Following the recent market fluctuations, with a sharp decline and a subsequent rally, it’s crucial to examine these movements’ underlying factors.

Utilizing relative rotation graphs (RRGs), we can gain insights into the current trends between growth and value stocks and their performance across different size segments.

Growth vs Value on Daily RRG

The daily RRG clearly prefers growth stocks over value stocks. The Dow Jones US Growth Index is advancing into the leading quadrant, indicating strong momentum, while the Dow Jones US Value Index is retreating into the lagging quadrant.

This rotation shows the recent shift towards growth stocks.

Large Cap Leads the Way

When we dissect the market by size rather than growth or value, we observe that large-cap stocks are positioned within the leading quadrant, albeit with a moderate trajectory.

Conversely, mid-and small-cap stocks are lagging, with mid-caps experiencing the most unfavorable rotation. This pattern indicates that large-cap stocks are currently outperforming their smaller counterparts.

A Closer Look at Growth and Value Across Sizes

The third RRG offers a detailed view of growth and value stocks by size.

Here, large-cap growth stocks stand out as they ascend within the leading quadrant. Mid-cap growth stocks show signs of recovery in the weakening quadrant, and small-cap growth stocks are gaining momentum in the lagging quadrant.

However, all value stocks, regardless of size, are declining, with large-cap value stocks also moving toward the lagging quadrant.

This separation underscores the near-term dominance of large-cap growth stocks.

The Influence of Large Cap Growth Stocks

Using the New York FANG index as a proxy for large-cap growth stocks further illustrates where the market’s strength lies.

A cluster of these stocks, including Tesla, Google, Amazon, and Netflix, are positioned in the leading quadrant, with Tesla exhibiting particularly high momentum. Microsoft is on the cusp of joining the leading quadrant, while Meta rebounds from the lagging quadrant.

Apple and NVIDIA, despite weaker tails, remain strong in relative strength, and AMD and Snowflake are also noteworthy, though they are currently lagging.

This concentration of a few stocks driving the market suggests a narrow foundation, which is a recurring theme for the US stock market.

Examining the charts of four significant market influencers—Apple, Tesla, Nvidia, and AMD—reveals potential risks.

NVDA

After surpassing its June high, NVIDIA is now struggling to advance, as indicated by a negative divergence in the RSI and price.

A break below the support level of 130 could trigger further declines.

AMD

AMD’s chart shows a series of lower highs and lower lows, with a potential break in raw relative strength on the horizon.

If the price downtrend continues, it will very likely trigger the start of a new down leg in an already established relative downtrend.

TSLA

Tesla’s inability to overcome resistance between 270 and 275, coupled with a negative RSI divergence, suggests limited upside potential.

AAPL

Apple, which peaked in mid-July, has since experienced a downward trend.

A break below the crucial support level around 213 could lead to further losses and trigger a continued weakness in its relative strength.

Conclusion: The Market’s Narrow Foundation

The market is back at a narrow foundation as we have seen it before.

The risk remains high, especially if these four stocks fail to advance and begin to decline, and when the observed divergences come into play.

Such a scenario would undoubtedly challenge the S&P 500’s ability to climb higher.

#StayAlert and have a great weekend, –Julius

The Halloween effect caught up with the stock market! October 31 ended up being a spooky day for investors.

Tepid earnings from big tech companies and negative news about Super Micro Computer (SMCI) sent stocks plunging, especially semiconductors (more on this below).

Precious metals, which were in a roaring bull rally, also sold off. Gold futures were down 1.84% and silver prices fell 3.76%. Risk aversion seems to be back, with the Cboe Volatility Index ($VIX) rising by 13.81%, closing at 23.16. As uncertainty about the upcoming US election results creeps up, the VIX could rise further. If there’s one indicator to monitor in the next few trading days, the VIX would make the top of the list.

Economic Data Supports a Rate Cut

There was a smorgasbord of economic data this week, most supporting the idea that the Federal Reserve will likely cut interest rates by 25 basis points. Some key data that was released are:

• Wednesday’s JOLTS report shows that in September, US job openings were lower than expected.
• The GDP for Q3 grew 2.8%, below the 3.1% estimate. Consumer spending was one of the biggest contributors to the GDP growth.
• October consumer confidence rose over 11%, the biggest one-month rise since March 2021.
• September Personal Consumption Expenditures Price Index (PCE) shows a 12-month inflation rate of 2.1%.

