Charts To Watch!

Hello Traders,

We’ve wrapped up a notable week in the markets this past week. With the Nasdaq falling over 2% on Thursday, as the number of stocks making New-Highs spiked higher, while simultaneously the Russel 2000 jumps over 3.5%. This shows a clear rotation out of big cap tech stocks, into small caps. I think many of us have likely been expecting a rotation of this nature to occur at some point in the near future, if this bull market is to broaden. But like many occurrences these days, it happened fast and abruptly.

I expect it to take some time for this rotation to play out, and for new charts to emerge with strong technical set-ups, given this rotation continues. Who knows, maybe this rotation stops in its tracks next week and reverts back to more of the same big cap tech leadership we’ve been used to. We are in too early of innings to say for certain just yet.

Nonetheless, certain areas of the market have perked up and will be high on watch, as well as some individual names are showing strong technical set-ups currently.

TICKERS:

XLF, XLV, XLB, XHB, XLI, IYT, MDY, CIBR, CARR, FCX, ALC, ENTG, WPM, URNM, BRK.B, MS, ROST, PEG, BX, HLT, TEL, HLN, IR

Let’s get into the charts:

XLF: Financials as a whole look quite strong. Price has formed a large multi-year basing pattern. Price broke out of this base earlier this year and has traded sideways just above resistance for several months. Price is now beginning to curl higher. Many individual names within this space have strong charts. I anticipate this to resolve to the upside. However, keep in mind we are amidst earnings for many of the financial names which will impact things going forward.

XLV: Health Care as a whole looks great as well. Another multi-year base followed by a big breakout at the end of January. Price went on to retest what was once resistance (blue line), which now this area has acted as support. Currently price is retesting the previous highs and looks like it may want to test new all-time-highs.

XLB: Materials with a large multi-year base. Price made a weak breakout attempt earlier this year. There wasn’t much in terms of follow through after the breakout as price really just pulled back and consolidated for several months. As of last week, price has perked up, showing early signs of life, however, time will be needed to determine if this is anything meaningful.

XHB: Homebuilders spiked higher last week. The primary trend in this space is up, however, price has been consolidating for several months after having made a monster move entering the new year. A consolidation following a move like this is extremely healthy and needed to set-up a new leg higher. I’ll be watching this area closely to see if we can breakout to fresh new highs.

XLI: Industrials with the exact same set up as Homebuilders. Price broke out of a multi-year base, and price has been consolidating for several months now, digesting the recent price move. Very constructive price action all around. I will be watching to see if we can breakout to new all-time-highs.

IYT: Transportations set-up is a bit different. We never officially had price breakout of this multi-year base. With that said, for the third time price rejected the upper resistance line this past March, which is logical place for price to pull back. I am watching to see if price can curl back up and retest this resistance line once again. I like the risk to reward opportunity here, as we have risk clearly defined. If price is to break below the May lows ($62), then all bets are off. If price can hold over this level and resolve to the upside, we could test the upper resistance line($70), and potentially break to new highs.

MDY: MidCaps with another multi-year base breakout. But price mainly consolidated sideways following the breakout. Last week we got a nice spike in price, showing some positive signs of broadening market participation. Nonetheless we will need more time and price confirmation. But as long as price stays over the blue line I am interested.

CIBR: Cybersecurity displaying a nice Cup & Handle patter. Price formed a nice big base (cup) and after rejecting the former highs, price has since consolidated, forming the handle of this pattern. Volume has perked up over the past few weeks, and price is already resolving higher. This chart looks actionable right where it sits.

CARR: Carrier Global formed a nice Cup & Handle patter, with a clean breakout April. Price has since been consolidating tightly over previous resistance and is looking poised for higher prices. If we can get a weekly close over $66.50 area, this would signal the next leg higher.

