Stocks

Let’s be real. How many of you kicked yourselves for not jumping into some long positions last Friday?

Of course, hindsight is 20/20, and unless you’ve got a crystal ball, there’s no sure way to know what the market will do next. What you can do, though, is be ready for the next opportunity, and one stock that’s flashing signals is Super Micro Computer, Inc. (SMCI).

Super Micro Computer has had a rocky ride. The company was delisted from the Nasdaq in 2018, after there was a report of possible accounting issues by Hindenburg Research, and it risked being delisted from the Nasdaq again in February 2025. SMCI managed to get its act together, filed its 10-K, and clawed its way back into compliance. Now it’s back on the SCTR radar, and with a current reading of 99 — an impressive move. As such, the stock has made its way into the Top 10 StockCharts Technical Rank (SCTR) report in the Large Cap category. Will it muscle its way back into the top three like it did in early 2024?

SMCI Stock’s Journey

The three-year arithmetic scale weekly chart of SMCI below shows the stock price rising higher and making a steep vertical upward move in 2024. SMCI’s stock price hit a high of $122.90 on the week of March 4. From there, things weren’t great. The stock price faced headwinds, bringing the stock price to a low of $17.25 by mid-November 2024. SMCI’s stock price has been grinding higher, carving out a series of higher lows.

FIGURE 1. WEEKLY CHART OF SMCI STOCK. After hitting a high of $129.90 in early March 2024, the stock tanked to $17.25 by mid-November. It is starting to show signs of recovery, but how far will it go this time?Chart source: StockCharts.com. For educational purposes.

From a weekly perspective, SMCI looks like it’s regrouping, and this week’s spike might just be the shot of adrenaline it needs.

The Daily View: A More Granular Perspective

A partnership with Advanced Micro Devices (AMD), a Saudi Arabian data center deal, and a couple of analyst nods may have had something to do with SMCI’s stock price gap up on Wednesday. But let’s shift away from the headlines and talk technicals (see daily chart of SMCI below).

FIGURE 2. DAILY CHART OF SMCI STOCK. The stock gapped up on Wednesday. Will it continue higher, or will the gap get filled? Chart source: StockCharts.com. For educational purposes.

SMCI has broken above its 200-day simple moving average (SMA) (even if it’s still sloping downward … a small detail not to be overlooked).The relative strength index (RSI) is getting close to its 70 line, indicating momentum is heating up.The percentage price oscillator (PPO) is crossing above its zero line.And again: SMCI’s SCTR score is at 99.1, a position of technical strength.

Is It Time to Get In Front of SMCI?

You know the drill. Timing a trade is about strategy. There’s always the temptation to hit the buy button, but rushing in can lead to expensive regrets. Ever place a limit order and end up canceling it because your nerves got the better of you? We’ve all been there.

Gaps like the one we saw in SMCI on Wednesday are tricky. They often get filled, but not always. So, in the case of SMCI, it may be worth waiting for the dust to settle. This is where patience becomes your superpower. 

An ideal scenario would be a pullback in price to perhaps the 200-day SMA, followed by a reversal. If the RSI breaks above 70 and the PPO rises above the zero line, it would confirm the necessary follow-through to push the price higher. Wait for the ideal setup before you make your move.

In other words: Don’t chase. Let the trade come to you.

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 S&P 500 ($SPX) just staged one of the sharpest rebounds we’ve seen in years. After tumbling into deeply oversold territory earlier this year, the index has completely flipped the script—short-term, medium-term, and even long-term indicators are now pointing in a new direction.

One longer-term indicator that hit an extreme low in early April was the 14-week relative strength index (RSI), which dropped to 27. That’s among the lowest levels since the 2008 financial crisis.

The obvious takeaway: it was a great time to buy, even in cases where the low RSI didn’t mark the low. Everyone who pounded the table a few weeks ago has been proven right, even if the rebound was faster and stronger than most could’ve predicted. So, what happens next?