Friday’s Nonfarm Payrolls should give more clarity to the Fed’s interest rate decision.

Tech Sector Gets Slammed

The StockCharts MarketCarpets for S&P 500 stocks by performance was a sea of red (see below). The Technology sector was the worst-performing sector of the day with the Technology Select Sector SPDR Fund (XLK) down 3.21% on Thursday. The largest weighted tech companies in the S&P 500—Apple (AAPL), Nvidia (NVDA), Microsoft (MSFT), Broadcom (AVGO), and Oracle (ORCL)—took a scary downward ride.

FIGURE 1. STOCKCHARTS MARKETCARPETS FOR OCTOBER 31. The Technology sector got slammed, as did most other sectors. Energy and Utilities were mostly green. Image source: StockChartsACP. For educational purposes.

A big blow to semiconductors was SMCI’s news of its auditor’s resignation. The VanEck Vectors Semiconductor ETF (SMH) fell 3.65%. SMH has fallen below its 50-day simple moving average (SMA) with a declining StockCharts Technical Rank (SCTR), moving average convergence/divergence (MACD), and performance relative to the S&P 500 (see chart below).

FIGURE 2. DAILY CHART OF THE VANECK VECTORS SEMICONDUCTOR ETF (SMH). Thursday’s selloff sent SMH below its 50-day moving average. Other indicators show an increase in selling pressure.Chart source: StockChartsACP. For educational purposes.

Thursday’s price action reminds us that things can change quickly, especially when the market has shown indecision for a while. Any negative news will cause a massive selloff, and if it impacts a sector that heavily influences the market, the selloff can be brutal.

There’s More To Come

On a positive note, from a long-term perspective, the broader indexes are still in an uptrend. Apple (AAPL), Amazon (AMZN), and Intel (INTC) reported earnings on Thursday after the close. While all of them beat estimates, Apple’s net income was lower. This could hurt its stock price, but probably not enough to bring the entire market down.

The more important news to pay attention to is Friday’s jobs number. The October nonfarm payrolls will be released at 8:30 a.m. on Friday. As of this writing, the Fed’s probability of cutting interest rates by 25 basis points is 94.6%. Let’s see how much that changes after the jobs data comes out.

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.

As we near the end of October 2024, it’s important to note that the market trends remain quite strong.  Despite plenty of short-term breakdowns in key stocks this week, our Market Trend Model remains bullish on all time frames.  This tells me to consider this market “innocent until proven guilty” but to always be looking for signs of a potential market reversal.

A quick review of key market breadth indicators this week shows that we are indeed seeing some of the warning signs often associated with major market tops.  Does that mean the top is in, and that we’ll observe a major selloff in November?  Not necessarily.  But it does tell me to remain vigilant and observant for signs of distribution.

Negative McClellan Oscillator Suggests Short-Term Weakness

Let’s start with a short-term measure of market breadth, the McClellan Oscillator.  Think of this indicator as a sort of a momentum reading for breadth conditions.  And while other charts we’ll review address more of a long-term reversal in breadth, this indicator in particular is helpful for identifying short-term distribution patterns.

While the McClellan Oscillator did turn briefly positive a couple weeks ago, the indicator has spent most of the month of October in a bearish range.  So even though the S&P 500 and Nasdaq have made higher highs in recent weeks, this tells us that the pace of the advance is slowing, at least as measured by market breadth.

Have you taken our FREE behavioral investing course?  During volatile market periods, all of your bad habits can become pretty expensive for your portfolio!  Our free course is designed to challenge how you think about the markets, encourage you to upgrade your routines, and empower you to make better investment decisions.  Check out our free behavioral investing course today!

Another way to think about this negative reading is that some of the smaller and more speculative stocks on the NYSE have already broken down, but the largest names with the biggest weights in the indexes remain strong.  And if you look at previous bull market cycles, this is often how those long-term uptrends end.

Many S&P 500 Members Have Already Broken Down

I often use the 50 and 200-day moving averages to measure short-term and long-term trend conditions for individual stocks.  Next we’ll look at the percent of stocks trading above their 50-day moving average, showing how many of the S&P 500 members remain above their 50-day moving average.

