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!

Before you trade any stock or ETF, you need to know the trend and condition of the market. The DP Alert gives you all you need to know with an executive summary of the market’s current trend and condition. It not only covers the market! We look at Bitcoin, Yields, Bonds, Gold, the Dollar, Gold Miners and Crude Oil! Only $50/month! Or, use our free trial to try it out for two weeks using coupon code: DPTRIAL2. Click HERE to subscribe NOW!

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

Try us out for two weeks with a trial subscription!

Use coupon code: DPTRIAL2 Subscribe HERE!

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:

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

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 10^th to 7^th and the Healthcare sector which moved from 11^th to 8^th.

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

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

www.EquityResearch.asia | www.ChartWizard.ae

In this video, Mary Ellen reviews the market’s flat momentum as uncertainty reemerges after weak AMZN, TSLA and GOOGL reports – PLUS more tariff talk from Trump. She also highlights the move into defensive sectors as growth stocks continue to struggle. Lastly, she shares the top stocks that are keeping the S&P 500 in an uptrend.

This video originally premiered February 7, 2025. You can watch it on our dedicated page for Mary Ellen’s videos.

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.

We are currently in a declining trend in the market and internals are telling us that this weakness will continue to be a problem. Our primary indicators in the short and the intermediate term have topped with one exception. The Swenlin Trading Oscillators (STOs) started down on Thursday and the STO-B continued to fall Friday. The STO-V interestingly turned up, but we wouldn’t get too excited.

The intermediate-term indicators, the ITBM and ITVM, topped and are moving down. It was an eye test on the ITBM on Thursday as to whether it had indeed declined. We checked and it had. Just another reason to look for more market decline.

Participation is leaking from the market. As price has started to turn over, so has participation. We note that participation readings of stocks above key moving averages shows declining trends which confirm near-term weakness.

The Silver Cross Index measures how many stocks have a 20-day EMA above the 50-day EMA (a Silver Cross). It is trying to top right now. We have a declining trend from the October top. With participation sinking, it won’t be long before this indicator tops too.

The Golden Cross Index measures how many stocks have a 50-day EMA above the 200-day EMA (a Golden Cross). That indicator has stagnated and is currently in decline below its signal line. Deterioration is visible on this chart.

Conclusion: We have a short-term declining trend in the market and failing internals. The ITBM/ITVM are declining along with the STO-B. It is going to be very difficult for price to move higher when fewer stocks are participating.

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

Before you trade any stock or ETF, you need to know the trend and condition of the market. The DP Alert gives you all you need to know with an executive summary of the market’s current trend and condition. It not only covers the market! We look at Bitcoin, Yields, Bonds, Gold, the Dollar, Gold Miners and Crude Oil! Only $50/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!

Try us out for two weeks with a trial subscription!

Use coupon code: DPTRIAL2 Subscribe HERE!

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:

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

While the major equity averages are certainty up year-to-date, we’re detecting a growing number of signs of leadership rotation.  As the Magnificent 7 stocks have begun to falter, and charts like Apple Inc (AAPL) taking on a less-than-magnificent luster in February, we’ve identified ten key stocks and ETFs for mindful investors to monitor in the coming weeks.

VanEck Vectors Semiconductor ETF (SMH)

To be honest, the 2024 bull market was dominated by the AI theme, and the AI theme is dominated by semiconductors.  At least, that was the prevailing narrative until news of Deepseek AI from China brought that entire thesis into question.  From a technical perspective, semiconductors last made a new all-time high in July 2024, and in recent months has settled into a consolidation phase.

We can see the SMH rotating between support around $235 and resistance near $260, creating a rectangular consolidation period on the chart.  The moving averages are almost completely flat, and the RSI has an almost perfectly neutral rating at 50.  That is the definition of a sideways chart, from top to bottom.

The key with a consolidation phase is to either use swing trading techniques to play movements within that pattern, or just patiently wait for the price to finally break out of the well-established price range.  I have alerts set for the SMH to break above $260 or break below $235, and until one of those levels is finally broken, the chart is telling me to look elsewhere for opportunities.

Costco Wholesale Corp. (COST)

While groups like semiconductors have entered into a clear consolidation phase, big box retailers including Walmart Inc. (WMT) and Costco Wholesale Corp. (COST) have shown a strong beginning to 2025 after a very successful bull run in 2024.

Regardless of what I think of the broad market conditions, I’m always going to want to own good charts that keep going higher.  As I love to sign off my daily market recap show, “It’s always a good time to own good charts!”  So what makes COST and other similar charts in the consumer staples sector so attractive from a technical analysis perspective?

I think it starts with the trend, and COST has been pounding out a fairly consistent pattern of higher highs and higher lows for 18 months and counting.  What’s most encouraging as we enter the month of February is the improvement in relative strength.  COST is making new highs while other charts, such as our next example, are pulling back from recent all-time highs.  At a time when it feels like stocks are beginning to struggle, I’m always looking for charts like Costco that are continuing their uptrend phase with higher highs and higher lows.

Alphabet Inc. (GOOGL)

Our third chart highlights the reality of the Magnificent 7 stocks in early February, with more and more of these previous leadership names beginning to show clear signs of negativity.  Earnings season has not been kind to companies like Alphabet, who despite beating earnings estimates for the quarter, provided a less optimistic forward projection for future earnings growth.  

GOOGL gapped lower on Wednesday after making a new all-time high into earnings on Tuesday.  After initially finding support at the 50-day moving average, Alphabet broke below the 50-day on Friday’s trading session.  The gap lower this week also accentuated a bearish momentum divergence, with GOOGL’s higher price highs in February marked by a decline in momentum.  Higher prices and lower RSI are a common feature of a late stage bull market, when stocks are still moving higher but the momentum behind those gains has begun to wane.

While GOOGL still remains above an upward-sloping 200-day moving average, and still appears to be holding trendline support based on the September and November swing lows, this week’s drop on forward guidance certainly has investors wondering where assets could flow if they’re no longer supporting mega cap growth stocks like GOOGL.

For the remaining seven stocks, along with lots more comments and insights on this market transition phase in February, head 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.