Don’t Expect a Straight Line Up

The long-term picture looks promising, but markets rarely move in a straight line. Even though the market was higher months and years after these deeply oversold readings, the path wasn’t a straight shot to new highs (even if long-term log charts sometimes make it look that way).

The chart below shows the lowest weekly RSI readings in the S&P 500 since 2008.

FIGURE 1. THE LOWEST WEEKLY RSI READING SIN THE S&P 500 SINCE 2008.

Almost every time, there was a pause, often more than one. Some were sharp, others more prolonged. The first real test typically came when RSI bounced back to the 50-zone (the mid-point of its range). Each of these moments is highlighted in yellow in the chart below.

FIGURE 2. AFTER DEEPLY OVERSOLD RSI READINGS, THERE WAS OFTEN A PAUSE IN THE INDEX.

As shown, this often marked the initial digestion phase after the face-ripping rally off the lows. Eventually, the SPX climbed back to a weekly overbought condition, but not right away. This pattern was clearest in 2011, 2015–16, and 2022. The depressed weekly RSI showed that things were getting washed out, but volatility persisted before a lasting uptrend took hold.

Indeed, the current snapback is one of the quickest and most powerful turnarounds in decades, but this pace is also unsustainable. A slowdown is inevitable.

So how does the market handle the next round of profit-taking? By continuing to make higher lows – and converting those into additional bullish patterns.

XLK Makes A Comeback

The market comeback has been led by large-cap growth; that much is clear. The Technology Select Sector SPDR ETF (XLK) has roared back nearly 30% in just six weeks. That’s a massive move in a short period, and far larger than any failed bear market rally seen in 2022. The best six-week rally back then came in the summer and topped out at 17%.

The last time we saw a six-week gain of 20%+ was the period following the COVID-19 low in spring 2020. As we know, that snapback continued, with XLK overtaking its pre-crash highs and ultimately rallying 160% into the early 2022 peak.

This isn’t a prediction, but we shouldn’t ignore it either. Why? Because before 2020, the last such move happened in April 2009, right after the ultimate low of the 2008 financial crisis.

FIGURE 3. WEEKLY CHART OF XLK.

Industrials are Building Strength Too

The Industrial Select Sector SPDR ETF (XLI) and XLK are the first sector ETFs to register overbought 14-day RSI readings. While that suggests a short-term pause could be near, it wouldn’t be a negative. As the weekly chart shows, a pullback could help complete a large bullish formation.

Once again, bouts of intense volatility eventually can lead to the biggest bullish chart formations. Let’s keep XLI on our radar screens.

FIGURE 4. WEEKLY CHART OF XLI.

Even Solar Stocks Are Waking Up

The Invesco Solar ETF (TAN), which has been stuck in a brutal downtrend for years, just rocketed higher by 40%, using intra-day highs and lows. That rally has produced the first overbought reading since late May 2024, which, notably, lasted only a day before momentum faded.

Yesterday, TAN tagged its 200-day moving average, prompting a round of profit-taking. This sets up a critical test for TAN, which has consistently failed at resistance or after short-term pops. Selling strength in TAN has been a highly effective strategy for quite some time.

FIGURE 5: DAILY CHART OF TAN.

The weekly chart clearly shows this pattern playing out since TAN topped in early 2021. Like anything else, TAN could eventually turn the corner—but to do so, it would need to form a legitimate higher low from here.

For now, the downtrend deserves respect. Chasing this move is not advised. Selling strength remains the recommended approach—until proven otherwise.

FIGURE 6. WEEKLY CHART OF TAN.

The Bottom Line

Yes, the market’s comeback has been fast and fierce. But fast moves don’t necessarily mean a straight path higher. Expect slowdowns and pullbacks, watch for bullish setups, and don’t chase runaway rallies. There’s opportunity out there, but it’s all about timing and discipline.

Want to know how to find strong stocks in a volatile market? In this video, Joe uses Relative Strength (RS), Fibonacci retracements, and technical analysis to spot top sectors and manage downside risk.

Follow along as Joe breaks down how to use the Relative Strength indicator to separate outperforming stocks from those failing at resistance. He highlights sectors showing strong or improving RS, discusses the Fibonacci retracement on QQQ, and explains what it means for downside risk.

