It is no secret that the NYFANG+ Index is still in in incredible up-run after bottoming out in October last year and subsequently breaking significant overhead resistance around 8.000. In the last 3-5 weeks, the index stalled just below 10.000 and moved sideways.

Split Universe

However, under the hood, some big moves are taking place. These are clearly visible on the Relative Rotation Graph.

On the weekly RRG, the split between the individual stocks in this universe is clearly visible. AMD, NVDA, META, and NFLX are all inside the leading quadrant AND in a positive RRG-Heading. AMZN is inside the lagging quadrant but very close to the benchmark and on a positive RRG-Heading. TSLA, AAPL, GOOGL, and MSFT are inside lagging AND on a negative RRG-Heading. Also on a negative RRG-Heading, but inside the weakening quadrant, is SNOW. MSFT is the only stock inside lagging, not on a negative or a positive heading.

Given the incredibly steep rise of the market (NYFANG), entering new long positions at current levels means taking a lot of risk. In no way does this mean selling when you hold the index or the stronger stocks in this group. The trend is undeniably still up. But as we all know, the longer and the steeper a trend gets, the higher the risk is getting.

Still, looking for some trading action, I would prefer looking at some pair trading opportunities.

The Long Side

The candidates for the long side of a pair trade would be NVDA, META, AMD, NFLX, and AMZN.

Looking at the individual charts of NVDA, META, and AMD, they are on almost vertical trajectories and very deep inside the leading quadrant. This leaves NFLX and AMZN as potential candidates, as they seem to have some upside potential left in them.

AMZN or NFLX

Looking at both charts, I see that they look very similar. Both have recently broken overhead resistance and both are underway to test their respective all-time high levels.

The upside potential, measured from current levels to ATH for NFLX, is around 14%, whereas, for AMZN, it is only 6%. Combine that with the tail for NFLX already being inside the leading quadrant and at a strong RRG-Heading while AMZN is still inside the lagging quadrant (on a positive heading), and my preference goes to NFLX. It has more price potential and has already made the turnaround from a relative downtrend to a relative uptrend.

The Short Side

The candidates for the short side of a pair trade would be coming from TSLA, AAPL, GOOGL, or SNOW. And to be honest, all four would be good candidates. However, AAPL and TSLA are relatively close to their support levels, where demand might pick up. Maybe only temporarily, but still, I have to assume that it might stall any immediate further declines.

GOOGL or SNOW

That leaves GOOGL and SNOW for further inspection.

The downside risk/potential for both, towards their next support levels, is quite similar, around 12-13%. However, the tail for GOOGL is already well inside the lagging quadrant and has just confirmed the already existing downtrend in relative strength by breaking below its previous relative low. This makes me lean a bit more toward GOOGL as the short candidate, but equally good arguments can be found for SNOW.

You could even think about a three-legged position, with NFLX on the long side and GOOGL and SNOW, each being half of the short side.

Such an approach would still get you “in the game” while being agnostic to general market direction.

#StayAlert and have a great weekend. –Julius

If you ran a StockCharts scan for Runaway Gaps (Runaway Gap Ups) on Thursday, you would have come across only 12 stocks. Among them, the most recognizable name was Novo Nordisk A S (NVO), the Danish pharma company best known as the developer of the popular diabetes II drug, Ozempic.

Having already gained 26% since January, NVO jumped over 9% after reporting successful early trial results for its new weight loss drug, amycretin. Trial participants who took the drug achieved an average weight loss reduction of 13.1% over a 12-week period.

Wall Street sentiment is betting on the possibility that this new drug will be just as big as, if not bigger than, Ozempic, and some investors want to get in early. It’s easy to see why by simply looking at a weekly chart plotted over five years, covering the time when Ozempic became mainstreamed not only as a diabetes drug, but as a weight loss drug.

CHART 1: WEEKLY CHART OF NOVO. Notice the significant strength and momentum of the uptrend over a five-year period. The demand for weight loss is virtually “inelastic” these days.

Looking at the 50-, 100-, and 200-week Simple Moving Averages, not only are have they been fanning-out in full sail since Ozempic ads have began penetrating the mainstream consciousness, but NVO appears to be stretching the MAs to breaking point (if you can imagine such a thing), defying gravity with only the slightest indication (yet) of a potential pullback.