At the end of September, the reading was around 85%.  As of this week, the number is closer to 55%.  That suggests that about 30% of the S&P 500 members were above their 50-day moving average about a month ago, but have since broken below this short-term trend gauge.  So even though the S&P 500 and Nasdaq remain above their own 50-day moving averages, plenty of individual stocks have already broken down.

Also notice the bearish divergence, with the S&P 500 making higher highs in October while the breadth indicator is making lower highs.  This often occurs toward the end of a bull market phase, where the largest names are still driving higher but more speculative and risky stocks have already begun the process of downside rotation.

Bullish Percent Index Speaks Downside Risks

Finally, let’s check out the Bullish Percent Index, a breadth indicator derived from point & figure charts.  We can see that over 80% of the S&P 500 members were in a bullish point & figure pattern in late September, but that number is now down to below 70%.

Look over the last two years when this indicator has dipped back below 70%, and you’ll see why the recent breakdown suggests a pullback phase may be imminent.  The lone exception was in January 2024, when the S&P 500 continued to pound higher even though the breadth readings were weakening.  This was the “golden age” of Magnificent 7 stocks in 2024, where the strength in the largest names was enough to overcome the breadth deterioration readings.

Could the market move higher through Q4 despite these concerning breadth signals?  Possibly.  But since major market tops usually feature breadth readings just like these, I’m pretty happy taking a more cautious approach to the equity markets as we move into November.

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.

Homebuyers are still on the sidelines, waiting for better mortgage rates, while homebuilders are gearing up for a potentially strong 2025. Despite mortgage rates hitting two-year lows, buyers are holding back, expecting rates and prices to drop further.

Here’s the big question: Are we seeing the bottom of a downward cycle about to turn up? In other words, are we seeing the early stages of an uptrend in homebuilders? And if so, which homebuilding stock might you want to add to your ChartLists?

Let’s start by analyzing the homebuilders using SPDR S&P Homebuilders ETF (XHB) as a proxy. Take a look at the weekly chart.

FIGURE 1. WEEKLY CHART OF XHB. Note how XHB has been reacting to the 50-week exponential moving average envelope.Chart source: StockCharts.com. For educational purposes.

Since XHB crossed above the 50-week exponential moving average envelope (EMA envelope) in early 2023, note the ETF’s bullish reaction, bouncing within range of the channel’s uptrend. You can also use the EMA envelope channel to gauge the strength of the uptrend (the further away it is toward the upside, the stronger the trend).

The big question: Can XHB keep riding its current uptrend? The ETF has bounced off the 50-week EMA envelope three times in the past two years, hinting at a possible trend continuation.

But not all of XHB’s holdings are pure homebuilders—companies like Home Depot and Lowe’s are in the mix too. That means you’ll need to pick your stocks wisely. So, let’s pick the most liquid and recognizable homebuilder stocks and check their technical strength by looking at their StockChartsTechnicalRank (SCTR) scores.

Homebuilding Stocks Ranked by SCTR

The following table lists the six most well-known stocks in the XHB fund and their corresponding SCTR score.

What might this look like on a year-to-date basis in terms of market performance? To get a perspective on this, take a look at each stock using PerfCharts:

FIGURE 2. PERFCHARTS YEAR-TO-DATE VIEW OF ALL STOX STOCKS’ MARKET PERFORMANCE. Note that TOL, KBH, and PHM outperformed XHB.Chart source: StockCharts.com. For educational purposes.

Year-to-date, TOL, XBH, and PHM were the top performers, but, since TOL’s SCTR score was significantly higher, perhaps it’s best to zero in on TOL, letting the other ones go for the moment. Still, add all six to your ChartLists in anticipation of a broad homebuilder recovery. Once the industry turns upward, their SCTRs will likely show changes that might make some of them more suitable for a “long” opportunity.

We’ll begin with a long-term view of TOL’s weekly chart.

TOL: Three Year Look-Back

Similar to XHB, but perhaps even more so, TOL is exhibiting a clear uptrend that is gaining strong traction. Note the pin bar this last week, signaling strong rejection from the weekly session lows.

FIGURE 3. WEEKLY CHART OF TOL. There’s a clear uptrend in the weekly price action and the stock is outperforming XHB.Chart source: StockCharts.com. For educational purposes.

Above the chart, you can see TOL’s relative performance against XHB. Looking at how far the line has risen above the zero level, you can see that TOL is outperforming its homebuilding peers by over 68%. Let’s shift to a daily chart.

