

(This is an excerpt from the subscriber-only DP Weekly Wrap for Friday)

Friday, the Biotechnology ETF (IBB) 20-day EMA crossed down through the 50-day EMA (Dark Cross), above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. IBB recently switched to a BUY Signal on Friday November 8 and we said at the time, “IBB is approaching the top of a four-month trading range (resistance), so this BUY Signal doesn’t look very juicy at this time.” This emphasizes why we consider Trend Model signals to be information flags, not action commands. Always check the chart.

Part of the reason Biotechs fell apart was the nomination of Robert F. Kennedy Jr. to the Health and Human Services department. He is known to be anti-COVID vaccines and just generally not a fan of chemicals for the body. This doesn’t necessarily bode well for this industry.

Participation has been plummeting as more and more stocks lose support at key moving averages. This drop below the 200-day EMA is perilous and given the negative indicators, the decline isn’t likely over yet. The PMO is dropping below the zero line on a Crossover SELL Signal and Stochastics are below 20 signaling extreme weakness. Support is arriving around 130.00, but it doesn’t look good.

The weekly chart shows the breakdown from the rising wedge formation, which is the normal resolution from this formation. The weekly PMO is tumbling lower. Support on the weekly chart is around 123.00. That would be a painful decline added to this already deep decline.

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

(c) Copyright 2024 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.

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Trend Models

Price Momentum Oscillator (PMO)

On Balance Volume

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

ITBM and ITVM

SCTR Ranking

Bear Market Rules

There’s no denying the strength that the mega cap growth names have exerted on the equity markets in 2024.  With their outsized weight in the major equity averages, and their strong performance into November 2024, the Magnificent 7 stocks in many ways reflect the investor optimism that has been much of the story of this bull market.

But with these leading growth names rotating lower this week, pushing the Nasdaq 100 down 3.4% and the S&P 500 down 2.1% through Friday’s close, we need to reconsider the sustainability of the uptrend phase through year-end 2024.  We can easily group the eight stocks, which I call the “Magnificent 7 and Friends”, into three distinct buckets.  Let’s review the technical configurations for these stocks, and focus on what levels could help us confirm a new market trend.

The Breakout Names, Featuring NVDA

Three of these eight leading growth names have already broken to a new all-time high in Q4, and while Netflix, Inc. (NFLX) and Amazon.com, Inc. (AMZN) both deserve our attention, I think the chart of NVIDIA Corp. (NVDA) perhaps best illustrates what we’re seeing with these top performers.

These three are in confirmed uptrends, as defined by Charles Dow’s original definition of higher highs and higher lows.  So the analysis here is simple: as long as that uptrend persists, the charts are in good shape.  For NVDA, that means a “line in the sand” around $132, which lines up with late October swing low as well as the 50-day moving average.

During an uptrend phase, stocks will often pull back to an ascending 50-day or 10-week moving average.  So if charts like Nvidia are able to hold this key short-term trend barometer, then the uptrend remains in place.  But if these first three stocks fail to hold expected support, that could provide a key market tell as the “generals” would show signs of weakness.

The Consolidating Charts, Featuring AAPL

Three of the eight charts on this list are testing short-term resistance levels, with Meta Platforms, Inc. (META) testing the $600 level as a prime example.  But we’ll focus today on Apple, Inc. (AAPL), which has spent the last four months failing to breakout above its July high around $237.

Quite simply, the chart of AAPL is at best “neutral” until and unless it can demonstrate a confirmed break above the July peak.  On top of that, we can see the RSI has failed to push above the 60 level on short-term rallies.  In fact, with the RSI basically rangebound between 40 and 60, this stock represents an absence of momentum and an equilibrium of buyers and sellers.

For charts like these, I’m reminded of Jesse Livermore’s famous quote, “There is time to go long, time to go short, and time to go fishing.”  When the chart is not providing a clear signal to the upside or downside, it’s usually best to find opportunities elsewhere.  But if three of these stocks are failing to break to new highs, that suggests limited upside for the S&P 500 and Nasdaq 100.