The daily picture gives us a clearer picture, not only of the strength of NOV’s performance, but of potential entry points should you want to go long.

CHART 2. DAILY CHART OF NVO. Not only does this look like a microcosm of the longer-term weekly chart, it also illustrates a similar trend relative to the broader market, its sector, and industry.

Runaway gaps, characterized as strong bullish continuation patterns, are located in the middle of a trend. But trends can only be confirmed looking backwards; we’re not there yet. So, are we looking at an exhaustion gap instead, one on the verge of a pullback?

Note the divergence between NOV’s price surge and the Money Flow Index (MFI) reading. As a volume-weighted RSI of sorts and an indicator to gauge momentum and anticipate possible reversals, the divergence we’re seeing hints at a potential dip in NVO’s share price.

Despite this, note NVO’s strong outperformance relative to the S&P 500 (+17%), its own sector via SPDR Health Care Select Sector Fund XLV (+20%), and the Dow Jones U.S. Pharmaceuticals Index or $DJUSPR (+23%).

The 50-day SMA and the Kumo segment of an Ichimoku Cloud has been plotted to show a potential landing point if a pullback were to occur. And if NVO were to pull back now, drawing a Fibonacci retracement from the October 2023 low would give us a 50% level right at $112.50, so we’re looking at the range, mostly covered within the “cloud.”

The Bottom Line

But here’s where you really have to think for yourself. Ozempic fever drove NVO’s seven-year uptrend, and arguably, it isn’t over yet. The most recent surge is driven by sentiment and speculation surrounding that amycretin will bolster and continue NVO’s winning streak. The $112 to $118 range may be a reasonable “technical” entry point, but with a PEG (Price to Earnings to Growth) ratio of 4.87, it’s far from being undervalued.

How to Run a StockCharts Scan

Finding the right stocks and exchange-traded funds (ETFs) to trade can be tricky. But with a little work, you can create a strategy that identifies a few promising prospects.

Fortunately, it isn’t too hard to learn how. Just stick to these steps:

Select (or create) a few different scan criteriaBe sure to run these scans regularlyAnalyze the stocks (or ETFs)  that your scan has identifiedDetermine your overall trading setup (including your entry and exit criteria)

The StockCharts Scan Engine is useful for narrowing down stocks and ETFs that match certain requirements. It comes with a bunch of ready-made scans that are a good starting point. As you get the hang of these scans, you can adjust them or create new ones that align with your trading goals.

For example, this article was prompted by a Runaway Gap Ups scan. As you can imagine, there are plenty more scans you can run. Try out the StockCharts Sample Scan Library (Charts & Tools > Sample Scan Library)

In this edition of StockCharts TV‘s The Final Bar, Grayson and Dave run through the 10 charts they feel present actionable opportunities based on their technical analysis setups. They’ll cover breakout strategies, moving average techniques, relative strength, and much more. And you’ll have ten new charts to review through the month of March!

This video originally premiered on March 8, 2024. Watch on our dedicated Final Bar page on StockCharts TV!

New episodes of The Final Bar premiere every weekday afternoon. You can view all previously recorded episodes at this link.

NVIDIA (NVDA) was enjoying quite a rally to start the day. All seemed right with the world. Someone recently said to me, regarding another company, that it was “a victim of its own success.” This is what happened to NVDA.

It appears that the ceiling was reached for investors, who were ready to take profits and move on. Over the prior six days of trading, NVDA was up over 19%. It was time for some profit-taking.

Today’s decline did set up a bearish engulfing candlestick that would imply more downside ahead on Monday. But will it really herald more selling? We saw that decline before earnings, and it didn’t turn into much. It’s time for a pullback, or at the very least consolidation, but we wouldn’t be at all surprised if this powerhouse defies gravity further. It wouldn’t be a bad idea to get a stop set here to preserve profits, just in case this does signal a more concerted decline.

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

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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.