TOL’s Daily Price Action

FIGURE 4. DAILY CHART OF TOL. The Raff Regression Line best captures TOL’s cyclical movement within an uptrend.Chart source: StockCharts.com. For educational purposes.

For TOL, you might consider plotting a Raff Regression Line for the following reasons:

• It identifies the trend direction.
• It captures TOL’s wide cyclical movement while projecting a wide range of potential support and resistance.
• It plots a clear channel to identify breaks and reversals.

With the regression line providing a clear picture of TOL’s trend, it’s best to use the On Balance Volume (OBV) to see the extent to which momentum supports (or diverges from) the price movement. In the example above, buying pressure aligns with TOL’s continued uptrend (see magenta line).

If you plan to go long, the best buying opportunity within the Raff Regression Channel typically occurs near the lower boundary (which attests to its recent bounce), as this area often serves as dynamic support and reflects potential price bounces. For risk management, placing a stop loss just below the lower boundary or beneath the most recent swing low is probably your best bet. This ensures protection in case the price closes below the channel, which could indicate a break in support and a potential trend reversal.

At the Close

Homebuilders are gearing up for a rebound despite homebuyers standing on the sidelines. If the industry begins showing green shoots of capital inflows (keep an eye on XHB to monitor this), it might present an opportunity to get in early on a potentially strong uptrend. But, until then, keep several homebuilding stocks on your ChartLists and monitor them regularly. For now, TOL is showing considerable strength, but, once the industry’s tide rises, it’ll take the strongest stocks up with it, so be ready.

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 the stock market hesitates to move in either direction, it becomes challenging to identify potential trading candidates. For this reason, it’s a good idea to have a checklist of items to go over during the trading day.

One item on my checklist is to run my SCTR (StockCharts Technical Rank, pronounced “scooter”) scan, which looks for stocks and exchange-traded funds (ETFs) with a SCTR rank above 76, 78, or 80. The scan results give you a good idea of which industries show technical strength. The scan is provided at the bottom of this article.

When I ran the scan on October 30 and sorted the results table by the Universe and SCTR columns, several regional banks made the list. This isn’t surprising, given that the Federal Reserve has started cutting interest rates and will likely make further cuts. The demand for consumer loans increases when interest rates are lower.

FIGURE 1. SCAN RESULTS, OCTOBER 30. Several regional banks were filtered in the scan.Image source: StockCharts.com. For educational purposes.

Naturally, I pulled up the chart of the SPDR S&P Regional Banking ETF (KRE). Since August, KRE has been in a gradual uptrend, accompanied by a rising S&P Financial Sector Bullish Percent Index ($BPFINA) and a high SCTR score.

FIGURE 2. DAILY CHART OF KRE. The regional banks are moving within an uptrend channel and have a high SCTR score and BPI.Chart source: StockCharts.com. For educational purposes.

Looking back at the scan results, I can save them to a ChartList, analyze the regional banks, and decide which ones to keep and delete. I prefer to do this by viewing the charts in CandleGlance, which I have set up with moving averages and the On Balance Volume indicator. I look to see which stocks are trending up with an OBV that’s above its 20-day SMA.

Glancing at the candlestick charts, the stocks that stand out are as follows:

• Barclays Plc (BCS)
• Cincinnati Financial Corp. (CINF)
• Fifth Third Bancorp (FITB)
• Keycorp (KEY)
• PNC Financial Services (PNC)
• US Bancorp (USB)

I transferred these symbols to my “watchlists” ChartList, which is where I have all stocks and ETFs that are in consideration. If you haven’t done so, install the StockCharts ChartList Framework to organize your ChartLists.

Analyzing Regional Banks

The next step involves analyzing each of these charts in more detail. Which ones have momentum behind them to make them trend higher? The moving average convergence/divergence (MACD) and the relative strength index (RSI) help confirm the momentum. Of the six, the three that stand out are KEY, PNC, and USB. Let’s look at these charts.

Keycorp (KEY)

The momentum looks like it’s slowing in Key Bank’s stock price (see daily chart below), which could be because it’s at or close to a resistance level.

FIGURE 3. DAILY CHART OF KEY BANK’S STOCK PRICE. KEY is in an uptrend although the momentum is slowing down. The last three bars, RSI, and MACD are showing sideways movement.Chart source: StockCharts.com. For educational purposes.

