Now that Q4 historical bullishness has kicked in, it’s time to allow the bears to go into hibernation, while the bulls search for key leadership to drive prices higher. Before I highlight a key industry group that just moved into all-time high territory, it’s important to understand the history of the stock market and which groups tend to carry the S&P 500 higher. In other words, since the S&P 500’s 2013 breakout above the 2000 and 2007 highs, which groups have led this secular bull market advance? Well, here you go. These are the 12 best-performing industry groups since April 2013 (as you check these out, keep in mind that the S&P 500 has gained 266% over the same period):

1. Semiconductors ($DJUSSC): +1488%
2. Computer Hardware ($DJUSCR): +1019%
3. Software ($DJUSSW): +774%
4. Specialty Finance ($DJUSSP): +709%
5. Internet ($DJUSNS): +683%
6. Broadliine Retailers ($DJUSRB): +653%
7. Automobiles ($DJUSAU): +480%
8. Home Construction ($DJUSHB): +459%
9. Insurance Brokers ($DJUSIB): +434%
10. Home Improvement ($DJUSHI): +424%
11. Hotels ($DJUSLG): +419%
12. Consumer Finance ($DJUSSF): +416%

This isn’t opinion. This isn’t a list based on current technical conditions or my favorite groups. This list is HISTORICAL FACT. These are the “risk on” groups that have led this bull market. If you’re still clinging to the hopes of a secular, or even cyclical, bear market right now, I think you need to leave personal biases at the door and look at this market objectively. All-time highs nearly always beget more all-time highs. In my lifetime, I’ve only seen TWO all-time highs that marked major tops – one in 1973 and the other in year 2000. Constantly searching for that major top is what leads to significant underperformance. Personally, I believe the next major top (leading to a secular bear market) is most likely a decade away. We’ll all find out together.

So I’m in a position believing that stock prices are going to go higher. I’m also of the belief that many of the same leaders shown above in the Top 12 groups since 2013 are going to lead the next leg higher in this secular bull market. Therefore, I’m paying particularly close attention to these charts……and one of them just broke out and started to lead on a relative basis during the past week.

Enter Software:

The absolute price breakout has already occurred. Now I’m waiting to see the relative breakout on the DJUSSW. Once that happens, I see a melt up in software stocks, especially among small and mid cap software stocks. It’s important to point out that in this environment of falling short-term fed funds rates, small and mid caps are showing tremendous leadership. As I look ahead, I believe small and mid caps will TROUNCE the S&P 500. All of this will lead to many small/mid cap software stocks tripling or quadrupling within a year. I’m going to uncover them.

On Saturday morning at 11am ET, I will be hosting a webinar, “Capitalizing On Small- and Mid-Cap Strength”. The objective of this event is to illustrate the strength in these two asset classes and to discuss potential levels of outperformance and to point out many stocks poised to lead. If you want to find stocks capable of tripling, quadrupling, or even more, then this webinar is for YOU! The webinar is completely FREE (no credit card required), but you must register for the event to save your seat – and seats are limited. For more information and to register NOW, CLICK HERE.

Happy trading!

Tom

I was originally taught to use RSI as a swing trading tool, helping me to identify when the price of a particular asset was overextended to the upside and downside.  And on the swing trading time frame, that approach very much works, especially if you employ a shorter time period for the indicator.

But RSI can also be used for longer-term time frames, helping investors to better define trend phases and identify broader shifts in momentum.  Today we’ll break down three charts that show how this application of the RSI could help you stay on the right side of strong uptrends!

HubSpot Inc. (HUBS)

Earlier this week on my daily market recap show I was asked about HubSpot which has recently become overbought.  The viewer was concerned about potential downside given the overbought conditions.

What we reviewed was that while an RSI above 70 is considered overbought, an RSI above 80 is considered “extremely overbought”, or what we would often call, “the good kind of overbought.”  Why consider such a high RSI to be a bullish tell?  Just look to the left on the chart of HUBS, at similar readings in June 2023 and December 2023.  In both cases, the stock briefly pulled back soon after.  And in both cases, the stock went on to make a new 52-week high within a month.

NVIDIA Corp. (NVDA)

Another stock that has shown a similar run of “the good kind of overbought” signals is Nvidia.  There have been three such occurrences over the last two years, and in every instance, these signals have occurred not at the end of the uptrend phase, but in the middle!

It’s worth noting here that Nvidia, along with most other semiconductor stocks, are nowhere near the overbought region given their recent weakness.  NVDA is actually featuring the dreaded “bearish momentum divergence” which often serves as a leading indicator of a bearish rotation!