Joe wraps up with detailed chart analysis on viewer-submitted symbol requests, including QTUM, HOOD, and more, to help you sharpen your trading decisions with expert insights.

The video premiered on May 14, 2025. Click this link to watch on Joe’s dedicated page.

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.

For months, investors have been on edge over U.S.-China tariff tensions, bracing for everything from fears of empty shelves to rising prices. But after this weekend’s trade talks, where both sides agreed to temporary tariff cuts (emphasis on temporary), stocks surged.

On Monday, the Dow Jones Industrial Average ($INDU) jumped 1,160 points, while the S&P 500 ($SPX) and Nasdaq Composite ($COMPQ) rallied 3.26% and 4.35%, respectively.

Monday’s rally sparked hopes that the worst may be over. Yet analysts remain split: some see signs of a bottom, while others warn this 90-day pause is just the start of a long, messy negotiation.

So here’s the critical question: If this is the bottom, which sector (or industry) leads the rebound, and is it worth investing in it right now? For investors, the answer could be the difference between riding the next bull wave or watching it pass by.

Nasdaq-100 Shows Strength, but Which Sector Leads?

Checking StockCharts’ Market Summary midday on Monday, the Breadth panel showed that the tech-heavy Nasdaq 100 ($NDX) had the most percentage of stocks (62%) trading above their 200-day simple moving average (SMA), indicating early strength and recovery (displayed in the Moving Averages tab).

FIGURE 1. MARKET SUMMARY – INDICES TRADING ABOVE 20 TO 200-DAY MOVING AVERAGES. The Nasdaq 100 is the most bullish index above the 200-day, warranting a closer examination.

About 51% of the Nasdaq 100 is made up of Information Technology stocks, while Consumer Discretionary and Communication Services together account for roughly 31% of the index.

Information Technology Dominates the Index

To get a clearer sense of market breadth, it’s useful to examine the sector-level Bullish Percent Index (BPI), which shows the percentage of stocks within each sector exhibiting technical strength.

FIGURE 2. MARKET SUMMARY SECTOR BULLISH PERCENT INDEX. While many sectors have bullish BPIs, the tech sector is leading.

While Communications and Discretionary are exhibiting technical strength, the Information Technology sector is leading the pack, with over 91% of stocks triggering Point & Figure buy signals.

Semiconductors: The Bellwether to Watch

While tech is also comprised of various industries, only one—semiconductors—is widely regarded as a “bellwether” industry. Shifting over to the US Industries panel, semiconductors displayed the highest StockCharts Technical Rank (SCTR).

FIGURE 3. BELLWETHER INDUSTRY SCTR SCORES. Among the bellwether industries listed, chipmakers are outpacing everything else.

While my threshold for bullish SCTR reading is 76, the semiconductor industry is the only bellwether industry that clears that bar.

But what might the performance of the Nasdaq 100, semiconductor, and broader market performance look like side by side? To answer this question, I plotted all three on a one-year PerfCharts view.

 FIGURE 4. PERFCHARTS OF SEMICONDUCTORS, NASDAQ 100, AND THE S&P 500. Here, semiconductors aren’t looking so hot, being the laggard of the bunch.

Using VanEck Vectors Semiconductor ETF (SMH) as the industry proxy, you can see that SMH was leading the Nasdaq 100 and S&P 500 last summer, but began lagging the two indexes starting in November. SMH was the hardest hit in the aftermath of the Trump tariffs, and, while it’s recovering, its performance is still trailing both indices.

This raises two key questions: First, is SMH’s upswing a true recovery or a temporary bounce? And second, is it worth investing in SMH in this stage of the cycle (in other words, does it present an opportunity to catch an uptrend early on)?

Weekly Chart Signals: Bear Market Drop or Recovery?

Let’s take a closer look at SMH, starting with a weekly chart.

FIGURE 5. WEEKLY CHART OF SMH. From a primary trend perspective, one that can last years, the uptrend is arguably intact, though facing challenges.