Looking at a three-year timeframe, you’ll see that the stock price is close to the February 2023 high (not shown here). The last three bars show a harami followed by an inverted hammer. So, there could be a slight pullback here, at least to its 25-day exponential moving average.

The RSI and MACD confirm the slowdown in momentum. If KEY pulls back and reverses with increasing momentum, I would consider entering a position. KEY’s all-time high is $23.44, so the stock has room for upside movement.

PNC Financial (PNC)

PNC’s chart is similar to that of KEY. The stock price is trending higher but momentum is slow at the moment. Trading volume has been relatively low in the last few days. If the RSI and MACD indicate increasing momentum and volume picks up, it will alert me to consider adding PNC to my portfolio.

FIGURE 4. DAILY CHART OF PNC BANK STOCK PRICE. PNC’s stock price is trending higher but trading volume is relatively low. The RSI and MACD are indicating slow momentum.Chart source: StockCharts.com. For educational purposes.

PNC’s all-time high is $202.80, so the stock price has the potential to move higher. It’ll first have to break out of its sideways move.

US Bancorp (USB)

Of the three, US Bank’s stock price has the most chop. The 25-day EMA was erratic, so it was removed from this chart. The 50-day SMA is a smoother measure of the overall trend.

FIGURE 5. DAILY CHART OF US BANK STOCK. USB is within a trading range. An upside breakout with above-average volume and a rising RSI and MACD crossover would be an indication of an upward-sloping trend.Chart source: StockCharts.com. For educational purposes.

KRE must break out from its sideways trading range before considering a long entry. Volume is relatively low, the RSI is moving sideways, and the MACD indicates a slowdown in momentum.

The Bottom Line

The sideways movement seen in the charts that we discussed here reflects the sentiment of the overall market. Earnings and economic data aren’t moving the market much, and trading volume is relatively low. There’s an election and a Fed meeting coming up. The Fed decision will likely have an impact on the price action of regional bank stocks. Does it mean you have to wait until November 7 to make your trading decisions? Patience is key, but if you see an upside breakout with strong momentum that’s convincing, you may have an opportunity to get in early on an upside move.

The SCTR Scan

[country is US] and [sma(20,volume) > 100000] and [[SCTR.us.etf x 76] or [SCTR.large x 76] or [SCTR.us.etf x 78] or [SCTR.large x 78] or [SCTR.us.etf x 80] or [SCTR.large x 80]]

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 exclusive StockCharts video, Joe shows a specific candlestick pattern that, when it develops at the right time, can signal the start of a new upleg. He uses NVDA, MSFT and GLD to explain how this can setup at different times and can give a timely signal to look to enter or in some cases a signal to exit. Joe then covers TNX and some commodities like Silver, Oil and Copper. Finally, he goes through the symbol requests that came through this week, including GOOGL, GBTC, and more.

This video was originally published on October 30, 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.

One of several effective StockCharts tools you can use to spot potential trading or investing opportunities is to check the New Highs panel in Your Dashboard. This feature highlights stocks hitting new highs—from one-month peaks to 52-week or all-time records—giving you a peek at where Wall Street’s capital may be flowing.

On Monday morning, the one-month new high list top 10 gave us three transportation stocks: Carnival Corp (CCL), Delta Air Lines (DAL), and United Airlines (UAL). As you can see below, Carnival, under the Consumer Discretionary sector, occupies the top spot.

FIGURE 1: NEW HIGHS FOR MONDAY, OCTOBER 28, 2024. We got a ship and two airlines. Which one, if any, might be more tradable or investment-worthy from a technical perspective?Image source: StockCharts.com. For educational purposes.

If the transportation industry seems like a suitable prospect for your portfolio, one of the first things you’ll want to do is compare the charts and drill down on the technicals. Let’s start with a PerfCharts view for a quick 200-day comparison of all three stocks.

FIGURE 2. PERFCHARTS OF CARNIVAL CORP, DELTA AIR LINES, AND UNITED AIRLINES STOCK. United Airlines took off and is now sky-high, with Delta following below while Carnival’s at the bottom with its tide rising.Chart source: StockCharts.com. For educational purposes.

With UAL clearly outpacing the other two, it makes you wonder whether the airline has enough fuel to gain more altitude or whether its trajectory is a little too vertical. Carnival, on the other hand, is the underperformer. But does that mean it has more upside to cover, and are we witnessing the beginning of a much larger uptrend?