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Bear Market Rules

Make absolutely no mistake about it, Friday was the most bearish day of 2024. There was a bearish engulfing candle on MASSIVE volume in the semiconductors area ($DJUSSC), and this group has been BY FAR the biggest single reason why our major indices have advanced as much as they have. Check out this chart:

That’s a NASTY bearish engulfing candle on the semiconductor chart. And the reversal occurred on the second largest volume of the past 6 months. I believe today’s open marked a very significant top on the DJUSSC. That doesn’t mean the overall market rally has ended. But I do expect to see other areas of the market lead the next advance. At a minimum, I’d expect at least short-term consolidation or selling among semiconductor stocks. That’s not a bad thing, it’s a necessary thing. Continuing higher in parabolic fashion would only end in a much more substantial pullback.

But huge rallies do not always end in despair. In fact, most just keep on truckin’!

Let’s check to see how the rally off the October 27th low measures up against other periods over the past few decades, first on the S&P 500 and then on the semiconductors index ($DJUSSC):

S&P 500:

The blue-dotted vertical lines coincide with every 90-day period in which the S&P 500 gains 25% or more. Prior to the current 25% gain in 90 days, you can see that it’s only been achieved a handful of other times over the past 30 years. The black arrows tell you that every one of these 25% rallies occurred AFTER a significant bear market bottom or correction low. This is the importance of calling major market bottoms, because the biggest gains take place on the heels of these bottoms.

Next, check out what happens to the S&P 500 after these 25%+ gains are made. It keeps going higher! We are in a secular bull market. If you have been waiting to get into this rally, I’d consider using any short-term weakness to do so. That’s my opinion, of course. I’m not a Registered Investment Advisor and, therefore, am not licensed to provide recommendations. I’m simply providing educational materials based on my research. Do with it what you will.

Semiconductors ($DJUSSC):

Here, the blue-dotted vertical lines coincide with 90-day periods where the DJUSSC gains at least 50%. Again, this has only happened a handful of times. Right now, the last 90 days has resulted in a gain in the DJUSSC of more than 75%, which eclipses any other semiconductor rally over the past 30 years. The group needs a break.

Should semiconductors stall here, I’m still very encouraged by the small cap asset class. On Monday, I’ll be analyzing a tiny software company that this week broke out of a cup with handle pattern on crazy high volume. It potentially could gain 40-50% over the next few months to its pattern measurement. To check it out, you can CLICK HERE to subscribe to our FREE EB Digest newsletter with only your name and email address. I’ll send you this tiny software stock on Monday morning.

Happy trading!

Tom

Feel like you never find those high-flying stocks before they make their big moves? This week’s edition of StockCharts TV‘s StockCharts in Focus is for you! Grayson walks you through the 3 simple steps he uses to find, track and trade the market’s strongest stocks – the same system that allowed him to pinpoint SMCI before it’s +200% gain! Learn how to take scans for stocks making new highs and schedule them to save the results into your StockCharts account automatically each trading day.

This video originally premiered on March 8, 2024. Click on the above image to watch on our dedicated StockCharts in Focus page on StockCharts TV.

You can view all previously recorded episodes of StockCharts in Focus at this link.

Pete presents the 100th and final edition of StockCharts TV‘s Halftime! This week, Pete shares some parting tips on what to look for when the trends change from defense, (risk off) to offense (risk on). He explains how he saw them coming and how the Chaikin Power Gauge did as well.

He then looks at some market metrics that he has shared along the way and goes into his thoughts on the recent job report. Not only did that happen but GOLD hit an all-time high today of $2200 an oz. And that was Pete’s target he set over a year ago! In addition, Pete had a target of 5400 on the SP 500, and it nearly got there this month. He goes over the exact turning point that he called out on 12/28/2022 and shows you how it did it.

So it is with great honor and gratitude that Pete signs off today. But that won’t be the last time we’ll see him; Dave Keller will be scheduling Pete on the Final Bar shows in the near future. So stay tuned! It ain’t over yet!

This video originally premiered on March 8, 2024. You can watch on our dedicated Halftime by Chaikin Analytics page on StockCharts TV.

You can view all previously recorded episodes of Halftime by Chaikin Analytics with Pete Carmasino at this link.

In this episode of StockCharts TV‘s The MEM Edge, Mary Ellen reviews the broader markets amid last week’s pullback. She also highlights sector rotation taking shape as Growth stocks pull back. With Bank stocks outperforming, she shares how to use StockCharts to uncover top candidates.

This video originally premiered March 8, 2024. Click here or on the above image to watch on our dedicated MEM Edge page on StockCharts TV.

New episodes of The MEM Edge 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.