Here are the key points to look at:

SMH is trading above the 40-week SMA (equivalent to a 200-day SMA) following a sharp price gap up. But can it hold above that level?SMH plunged 39.8% from its 2024 high of around $280 to the 2025 low of $170. This is a textbook bear market drop that raises the question: Is this latest surge just a bear market rally?On the other hand, a long-term Fibonacci Retracement measured from the 2022 low to the 2024 high found support at the 50% and 61.8% retracement levels. This kind of pullback is not only “normal”, but also supports the view that SMH’s bullish “primary trend” is still intact.However, the Chaikin Money Flow (CMF) is signaling weak buying pressure. For the rally to continue, there needs to be stronger accumulation, something the CMF has yet to confirm.

Daily Chart View: Support, Resistance, and Warning Signs

After looking at SMH from a broader scale, what might the price action reveal if we were to zoom in using a daily chart?

FIGURE 6. DAILY CHART OF SMH. Zooming in, SMH’s situation looks even less bullish.

This chart tells a tougher story: SMH looks ready to re-enter the months-long trading range it broke to the downside in March.

Should You Invest In SMH? Here’s What to Watch

To answer this question, here’s some points you might want to focus on:

For one, note how closely the stochastic oscillator cycles mirror SMH’s fluctuations. With a reading above 96, SMH may be due for a near-term pullback.

Should it pull back, SMH will need to remain above or bounce at the $210 support range (highlighted in blue) for the current, albeit small, uptrend to remain intact. Below that, it might bounce at the consecutive swing lows—$185 and $170—but such a deep pullback indicates weakness and raises the possibility that SMH may slip back into the trading range (highlighted in yellow) that dominated a lengthy five-month period.

On the upside, SMH needs to eventually clear that same range before challenging its all-time highs at the $281 level. If SMH manages to do so, it’s likely to unfold in a series of higher highs and higher lows, which will take some time to develop.

At the Close: A Bullish Setup or Bull Trap?

While SMH has begun to exhibit significant technical strength, warning signs remain. If you’re bullish on semiconductors, the next few weeks will be critical. Holding the $210 support zone is key for keeping the uptrend intact. A drop toward $185 or $170 would raise serious doubts about the sustainability of the current rally.

If SMH can clear its trading range and build a structure of higher highs and higher lows, it could be poised to challenge its all-time highs once again. Until then, stay cautious and keep a close eye on the technical levels discussed above.

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 personal and financial situation, or without consulting a financial professional.

We’ve been cautious about the uptrend phase off the April low for a number of reasons, including the lack of breadth support.  While short-term measures of breadth had turned more positive, the long-term breadth conditions had remained firmly in the bearish realm.  With the renewed strength in risk assets over the last week, our long-term breadth measures now indicate a healthy uptrend phase.  

Today we’ll dive a little deeper into one of those breadth indicators, talk about why we track moving average breadth, and show how this recent bullish signal could be a sign of stronger price action to come.

Here we’re showing the S&P 500 on a closing basis along with its 50-day and 200-day moving averages.  Below that, we’re tracking the percent of S&P 500 stocks above their 200-day moving average, followed by the percent of stocks above their 50-day moving average.

Starting at the bottom, we can see that less than 10% of S&P 500 members were above their 50-day moving average at the April 2025 low.  The last time we had reached below the 10% level was back in October 2023, just before a significant market bottom.

While the surge in this short-term breadth indicator over the last month has suggested a tactical rally, the panel above shows how there were still less than 50% of S&P 500 members above their 200-day moving average.  So most stocks had regained the short-term moving average, but were still languishing below the long-term moving average.

As risk assets have surged higher this week, it’s meant enough upside momentum that now most S&P 500 members are back above their 200-day moving average.  Now let’s look at a longer-term time frame and consider previous instances where this long-term moving average breadth indicator has gone from below 25% to above 50%.