Note: We’ll look at weekly charts because this time frame provides the clearest key levels for each stock.

Let’s start with a weekly chart of CCL.

FIGURE 3. WEEKLY CHART OF CARNIVAL CORP STOCK. Note the multiple levels of resistance overhead.Chart source: StockCharts.com. For educational purposes.

A couple of things to note:

• CCL’s StockChartsTechnicalRank (SCTR) score has hit or crossed the bullish 90 mark several times in the past four years, but it hasn’t stayed there for long. Each time it peaks, the score drops within a few months, signaling that the stock struggles to maintain technical strength for extended periods.
• CCL has four resistance levels up ahead, marked by the dotted magenta lines. If you happen to be long the stock, expect heavier profit-taking and selling pressure at each consecutive resistance level all the way up to $31.
• The stock has broken out of a long-term ascending triangle pattern, which is generally bullish. However, according to the On Balance Volume (OBV), the buying/selling momentum is narrowing as prices rise, signaling not only an intensified state of indecision but also a divergence between price and momentum.

At this point, it’s a wait-and-see, and if price pulls back, keep an eye on the top of the triangle pattern near $19.75 to see if price bounces and what the momentum looks like at that point, specifically on a daily chart. I’m not zooming into the daily chart because the key levels it will give are similar to what you can see on the weekly.

So, how might Carnival Corp. stock perform technically against UAL, which, in the PerfCharts, is outperforming CCL and DAL? Let’s take a look at UAL’s weekly chart.

FIGURE 4. WEEKLY CHART OF UNITED AIRLINES STOCK PRICE. UAL stock’s price action is similar to CCL’s, but the OBV has reversed its downward slope and is rising.Chart source: StockCharts.com. For educational purposes.

Like CCL in the previous example, UAL’s technical strength, as measured by the SCTR line, also rises above the extremely bullish 90 line, but seems to never sustain that level for too long. However, in contrast to CCL, the buying pressure driving UAL’s valuations, as measured by the OBV, reversed its downward slope and is now rising. Watch out for the Money Flow Index (MFI), which is flashing an overbought signal, indicating a near-term pullback.

Now look at Delta Airlines (DAL), the middle performer on the PerfCharts comparison. Below is the weekly chart.

FIGURE 5. WEEKLY CHART OF DELTA STOCK. The price chart displays deep swing highs and lows in contrast to CCL and UAL.Chart source: StockCharts.com. For educational purposes.

The approach to DAL will be slightly different, primarily because the stock’s main patterns are driven by swings that are much deeper and more pronounced than those in the other examples.

Note the SCTR line; as price claws its way higher, its overall technical strength, as measured by multiple indicators across several timeframes, failed to reach previous levels above the 90 line. In addition, look at the panels below the chart—the OBV and MFI readings, which both exhibit a bearish divergence in buying pressure. This signals dwindling momentum as DAL’s price establishes a three-year high.

Looking at the chart, note the ZigZag line. This marks the swing high and swing levels that must hold for the current uptrend to remain intact: while DAL broke above the swing high of $54, signaling a continuation of the uptrend, it must also stay above the swing low of $37 for the uptrend to remain intact.

To that end, I drew a Quadrant Line to measure the strength of the potential upcoming pullback, as suggested by the momentum indicators. For the bulls, a DAL pullback should stay above the last quadrant (above $41) for DAL’s technical strength to remain convincingly bullish.

Add these charts to your ChartLists and monitor their movements in the coming weeks.

Summary in a Nutshell

Each stock presents a longer-term play.

Carnival Corp (CCL)

• Opportunity: Broke out of a bullish ascending triangle pattern, hinting at potential upside.
• Risk: Multiple resistance levels ahead; narrowing momentum signals indecision, with heavy selling likely near $31.

United Airlines (UAL)

• Opportunity: Strong recent performance, with rising buying pressure and outperformance compared to peers.
• Risk: Overbought Money Flow Index (MFI) suggests a near-term pullback might be imminent.

Delta Airlines (DAL)

• Opportunity: Currently in an uptrend, breaking past key swing levels.
• Risk: Dwindling momentum, with bearish divergences in OBV and MFI. The stock must hold above key levels ($41) to maintain bullish strength.