The Wild Cards, Featuring MSFT

Now the final two charts are sort of in an “other” bucket, with Tesla Inc. (TSLA) a notable outlier with its exceptionally strong upside rally post-elections, and then an equally dramatic decline over the last week.  But I think Microsoft Corp. (MSFT) provides a more compelling technical configuration, given that it’s one of the only growth names on this list that is actively testing price support.

If you connect a trendline from the July peak to the September high, you’ll see that MSFT had a failed breakout above that trendline in late October then again earlier this week.  In bullish market phases, charts like this usually follow through on breakouts.  But when clear technical breakouts don’t see enough follow-through, that can often be an indication of a wider risk aversion and lack of willing buyers.

With Microsoft in particular, it’s all about the $406 level, which represents a 38.2% retracement of the 2023-24 uptrend phase.  There have been numerous tests of this support level over the last three months, and a break below this level could indicate a larger theme of distribution in the equity markets.  Bear phases are always marked by stocks being unable to hold key price support!

For a deeper dive into these three charts, along with the rest of the Magnificent 7 and Friends, head on over to my YouTube channel!

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.

As the cybersecurity landscape continues to evolve with increasing digital threats, Zscaler, Inc. (ZS) stands out as a new opportunity after lagging for most of 2024. Recent chart setups in Zscaler stock suggest ZS may be gearing up for a significant bullish trend.

In this analysis, we will break down the bullish signals and Zscaler’s financials, and then outline an optimal options strategy you can apply to capitalize on this opportunity—all identified instantly using the OptionsPlay Strategy Center within StockCharts.com. We’ve included a video illustrating this tool at the end of this article, which will help you get a better idea of how you can apply it to your options trading.

FIGURE 1. DAILY CHART OF ZSCALER. The stock price has broken out above a significant resistance level, and its performance relative to the S&P 500 is improving.Chart source: StockCharts.com. For educational purposes.

Looking at the daily chart of ZS, there are several bullish factors:

• Breakout Above Major Resistance. After trading below $200 since March, ZScaler’s stock price has recently completed a bottoming formation and broke out above this critical resistance level. The prolonged consolidation period below $200 formed a solid base, indicating that selling pressure has subsided with buyers gaining control.
• Market Outperformance. Relative to the S&P 500 ($SPX), ZS’s performance has been improving, suggesting relative strength and increased investor interest in the stock.

These technical factors collectively point towards a potential continuation higher after breaking out above this key $200 resistance level.

Beyond the technicals, Zscaler’s fundamentals further strengthen the bullish thesis:

• Robust Revenue Growth. Zscaler reported a 30% year-over-year increase in revenue, reaching $593 million.
• Impressive Billings Increase. The company achieved a 27% growth in billings, totaling $911 million.
• Expanding Customer Base. Zscaler now serves 567 customers with over $1 million in annual recurring revenue (ARR)—a 26% increase—and 3,100 customers with over $100,000 in ARR, marking a 19% growth.
• High Gross Margin. Maintaining a non-GAAP gross margin of 81% for fiscal year 2024 showcases the company’s operational efficiency and profitability.
• Strong Free Cash Flow. With a free cash flow margin of 27%, Zscaler demonstrates robust cash generation capabilities, providing financial flexibility for future investments and growth initiatives.

Zscaler’s strong financial performance highlights its potential for continued growth. The company’s focus on innovation and the expansion of its Zero Trust Exchange platform positions it well to capitalize on the increasing demand for cloud-based security solutions.

Options Strategy

To leverage this bullish outlook on ZS, the OptionsPlay Strategy Center suggests selling the Dec 27 $205/190 Put Vertical @ $5.60 Credit.

• Sell. December 27 $205 Put Option at $12.15
• Buy. December 27 $190 Put Option at $6.60

This strategy involves selling a higher strike put and buying a lower strike put, resulting in a net credit of $5.60 per share, or $560 per contract. The trade profits if ZS stays above $199.40 by the December 27, 2024 expiration date, with a 56.92% probability of success.

FIGURE 2. PUT VERTICAL RISK GRAPH. Here, you see the max reward, max risk, and other details of the trade.Image source: StockCharts.com. For educational purposes.

