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Technology Sector Review: 11/21/24
It Is Still a Software World: Software is still where it's at. There is much better breadth in the subgroup and the IGV is just 2% off its most recent 52-week highs while the SMH is 14% off its annual peak (seen visually here with the ratio chart of the IGV against the SMH). We did speak on this topic recently being impressed at the ETF's strength given that MSFT has been lagging. Others have been picking up the slack like the second largest component in ORCL which sports a bull flag pivot of 192 and a break above could carry a measured move to 217. Fellow top ten holding NOW is dealing with round number theory at the very round 1000 number and looks headed toward 1075 after a break above a cup base at the round 700 figure in February. Getting back to the IGV, this broke above a 4-week tight pattern, a William O' Neill favorite, (with the 4 weeks ending between 10/11-11/1 all CLOSING with a 92 handle) the week ending 11/8 which jumped 9.7%, narrowly missing its first double-digit WEEKLY advance since the week ending 11/11/22. As of Wednesday's CLOSE, it is back above the high of that WEEKLY range. PANW reports after the CLOSE too, and although it is not as important as NVDA to the SMH it recently broke above a bull flag and is currently dealing with the very round 400 number.
Consumer Sector Review: 11/20/24
Breadth Booming: Is there something going on under the surface with the consumer feeling ebullient? The data may not support that belief but as a technician, my philosophy is that charts do not lie (and they tend to look ahead 6 months). The daily chart below of the more "equal weighted" consumer ETF in the XRT shows a possible move back above a bullish ascending triangle. These types of situations can be powerful if a failed breakout gets bears excited but reclaims the pivot level again in quick fashion thrusting back above. We have been vocal about the MONTHLY charts too whether it be the cup with handle or the bull flag scenario, with those bases taking shape after a sharp rejection at the very round par number in November 2021 with the shooting star candle. The ratio chart comparing the XRT to the XLY still shows the preference of investors wanting mega caps, except for the last 3 weeks of July with the XLY in command. Of course, the reason is the power in TSLA and AMZN. Tesla has now given investors an add-on buy point above a 350 bull flag pivot that would carry a measured move to 460 and Amazon is showing a newfound affinity for trading above the very round 200 number, a level of prior support this summer. That prior ceiling is likely now a floor and Tuesday's bullish engulfing candle heightens the bullish theme.
Industrial Sector Review: 11/19/24
Industrial Revolution: The industrials were the worst-performing major S&P sector (the only of 11 lower on the day) held down by the soaring airlines and defense names. Perhaps yet another clue that there was going to be a change in administrations, was the action of some of the big players in the ITA. LMT, for example, has now shed almost one hundred handles since an attempted break above a bull flag was met with a doji candle and a spinning top on 10/18 and 10/21. It looks headed back toward the very round 500 number which could possibly start a double bottom base. HII is another one that has felt the pain not long after a double top at the 280 level with a bearish engulfing candle on and back-to-back spinning top candles on 8/1 and 8/29-30. Below is the daily chart of the XLI and notice for 6 consecutive sessions it has CLOSED in the lower half of the daily range and is now back under the intraday lows of the election results. Its WEEKLY chart has still yet to meet its measured move to 155, which could happen into year-end. It is still above the bearish evening star pattern the week ending 10/25 and last week recorded a dark cloud cover candle. Its northward progress will not be a straight line up but a grinding one. Invest accordingly.