GoDaddy Inc. (GDDY)

GoDaddy is another chart which has recently shown an RSI level above the 80 threshold.  And while that could mean a brief countertrend pullback is in store, it also suggests that the long-term uptrend may still be in place.

The last time GDDY saw an RSI above 80 was in November 2023, just before an incredible bullish phase that arguably is still in place in November 2024.  So while I could see a short-term pullback as a reasonable expectation between now and year-end, this configuration also serves to reinforce the broader uptrend phase that is still active.

As I was first learning technical analysis back in the day, I thought chart reading was all about finding signals and just blindly following them.  Over the years, I’ve come to appreciate that indicators like RSI have layers of value.  Mindless investors take indicators at face value.  Mindful investors have learned to dig deeper and appreciate the values of learning from previous market cycles!

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.

In today’s DP Alert short video we discuss the key support levels for Gold as it has likely begun a longer-term correction. We also take a look at Gold Miners under the hood! Charts and commentary are taken from our subscriber-only DP Alert publication. Subscribe now and try us out for 2 weeks using coupon code: DPTRIAL2.

Below are the charts that we used in the video for your review:

Introducing the new Scan Alert System!

Delivered to your email box at the end of the market day. You’ll get the results of our proprietary scans that Erin uses to pick her “Diamonds in the Rough” for the DecisionPoint Diamonds Report. Get all of the results and see which ones you like best! Only $29/month! Or, use our free trial to try it out for two weeks using coupon code: DPTRIAL2. Click HERE to subscribe NOW!

Learn more about DecisionPoint.com:

Watch the latest episode of the DecisionPointTrading Room on DP’s YouTube channel here!

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Use coupon code: DPTRIAL2 Subscribe HERE!

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.

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:

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

In this exclusive StockCharts video, Joe explains how to use an 18 simple moving average in multiple timeframes to identify when a stock has confluence amongst 2-3 timeframes. He shows how to start with the higher timeframes first, before working down to the lower ones. Joe then covers the shifts that are taking place in the sectors; in addition, he shows a nice feature in StockChartsACP that can help zero you in on new emerging strength. Finally, he goes through the symbol requests that came through this week.

This video was originally published on November 13, 2024. Click this link to watch on StockCharts TV.

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.

Palantir Technologies (PLTR) has occasionally appeared in the Top 10 StockCharts Technical Rank (SCTR) Reports. More recently, it has reached the top 5, making it a stock worth analyzing.

Palantir is a data analytics company that could benefit from the AI boom. On November 4, after reporting better-than-expected quarterly earnings, Palantir’s stock price rose 23% and has continued rising since then. The stock price is up over 250% this year. Given this performance and being added to the S&P 500 in early September, PLTR has a lot of upside potential.

FIGURE 1. PALANTIR IN THIRD PLACE. The stock’s recent price action has made PLTR a contender for a closer look.Image source: StockCharts.com. For educational purposes.

The weekly chart of Palantir stock paints the picture, and the dramatic price rise last week is very clear. After breaking through all resistance levels, the stock price is in a position to navigate uncharted territories. This makes it difficult to forecast Palantir’s stock price, but, given how far the stock price has come, it’s worth keeping an eye on it.

FIGURE 2. WEEKLY CHART OF PALANTIR STOCK. The stock price has broken through all resistance levels and is now in uncharted territory. How much higher can it go?Chart source: StockCharts.com. For educational purposes.

The daily chart (see below) shows that the uptrend is still going strong.

FIGURE 3. PALANTIR STOCK’s UPWARD TREND. The SCTR score has been above 80 since the early stages of the uptrend in the stock price. The relative strength index and full stochastic oscillator are in overbought territory.Chart source: StockCharts.com. For educational purposes.

Palantir is trading above its 15-day exponential moving average (EMA), its relative strength index (RSI) is well above the 70 level, and the full stochastic oscillator shows the stock is in overbought territory. Notice that the SCTR score has been above 80 since June 2024, when PLTR started its ascent. The bull run has been going on for a while, and recent price action shows that this stock has a lot of momentum.

When To Buy PLTR Stock

Palantir stock’s price action after its recent earnings report has been euphoric, so a correction would be healthy. When a stock is trading at its all-time high, it’s difficult to determine how deep a pullback would be. I am currently using the 15-day EMA as a potential support level, although I might have to tighten it depending on how the stock behaves in the next few trading sessions.

