Drawing a Line in the Sand on Three Tech Bellwethers
Let's look at NVDA, AVGO, and AMD. All three are sitting on support. It would be worrisome if they broke down from here.
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The Market
Once again, 6800 held. I’m beginning to think it is a conspiracy against me!! But holding that level means very little changed in the market.
I wish it weren’t so. I wish I could tell you that this broke out or that broke down, but nope, that’s not the case.
I wish I could tell you breadth was bad, or breadth was good. Or it moved enough to change the indicators. But that too didn’t happen. Neither did anything of note in the number of stocks making new lows.
I can’t even tell you sentiment changed because what I see is partly a sigh of relief, partly folks saying the fact that we couldn’t break is bullish, and yet the options ratios show very little change. For example, the ISE drifted over 2.0 (to 2.18), but heck, it was 2.42 last week. So it’s not as though call buying was rampant. Nor was put buying.
I do see there is definitely more of a desire to start calling a bottom in software, as it held up well on the day. I still think software is in a bottoming process, and for the time being we can trade them, but on a longer-term basis we will have to wait and see what shakes out, which stocks form bases and which ones don’t.
Then there are the financials. That seems to be where all the attention has focused now. I like that many of them were down and reversed. I’m not yet convinced they are out of the woods yet.
But it is the semis I want to highlight today. Sure, Nvidia (NVDA) rallied, and thus, there was a sigh of relief. Once again, I will note my view on NVDA is that as long as it stays over 170, it hasn’t done anything wrong.
But now I want you to look at three well-followed semi stocks. One of them has earnings this week, Broadcom (AVGO) . I typically wouldn’t comment on a stock with earnings, but here too, my view hasn’t changed: break 300, and there’s a problem. Hold 300, and it’s still just a giant sideways.
Here’s the line at 170 on NVDA.
Here’s the line at 300 on AVGO (I‘ll even give it leeway to 290).
Finally, here’s the line on Advanced Micro Devices (AMD) . 190 has held about six times since November.
I am not sure I have ever seen three important stocks in the same group with such clear levels. I’ll grant you AVGO is fuzzier than the other two, but I think you can take oil off your screen (everyone else is watching it and screaming about it) and put these three on your list. Those three levels have become like 6800 on the S&P.
Finally, I do want to note that the VIX jumped up today, making it the only instrument I watch that came out of its range (this is good).
New Ideas
For months now, I have been asked on a regular basis about Boeing (BA) . My view has been that I wanted to buy it on a pullback. It is finally pulling back (down about ten percent). I’d love it to rally a bit, come down one more time, and then go (drawn in blue). But for those who have been waiting, we’re getting there.
Today’s Indicator
The 30-day moving average of the advance/decline line is not yet oversold. I expect we will see it rise for a day or so and then back down again.
Q&A/Reader’s Feedback
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I was bullish on (TLT) a few weeks ago, but now I am not. I am not bearish; I just don’t want to buy TLT up here. My view remains that TLT (bonds) is mostly in a wide trading range, and each time we get near the top of the range, we should look to sell, and near the bottom, we should look to buy. At some point, that view will change because the chart will change. I suspect if TLT drops back anywhere near that 88 level, I will warm up to it again. For now, I am simply neutral.
We can add Best Buy (BBY) to the list of stocks that have revisited the area of the Tariff Tantrum lows. I think it is oversold enough to rally from here. However, I think I am going to need to see more signs of holding and basing before I find comfort in the chart again.
I still think Arm Holdings (ARM) is okay as long as it holds over this 120 area. If it can hold over it and rally again, then I think that little gap fill around 140 is still in play.
I remain positive on the chart of (XME) as long as it doesn’t break 110. But it really needs to rally with more oomph because right now it’s creeping upward, without much life. I would like to see it map out as I have drawn in blue.