We’ve identified eight occurrences of this pattern since the 2009 market low.  In all eight occurrences, the S&P 500 has experienced positive returns in the next 12 months.  And with the exception of the signal in October 2015, we haven’t seen any retest of the previous swing low.

Let’s dig into that 2015 example a little further, and you’ll see what differentiated that particular signal from all the others.

In all the other occurrences, the S&P 500 broke above its 200-day moving average and held that crucial level of support.  In Q4 2015, however, the S&P 500 failed to hold the 200-day moving average, and the breadth indicators soon rotated back to a bearish phase.

It took another attempt in March 2016 before the chart finally resolved to the upside, with the S&P 500 leaving the 200-day moving average behind as it continued to push higher.  Breadth indicators continued to improve as investors began to believe in the bull market of 2016.

I was taught that “nothing good happens below the 200-day moving average,” which also implies that good things can definitely happen above this long-term trend barometer.  At this point, given the bullish breadth rotation that we’ve observed off the April low, I would say that as long as the S&P 500 remains above its 200-day moving average, then we stand a serious chance of further upside from here.

If, however, the SPX fails to hold this crucial line of support, and the index falls back below the 5750 level, then we may be looking at more of a 2015-style retracement as fears rise and stocks drop.

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

marketmisbehavior.com

https://www.youtube.com/c/MarketMisbehavior

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.

Bullish signal alert! Over 50% of S&P 500 stocks are now above their 200-day moving average.

In this video, Dave explains this key market breadth indicator and what it means for stock market trends. He shows how moving average breadth has reached a bullish milestone, what this means based on historical signals over the past 15 years, and how it compares to the Zweig Breadth Thrust. He also introduces the stoplight market phase technique—a simple but effective method using StockCharts tools to assess market conditions in real time.

This video originally premiered on May 13, 2025. Watch on StockCharts’ dedicated David Keller page!

Previously recorded videos from Dave are available at this link.

Let’s be honest. Did anyone think a little more than a month ago that the S&P 500 was primed for a 1000-point rebound? I turned bullish at that April 7th bottom a month ago, but I did not see this type of massive recovery so quickly.

Why does this happen?

I believe these panicked selloffs occur, because the big Wall Street firms get out prior to market massacres and they need to get back in. What’s the best way to accumulate shares? To send out your best market influencers (oops, I meant analysts) to drive home the pain and misery that’s coming. I mean, just ask the media outlets. They were the ones responsible for all those terrorizing headlines. And market makers added panic by opening stocks much, much lower from previous days’ closes on many occasions this year.

Want some evidence?

Well, let’s go back in time and zero in on the more aggressive QQQ (ETF that tracks the NASDAQ 100):

At the very bottom, when the most manipulation takes place, we see massive gaps to the downside that create opportunities for Wall Street firms to buy in much, much cheaper as retail traders panic sell into those falling gaps. The massive volume that accompanies capitulation makes it very easy for market makers to buy lots of shares on their own behalf and on behalf of their institutional clients. This institutional buying is reflected by higher prices intraday. Looking at the above chart, the QQQ tumbled 52.46 (476.15-423.69) over 3 trading days. But the total gap downs over those 3 days were 46.26, nearly 90% of the entire 3-day meltdown. This wasn’t a distribution period or a selling event, it was a MARKET MAKER MANIPULATION EVENT.

Want an even more telling stat? From the March 13th close (467.64) to the Friday, May 9th close (487.97), the QQQ gained roughly 20 bucks. Here’s the breakdown of how the QQQ traded on an intraday basis over this 2-month period:

Opening gaps: -42.319:30-10:00: +19.1810:00-11:00: +6.7211:00-2:00: +21.862:00-4:00: +14.13

During a period when the QQQ gained roughly 20 bucks, the cumulative opening gaps were -42 bucks. That means that the QQQ saw buying to the tune of 62 bucks during the trading day. Panicked retailers took the market makers’ bait and sold with all the media-related nonsense, while market makers were secretly buying for all their Wall Street colleagues and buddies.