Trade Details:

• Maximum Potential Reward. $560 (the net credit received)
• Maximum Potential Risk. $1,880 (difference in strike prices multiplied by 100 shares per contract, minus the net credit)
• Breakeven Point. $199.40 (strike price of the sold put minus the net credit per share)

This strategy benefits from time decay and allows for profit even if the stock remains stagnant or rises moderately. It provides a favorable risk-to-reward ratio while aligning with the bullish outlook on ZS.

Real-Time Trade Ideas With OptionsPlay Strategy Center

This bullish opportunity in Zscaler was identified using the OptionsPlay Strategy Center within StockCharts.com. The platform automatically scanned the market, highlighted ZS as a strong candidate for a continuation higher, and structured the optimal options trade in real-time.

FIGURE 3. APPLYING THE OPTIONSPLAY STRATEGY CENTER. ZS was identified as a stock that has potential for a continued move higher. Click the arrow to the left of the stock symbol to view the trade details.Image source: StockCharts.com. For educational purposes.

By subscribing to the OptionsPlay Strategy Center, you can access:

• Automated Market Scanning. Effortlessly discover the best trading opportunities based on comprehensive technical and options strategies in real time.
• Optimal Trade Structuring. Receive tailored options strategies that align with your market outlook and risk tolerance.
• Time-Saving Insights. Save hours of research with actionable trade ideas delivered in real time, allowing you to make informed decisions swiftly.

Don’t let valuable trading opportunities pass you by. Subscribe to the OptionsPlay Strategy Center today and empower your trading journey with tools designed to keep you ahead of the market. Access real-time trade ideas like the one discussed in this article and find the best options trades within seconds daily. Let OptionsPlay be your partner in navigating the markets efficiently and effectively.

Learn more about the OptionsPlay Strategy Center features and how to apply them to your trading in the video below!

The Indian benchmark Nifty 50 extended its corrective decline. Over the past four sessions of a truncated week, the Nifty 50 index remained largely under selling pressure. Throughout the past week, the markets continued with their process of mean-reversion. The volatility, though, did not show any major surge. The volatility gauge, IndiaVIX rose by a modest 2.11% to 14.77. The trading range over the past week stayed wider on the expected lines. The Nifty oscillated in a range of 852 points. It closed with a net weekly loss of (-615.50) points (-2.55%).

The coming week is truncated as well. Wednesday, November 20th is a trading holiday due to Assembly Elections in the state of Maharashtra. The markets are undergoing a painful mean-reversion process. As of now, though the Nifty has closed a notch below the 200-DMA which is currently placed at 23555, it has managed to defend this important support. Beyond this, the Nifty is within striking distance of the 50-week MA which presently stands at 23253. Even if the index ends up testing this level, the long-term primary uptrend would still stay intact. Two possibilities remain distinct; a relief rally in the form of a technical pullback cannot be ruled out; in the same breadth, the markets remain weak and vulnerable to extended corrective pressure.

On Monday, the Nifty will adjust to the global market setup as it will open after a gap of one day.  The levels of 23650 and 23780 may act as potential resistance points. The supports come in at 23250 and 23000 levels.

The weekly RSI is 43.26; it has made a fresh 14-period low which is bearish. It also stays neutral and does not show any divergence against the price. The weekly MACD is bearish and stays below its signal line. The widening Histogram shows accelerated momentum during the downtrend. A long black body occurred on the Candles; this showed the strength of the trend on the downside.

The pattern analysis shows that the Nifty has made a feeble attempt to defend its 200-DMA though it has closed slightly below this important point. Any further downside may see the Index testing another important support level of 50-week MA which is placed at 23253. Besides this, the index has taken support on an extended trendline which also remains in close proximity to the 50-week MA.

All in all, the markets are trading with a weak undercurrent. A technical rebound and a relief rally cannot be ruled out; however, the markets are also vulnerable to sustained selling pressure and a test of lower levels cannot be ruled out. The market breadth remains weak and this is concerning as all technical rebounds may get sold if the breadth continues to remain weak. It is strongly recommended that all leveraged exposures must be curtailed. Any technical rebound; as and when it occurs, should not be chased and all gains must be mindfully protected. A highly cautious 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 a largely unchanged sectoral setup. Nifty Services Sector, Pharma, Financial Services, and IT sector indices are inside the leading quadrant. They are likely to continue to relatively outperform the broader markets.