There are signs of a pullback surfacing. The red body of the last candlestick bar is the first since its last earnings report. Note the decline in trading volume while prices were rising. These are signs of a price decline, but, if the overall market remains bullish, the price decline may not be deep enough to reach the 15-day EMA. I might shorten it to a 10-day or even a 5-day EMA to use as a support level.

I would enter a long position when the price reverses on increasing volume and hold it until momentum decreases enough to justify exiting it. I would use a trailing stop to exit the position. Since PLTR is an AI-related stock, I would also monitor the performance of other AI stocks. If interest tapers, I would either avoid adding long positions or, if I own the stock, sell at least some of my positions.

The Bottom Line

I’ve added PLTR to my WatchLists ChartList (to organize your ChartLists, use the StockCharts ChartList Framework) and to one of my Dashboard panels to monitor it regularly. I wouldn’t want to miss an opportunity to ride Palantir’s rally.

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.

When a stock shows an RSI value above 80, is that a good thing or a bad thing? In this video, Dave reviews a series of examples showing this “extreme overbought” condition, highlights how these signals usually occur not at the end of, but often earlier in an uptrend phase, and unveils how to use the StockCharts platform to scan for stocks meeting this criteria today!

This video originally premiered on November 13, 2024. Watch on our dedicated David Keller page on StockCharts TV!

Previously recorded videos from Dave are available at this link.

The post-election euphoria may have taken a breather on Tuesday, as the US stock market indexes closed lower. The tech-heavy Nasdaq Composite ($COMPQ) was only lower by 0.09%, whereas the S&P 600 Small Cap Index ($SML) was down the most—it closed lower by 1.54%.

A MarketCarpets Ride

On a day when the equity indexes closed lower, Tuesday’s StockCharts’ MarketCarpets shows that the downward move was mostly from a handful of sectors. Materials, Health Care, Real Estate, Utilities, Industrials, and Energy were the worst hit. Consumer Discretionary was also hit hard, except for Amazon.com, Inc. (AMZN), the highest cap-weighted stock in the sector.

FIGURE 1. MARKETCARPET FOR TUESDAY. Although a lot of sectors were a sea of red, the Mag 7 stocks closed higher.Image source: StockCharts.com. For educational purposes.

What stands out in the MarketCarpet is that the heavily weighted Mag 7 stocks, NVDA, MSFT, GOOGL, AMZN, META, and NFLX, closed higher for the day. AAPL was the exception—it closed unchanged. So, it’s unsurprising that Communication Services and Technology were Tuesday’s top performers.

Because most of the largest cap-weighted stocks closed higher, pulling up the Nasdaq 100 Equal-Weighted Index ($NDXE) chart made sense. The daily chart below shows that the index is still bullish despite Tuesday’s pullback, a decline of -0.41%. $NDXE broke above its July high post-election and is trading relatively close to its all-time high.

FIGURE 2. DAILY CHART OF NASDAQ 100 EQUAL WEIGHTED INDEX ($NDXE). Even though the large cap-weighted stocks performed well, the equal-weighted index is also bullish despite underperforming the Nasdaq 100 Index ($NDX).Chart source: StockCharts.com. For educational purposes only.

The last bar on the chart hit the November 7 (the last large body day) low and bounced back. Since the long body of November 7, there are now three short bodies, suggesting that market participants aren’t decisive in one way or another (see the candlestick bars within the green rectangle).

Note that $NDXE is underperforming relative to the Nasdaq 100 Index ($NDX), which isn’t unusual. What is interesting to see is that the relative performance is declining. This may mean that we could see a rotation into Technology and Communication Services as the year plays out.

Finding Stocks Using MarketCarpets

With many mega-cap tech stocks trading at elevated prices, does this mean the less sought-after smaller-cap tech stocks won’t see much upside movement? Not necessarily. One way to identify some of the smaller-weighted tech stocks is to look for technically strong stocks within the top-performing sector that are lower priced.

For example, expand the Technology sector in the MarketCarpet (click Technology header) and follow the path below:

Select SCTR from Measurements > 1M Change from Color By > Equal Weight from Size By.

I use the equal weight because it makes it easier to identify the different stocks. Note that this is just an example; you can use any parameters that meet your investing needs.

The screenshot below is the result of the above-mentioned selection criteria.

FIGURE 3. DIVING DEEPER INTO THE TECHNOLOGY SECTOR. Organizing the MarketCarpets by SCTR and equal weight makes it easier to identify the technically strong stocks.Image source: StockCharts.com. For educational purposes.