FCX: Freeport-McMoran with a multi-year base. Price tried to breakout to new 52-week highs in May, but failed to resolve higher. This same level acted as resistance back in April, 2022. This is a logical place for a pull back. Currently price is consolidating right under this resistance level. I’m watching for a breakout over this resistance line to signal a new leg higher.

ALC: Alcon with a multi-year base breakout. Price has broke out and is currently consolidating right over resistance. There has been some nice volume coming in over the past few months as well. The chart is actionable as long as price holds over the blue support line.

ENTG: Entegris price has been stair stepping higher for the past 18 months and looks like it may want to make another push to the upside. Around $157 are the previous all time highs, which is where I expect some resistance to be met. However, if price can push up to test these highs, and consolidate, it could potentially set-up a breakout to new all-time-highs. I’m waiting for a clean breakout over the slanted resistance line as a signal.

WPM: Wheaton Precious Metals is breaking out of a massive multi-year base. As both gold and silver are amidst strong trending moves, I would expect this to continue to the upside. As long as price remains over the blue line this chart looks actionable.

URNM: Uranium Miners broke out in January, but since, have had really choppy price action. As I’m seeing more of the commodities and metals show positive signs, I anticipate Uranium to participate. This is a relatively low risk to reward set-up, since risk is clearly defined with the current support level (blue line). If price holds over the blue support line then I remain interested. If price crosses below, then all bets are off. Since price is sitting just above this level, it offers for a good risk to reward opportunity.

BRK.B: Berkshire Hathaway is breaking out of clean multi-month base. The primary price trend has been up, and with a base breakout amidst a primary uptrend, I can’t help but think this continues to the upside.

MS: Morgan Stanley is forming a huge multi-year base. Price is coming back up to previous cycle highs and testing those levels. The chart is not actionable yet, as we need to see price cross over the blue resistance line to signal new highs. Earnings are next week, so this chart will be on watch until after earnings.

ROST: Ross Stores chart showing a nice Cup & Handle pattern. Price broke above a clear resistance level at $150, signalling a potential leg higher. As long as price can hold over the blue line, I am interested in being long.

PEG: Public Service Enterprise Group with a clean multi-year base breakout to new all-time-highs last week. Price tightly consolidating for a couple of months right under resistance before breaking out. I like when I see this kind of price action, as these consolidations under resistance often help set up the next move higher. If price holds above resistance I am very interested in being long.

BX: Blackstone forming a Cup & Handle like pattern, with a big base formed followed by a tight consolidation. Price still needs to break above the red slanted resistance line to signal the next move higher. But overall price action looks constructive and this chart remains on watch for a breakout.

HLT: Hilton with a multi-month base breakout. Price consolidated right at resistance for several weeks before beginning to turn up last week. If price can stay over the blue line I am interested in being long.

TEL: TE Connectivity is looking to complete the last portion of the right-side of this massive base. I’ll be looking for price to test former highs around $166.69 area. I would expect some resistance around this area, as these are the former cycle highs back in November, 2021. I would expect some price consolidation at this level before any attempts at new highs.

HLN: Haleon chart looks primed for a breakout. This technically wouldn’t be the IPO base as the IPO base breakout occurred in April, 2023. However, price failed to follow through after breaking out, and since has been in a continuous sideways consolidation. If we can print a closing price over $9 I would be very interested.

IR: Ingersoll Rand chart with a really clean multi-month base breakout. Price has formed a tight consolidation (or base) for several months and just broke out last week. The primary trend is up, and I expect price to continue higher.

Many of these charts share the same characteristics, big basing patterns, and price pushing to new highs. This type of price action is positive and very constructive. If price is pushing to new highs, it is more likely to continue in that direction, hence the trend is your friend.

There are many areas of the market which are showing positive signs, but we still need to see further price confirmation of the broadening we are beginning to see. Nonetheless there are many actionable charts out there to participate in. It’ll be interesting to see how things develop next week. I’ll let price determine that, nothing more.

Have a good week!

Noah