The Nifty Consumption, Midcap 100, and FMCG indices are inside the weakening quadrant. These sectors are expected to continue giving up on their relative performance over the coming weeks.

The Realty, Infrastructure, PSE, Media, Auto, Commodities, and Energy indices are inside the lagging quadrant. Among these, Commodities, Energy, Realty, and Infrastructure Indices are seen improving their relative momentum against the Nifty 500 index.

The Banknifty, PSU Bank, and Nifty Metal Indices are inside the improving quadrant. A gradual betterment in their relative performance can be expected over the coming weeks.

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

www.EquityResearch.asia | www.ChartWizard.ae

With cryptocurrencies evolving from speculative assets to a global economic force, investors face a critical question: how can you filter out the noise to pinpoint coins that truly matter?

Whether cryptocurrency trading is part of your financial strategy or not, it’s becoming clear that certain coins have moved beyond speculation and are now positioned as potential drivers of the future global economy.

Still, there’s a lot of market noise in the crypto space. You need to distinguish real geopolitical developments surrounding certain coins, domestic developments affecting crypto (like Trump’s proposal to scale back the SEC’s ability to regulate crypto), and market speculation in response to the above, which can affect many cryptocurrencies, even the most obscure ones.

A Snapshot of Crypto Leaders Over Time

Given cryptocurrencies’ sensitivity to the political and economic landscape, there will be a lot of volatility. One way to sort out the leaders is to view the StockCharts MarketCarpets for Cryptocurrencies (use the Select Group dropdown menu) over lookback periods, say, from one day to three months or more.

I like to measure Up Days minus Down Days to get a general sense of the crypto market’s performance in breadth. To do this, go to the Measurements drop-down menu and select [Up Days] – [Down Days]. Scrolling over each square will show how many up or down days are prevalent over a specified period. For instance, in 5 days, if there are 3 up days and 2 down days, the “score,” if we can call it that, will be +1 (as 3 – 2 = 1). The point here is that this view might give you a better filter for identifying market leaders.

Here’s a 5-day view of market leaders in the crypto space.

FIGURE 1. 5-DAY MARKETCARPETS VIEW OF THE CRYPTO MARKET MEASURING UP MINUS DOWN DAYS.Image source: StockCharts.com. For educational purposes.

Don’t mind the particulars for now. Just note the overall performance of the market. Compare it to this 1-month view.

FIGURE 2. 1-MONTH MARKETCARPETS VIEW OF THE CRYPTO MARKET MEASURING UP MINUS DOWN DAYS. Image source: StockCharts.com. For educational purposes.

Now, notice how there are fewer deep “greens” indicating fewer outperformers. The only coin of significance is Dogecoin ($DOGEUSD). The rest are relatively obscure. Keep that in mind as I zoom out to a 3-month view.

FIGURE 3. 3-MONTH MARKETCARPETS VIEW OF THE CRYPTO MARKET MEASURING UP MINUS DOWN DAYS.Image source: StockCharts.com. For educational purposes.

You have a few more market leaders going back a quarter. But the only liquidly-traded one is still Dogecoin. DOGE stands out as one of the top three non-stablecoin cryptocurrencies worth watching, with a unique connection to the potential “Trump 2.0” economy.

Three Crytpos to Watch Ahead of Trump 2.0

So, here they are—Bitcoin ($BTCUSD), Ethereum ($ETHUSD), and, strangely, Dogecoin ($DOGEUSD). Why?

Trump has talked about creating a strategic Bitcoin reserve as he aims to make the US the “crypto capital of the planet.” With a crypto-friendly administration and, presumably, fewer regulatory barriers, Ethereum—the second-largest cryptocurrency by market cap—will likely see growth alongside Bitcoin.

The Dogecoin case sounds a little weird. Its boost seems to be a speculative conflation of DOGE, the crypto’s ticker, and DOGE, the acronym for the proposed Department of Governmental Efficiency, co-led by Elon Musk, who happens to be a strong proponent of Dogecoin. Whatever the investment case may be, this symbolic conflation was enough to fuel the coin’s record three-year high.