The table on the right displays the top performers based on your selected criteria. Mouse over the squares of those top performers and, from the thumbnail chart, identify the stocks that meet your price-per-share threshold. Then, double-click on the tile in the MarketCarpet to see the Symbol Summary page for your selected stock. From here, you can do a deeper analysis; if the stock has upside potential, add it to an appropriate ChartList. Set a price alert so you’re notified when the alert is met.

The bottom line: The stock market offers many opportunities. The key to taking advantage of those opportunities lies in your market analysis. The StockCharts MarketCarpets help you do a top-down analysis of the market to identify stocks or ETFs to trade.

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.

Where might you invest as the year winds down and holiday spending kicks into high gear? A look at historical seasonality trends might help you figure out which sectors tend to outperform in the final months and into the new year.

To begin, the first step is to open up your S&P Sector ETFs ChartLists. If you don’t have an S&P Sectors ChartList, it’s time to create one. My ChartList includes the ETFs listed in the Sector Summary Dashboard panel.

• Consumer Discretionary (XLY)
• Financials (XLF)
• Communications (XLC)
• Industrials (XLI)
• Technology (XLK)
• Real Estate (XLRE)
• Utilities (XLU)
• Energy (XLE)
• Consumer Staples (XLP)
• Materials (XLB)
• Health Care (XLV)

In the View List As dropdown menu on your ChartList, select Seasonality. When your seasonality chart pops up, you can then select each chart in your sector ChartLists.

Because this is an election year, I am setting each chart to a 10-year lookback period (from 2015 to 2024) to capture three election years. I also view each sector relative to the S&P 500 ($SPX) to set a benchmark comparison (you can set this at the bottom of your seasonality chart in the Compare Symbol To box).

Top Two Sectors to Watch from November to January 2025

If you thought Consumer Discretionary spending might spike from the holiday season to January (considering the beginning of the Q4 earnings season), the results might surprise you.

Remember, we’re looking at entire sectors, not individual stocks that might outperform their sector peers. That said, the two sectors that pop out in a seasonality analysis relative to the S&P 500 are Financials (XLF) and Communications Services (XLC). Take a look at XLF’s seasonal performance (see image below).

FIGURE 1. 10-YEAR SEASONALITY CHART OF XLF. October and November are the strongest months for the Financials relative to the broader market.Image source: StockCharts.com. For educational purposes.

If you bought XLF in August, then you are on the right side of seasonality. November happens to be the strongest seasonal month of the year relative to the broader market. While seasonality alone shouldn’t be the only reason to invest in a given sector, the fundamental and political contexts affecting financials happen to align. Let’s take a look at a daily chart of XLF.

FIGURE 2. DAILY CHART OF XLF. The Bullish Percent Index in the top panel should buying pressure. The divergence in money flow between the On Balance Volume and the Chaikin Money Flow indicates retail traders may be driving prices higher.Chart source: StockCharts.com. For educational purposes.

The Bullish Percent Index (BPI) for the financials sector is soaring above 70%, representing the percentage of stocks experiencing bullish P&F breakouts. However, a BPI over 70% also suggests that the index may be overbought.

Note the divergence between the On Balance Volume (OBV) and the Chaikin Money Flow (CMF). While both measure buying pressure, the CMF can reflect “smart money” activity, since it tracks buying/selling pressure relative to daily price ranges, often capturing institutional accumulation or distribution patterns. If OBV rises while CMF declines, that may signal that retail buyers are driving prices up while institutions quietly sell, suggesting potential weakness in the uptrend.

If you’re expecting a pullback, perhaps to enter or add to an existing position, look to the 20-day and 50-day simple moving averages (SMAs) for a potential bounce. Otherwise, watch support at $46 (see blue dotted line). A close below this level could invalidate the uptrend, fulfilling its seasonal weakness heading into January.

The other outstanding seasonal sector chart was XLC, a proxy for the Communications Services sector.

FIGURE 3. SEASONALITY CHART OF XLC. The January profile reflects an interesting observation.Image source: StockCharts.com. For educational purposes.

This chart is extraordinary.

• Over the last 10 years, XLC has had 100% higher closes relative to the S&P 500 in January.
• Its average return, relative to the S&P 500, has been 3.1%, marking its strongest relative seasonal month.

November and December may be weak, but they’re the perfect setup for a strong January. But will January 2025 repeat this historical pattern? Shift over to a daily chart for a closer look.

FIGURE 4. DAILY CHART OF XLC. XLC has a similar profile as XLF in that it looks overbought. There could be a pullback in price.Chart source: StockCharts.com. For educational purposes.