At the Close

You will have to decide for yourself which among the three might be the stronger stock to invest in when the time comes. Again, these are longer-term plays, but if played well, they may present strong investment opportunities. Keep an eye on momentum and key price patterns that could shift.

Bottom line: Add them to your ChartLists and be ready for the next opportunity.

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

In this video, Dave digs into five market breadth indicators every investor should track as we navigate a volatile period including Q3 earnings, the US elections, and the November Fed meeting. He breaks down key insights on each of the five charts, talks about why breadth indicators are equal-weighted, and relates all of this back to the most important chart of all: the daily S&P 500 chart.

This video originally premiered on October 28, 2024. Watch on our dedicated David Keller page on StockCharts TV!

Previously recorded videos from Dave are available at this link.

As part of today’s coverage of the Magnificent Seven we remind you when the big mega-caps are reporting and give you are current perspective of each. We also cover all of the Magnificent Seven in the short and intermediate terms with daily and weekly charts.

Carl gives us his opinion on where the market is headed and what DecisionPoint signal tables are telling us about market conditions. He also covers asset classes Gold, Dollar, Gold Miners, Crude Oil, Bonds and Yields.

Erin takes the controls and enlightens us on current sector rotation trends. Momentum may be failing on some of the sectors, but Silver Crosses are still intact.

The pair finish with a look at viewer symbol requests that included RIVN, ON, SMCI and more!

01:52 DP Signal Tables

04:44 Market Overview

14:50 Magnificent Seven

24:48 Questions

30:09 Sector Rotation

35:49 Symbol Requests

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

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Bear Market Rules

The secular bull market in stocks has been epic both in duration and extent. The NASDAQ 100 Index illustrates this bull run best of all. Using Wyckoff Method classic trendline construction techniques, the chart below illuminates this secular bull phenomena. The stride of the bull market run is set with three points in 2010 and 2011. Drawing a Demand Trendline on the two reaction points and an OverBought (Supply Line) on the intervening high price, the Stride of the advance is defined for the next 14 years (and the bull run is still going strong). The upward trend has ebbed and flowed during the long advance, swinging between the Overbought and OverSold Trendline extremes. And at times throwing over and under these Trendline boundaries. These throwovers typically are long term overbought and oversold conditions. Presently the NASDAQ 100 is above the OverBought threshold of the upward channel, creating the classic Wyckoff throwover. Is this index vulnerable to a reaction back into the channel?  

NASDAQ 100 Index 2008-Present

Extremes in sentiment can be characterized by the classic equity put to call volume ratio. In the lower panel the Put/Call Ratio for CBOE equity option volume is plotted. An extremely low reading for this ratio indicates high call option volume in relation to put option activity. High call activity characterizes broad bullishness by option traders. Conversely, a high reading by this oscillator reflects extreme put volume and reflects intense bearishness. What makes this particular view of the Put/Call indicator noteworthy is the 10 Week Moving Average time frame. The long term construction of this indicator moves slowly and deliberately from Bullish to Bearish extreme and back again. This coincides well with the secular view of the upward striding NDX 100. Note the correlation of the OverBought and OverSold extremes around the edges of the trend channel and how well it syncs up with trading sentiment as defined by the 10 WMA Put/Call ratio.

Two notable conditions on the chart have recently occurred. In the third quarter (July) the NDX­-100 jumped above the Supply Trendline and became classically OverBought. Now, as the fourth quarter gets underway a Test of the July high is underway. Second, during the current Test of the July high the 10 WMA of the Put/Call Ratio has suddenly tumbled down into extreme call volume readings signaling that sentiment has become bullish and frothy, on a longer term 10 week basis!

Sentiment indicators are best evaluated as environmental in nature. Thus signaling that the upward trend of the stock market has suddenly become crowded with bullish speculators and investors. Sentiment indicators tell us when the rewards relative to the risks are high or low. The long term Put/Call Ratio now signals that bullish reward potential is diminished, and the risks are high. 

Wyckoffians would be watching the relationship between the NDX-100 index and the Overbought trendline. Often a decline back into the trend channel from an OverBought condition leads to volatility and a decline toward the Demand Line and an OverSold condition. Note also the position of the 39-week moving average (red dotted line) which is poised at the same level as the upper trend channel line. A drop of the NDX-100 into the channel would breach both of these noteworthy lines. 

All the Best,

Bruce

@rdwyckoff

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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