Let’s look at the technicals, starting with a daily chart of Bitcoin.

FIGURE 4. DAILY CHART OF $BTCUSD. Did broad retail buying just kick in?Chart source: StockCharts.com. For educational purposes.

According to the Relative Strength Index (RSI), Bitcoin, which closed above a record-high $90K level, is well within the overbought range, hinting at a potential pullback. You’re starting to see that potentially taking shape.

Looking at our two momentum indicators below, the Chaikin Money Flow (CMF) shows three deep yet flattening surges suggesting high buying pressure, yet, in the On Balance Volume (OBV), the last surge shows a breakout (see green circle). Could this suggest that institutional buying occurred in September and October, followed by increased retail participation in November? If that’s the case, it will be interesting to observe how Bitcoin performs after taking a breather.

On the chart, there are three Quadrant Lines. The first two demonstrate how prices, in an uptrend, tend to bounce between the 50% or 75% lines (2nd or 3rd quadrants). The third quadrant line on the right is the one you should keep an eye on. If Bitcoin pulls back, it should bounce above the last quadrant, which also coincides with two critical levels of resistance-turned-support (see dotted magenta lines).

Let’s shift over to a daily chart of Ethereum ($ETHUSD).

FIGURE 5. DAILY CHART OF $ETHUSD. Smart money selling as retail investors scoop it up?Chart source: StockCharts.com. For educational purposes.

Like Bitcoin, Ethereum ($ETHUSD) is pulling back from its RSI-measured overbought level. However, unlike Bitcoin, the CMF and OBV are in stark divergence, possibly indicating that “smart money” buying has declined while retail buying has ramped up. If anything, this confirms forecasts of near-term weakness.

Unlike Bitcoin, Ethereum did not hit an all-time high, but this can also mean the crypto has room to run. You might expect a bounce at the 50% and 61.8% Fibonacci retracement levels (see green circle on the chart) which is further buffered by support at $2,730 (see green dotted line). However, if the uptrend resumes, take note of the three resistance levels ahead, highlighted by the magenta lines where you may see profit-taking and selling.

Let’s now look at a daily chart of Dogecoin ($DOGEUSD).

Figure 6. DAILY CHART OF $DOGEUSD. This chart looks like a meme stock, but the divergence between the CMF and OBV shows the difference between smart money and retail accumulation.Chart source: StockCharts.com. For educational purposes.

Similar to Bitcoin, Dogecoin also has a three-year high. But unlike Bitcoin and Ethereum, there’s no indication that Dogecoin will be a reserve asset, nor does it share Ethereum’s reputation for technological innovation. It started as a meme coin, and the only thing that seems to be driving its recent surge is its association with Elon Musk.

The RSI shows that Dogecoin is well-overbought. If you look at the CMF and OBV, note how larger players began accumulating Dogecoin with tremendous buying pressure long before the retail crowd noticed (see magenta square).  Now, the sharp divergence shows how “smart money” may be pulling back while retail traders are jumping in.

If you find a reason to buy Dogecoin beyond pure speculation, be aware that it has plenty of room to tumble. Note the 61.8% Fib retracement level coinciding with the coin’s 2024 high of $0.22. If it fails to bounce at this level, then the meme is over. But considering how unpredictable this coin is, look for a bounce near the 50% Fib retracement.

At the Close

In a market buzzing with hype, separating the legit from the noise takes more than following news and taking a quick glance—it’s all about using the right tools. For me, it’s about viewing MarketCarpets over different timeframes, checking up and down days to see which crypto is leading the pack. With Bitcoin and Ethereum, there’s solid institutional backing, showing they’ve got potential staying power. Dogecoin, though, feels more like a meme-fueled thrill ride, getting its boost from Elon Musk’s influence rather than fundamentals.

By looking at the daily charts and contrasting the CMF with the OBV, you can spot where the real buying pressure is—seeing institutional money flow versus the retail players. In the end, separating the signal from the noise comes down to reading the charts using the right tools.

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.

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