Like financials, XLC’s BPI is extremely bullish at nearly 87%, yet this level (over 70%) warns of potential overbought conditions.

The OBV and CMF are also diverging, hinting that retail investors may be driving prices higher, while the smart money may be holding back. Given the seasonality context of a weak November (which, so far, it isn’t) and a tepid December, you might expect XLC to pull back, giving you a strong setup for a January 2025 surge.

Watch the 20-day- and 50-day SMAs as potential support levels in this case. More importantly, keep a close eye on the two swing points at $91.50 and $90, indicated by blue dotted lines on the chart. A close below $90 could signal significant weakness and, unless institutional buying pressure increases, the risk of further downside remains high.

A Few Tips and Tricks

I’ve demonstrated a few ways to use Seasonality Charts to identify seasonality in stocks and sectors.

• Drill Down on the Seasonality to Prepare, but Not to Predict: Seasonality charts give you historical context to inform the likelihood of a sector performing a certain way if similar seasonal factors influence the market again. Seasonality is NOT a predictor, but an indicator of possible outcomes that certain factors may historically skew.
• Check Sector ETFs Daily Charts: If you’re interested in investing in sector ETFs, then check the daily chart to see if there are any viable entry points.
• Drill Down to the Stock Level: If you’re looking at sectors to spot individual stocks, proceed to the stock level. You may want to repeat the process above, as individual stocks may also have their own seasonality depending on factors like earnings cycles, industry-specific trends, or recurring market events.

However, many other ways to apply seasonality charts to your analysis exist. Check out the StockCharts support page on Seasonality Charts and explore how to apply this tool to your analysis.

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 from StockCharts TV, Julius pulls the curtain back on the updated Relative Rotation Graphs that are now available on the StockCharts website. He demonstrates a myriad of new features, including alignment of the intraday time frames with SharpCharts/ACP, zoom and position control with your mouse, and increased flexibility with selecting and/or highlighting tails. Julius finishes with a brief update on the S&P 500 chart after the elections.

This video was originally published on November 11, 2024. Click anywhere on the icon above to view on our dedicated page for Julius.

Past videos from Julius can be found here.

#StayAlert, -Julius

Good morning and welcome to this week’s Flight Path. Equities saw the “Go” trend continued this week and price gapped higher after some weaker aqua bars. We now see GoNoGo Trend painting strong blue bars at new highs. Treasury bond prices remained in a “NoGo” trend but the week ended with a weaker pink bar. The U.S. commodities index saw a strong end to the week as bright blue “Go” bars returned and the dollar likewise saw strength with strong blue “Go” bars the second half of the week.

$SPY Gaps Higher on Strong Blue “Go” Bars

The GoNoGo chart below shows that after some weakness that saw price fall from the last Go Countertrend Correction Icon (red arrow), price gapped higher on Wednesday and prices soared to new highs in the aftermath of the election. GoNoGo Oscillator was able to recover positive territory after having fallen into negative territory the week before. Now, with the oscillator in positive territory at a value 4 on heavy volume, we know that momentum is on the side of the “Go” trend once again.

A new higher weekly close was painted on the chart this past week. After a couple of consecutive lower closes after the recent Go Countertrend Correction Icon (red arrow), we saw price surge to a new higher close. GoNoGo Oscillator had been falling toward the zero level but reversed course sharply this week and is now breaching overbought territory at a value of 5. We will see how much higher price can go from here. We will look for it to at least consolidate at these levels going forward.

Treasury Rates Cool after Higher High

Treasury bond yields saw the “Go” trend continue this week but we saw a little weakness creep in with GoNoGo Trend painting an aqua bar. This comes after we saw a Go Countertrend Correction Icon (red arrow) indicating that price may struggle to go higher in the short term. We will watch to see if price finds support here and sets a new higher low. GoNoGo Oscillator has fallen to test the zero line from above and we know that if the “Go” trend is to remain healthy it should find support at that level. If it can rally back into positive territory then we will know that momentum is resurgent in the direction of the underlying “Go” trend.

The Dollar Jumps Higher

Last week we saw some weakness in the “Go” trend as the indicator painted a string of weaker aqua bars following a Go Countertrend Correction Icon (red arrow). This Icon warned us that price may struggle to go higher in the short term. As price fell from its most recent high, we turned our attention to the oscillator panel. GoNoGo Oscillator fell to test the zero level and quickly found support as volume increased (darker blue of oscillator line). Now, with price making new higher highs and GoNoGo Trend once again painting strong blue bars we know that momentum is resurgent in the direction of the “Go” trend.