If you’re sitting in cash right now, wondering when to get back in, I can promise you that you’re not alone. This 2025 “massacre” and “shocking rebound” were planned all along. Wall Street’s rotation into defensive areas of the market had me and many EarningsBeats.com members in cash back in January and early February. They absolutely knew this was coming, but media outlets weren’t telling us back then to get out. They waited for the fear to kick in before posting their ridiculously-bearish headlines over and over and over again – forcing retail traders to say “Uncle!!!!!”

This is what I refer to as “legalized thievery.” It’s how our financial system works unfortunately. You either learn how to play defense against it or periodically suffer the consequences. At EarningsBeats.com, we choose the former.

How To Build A Winning Portfolio

Now that the manipulation is in our rear view mirror and the S&P 500 looks to move back into all-time high territory, it’s very important to understand the best way to outperform the benchmark S&P 500. That’s what we strive to do over time and we’ve been very successful at it. This Saturday, May 17th, at 10:00am ET, I’ll be hosting a webinar to show you how to successfully build a portfolio that outperforms over time. One part of this webinar will be dedicated to highlighting the keys to spotting the 2025 cyclical bear market and determining the best time frame to jump back in. We’ve made these calls in real time during 2025, from our MarketVision 2025 event in early January to my Daily Market Reports to EB members to my StockCharts blog articles to my YouTube shows hosted by both EarningsBeats.com and StockCharts.com. It’s extremely important that we learn from difficult periods in the stock market so that we’re better prepared for the next one.

Don’t allow Wall Street to manipulate you. I’m going to show you the best way(s) to avoid it when it occurs again. And it WILL happen again. CLICK HERE to learn more, register for our “How To Build A Winning Portfolio” and save your seat. If you cannot make the event live on Saturday, you’ll receive a recording of the event to listen to at your leisure simply by registering. So register NOW!

Happy trading!

Tom

In this in-depth walkthrough, Grayson introduces the brand-new Market Summary Dashboard, an all-in-one resource designed to help you analyze the market with ease, speed, and depth. Follow along as Grayson shows how to take advantage of panels, mini-charts, and quick scroll menus to maximize your StockCharts experience.

This video originally premiered on May 12, 2025. Click on the above image to watch on our dedicated Grayson Roze page on StockCharts TV.

You can view previously recorded videos from Grayson at this link.

Earnings season continues, and this week we’re looking at three companies heading into their reports with different trajectories. One is in a long-term downtrend, one has been a steady riser, and one is somewhere in between. Let’s unpack what’s happening adn what to watch, all with an eye on balancing opportunity and risk, something that matters even more when you’re managing your own next egg.

Under Armour (UAA): Looking for a Comeback

If you’ve held Under Armour for the long term, you would be better off hiding out literally under armor than trying to make money owning the stock. For traders, though, there may be a near-term opportunity to trade.

The stock’s all-time peak coincided with the peak of the Golden State Warriors and Steph Curry jacking up threes. Every kid in the gym tried to be like Steph, and young basketball players couldn’t get enough of his gear. I know because I coached these kids! Good luck getting them to practice lay-ups… it was just shooting bombs like Curry, but I digress.

Coming to earnings, UAA stock is trading just above all-time lows and is looking for a new catalyst to turn things around (see chart below). Let’s see if Kevin Plank can spark a comeback.

FIGURE 1. DAILY CHART OF UNDER ARMOUR STOCK.Technically, things have been messy over the long-term and intermediate term. But for short-term traders, there may be an opportunity. I’ve added the 20-day simple moving average (SMA) to the chart (green line). Over the past years, when the stock’s price moved above this point, it has led to a near-term rally. Sadly, those rallies have been short-lived. 

Maybe this time it will be different.

The $6.10-$6.20 range is a key level to watch. That’s where the 50-day SMA and the old pocket of longer-term support the stock broke below on April 2 meet. From a risk/reward perspective, use this as the line in the sand to be long or short Under Armour stock.

Any upward momentum that gets price to and above this level could lead to a bigger rally. It’s not a pretty picture, but risk/reward metrics for a short-term trade and potential near-term bottom look possible.

Walmart (WMT): A Bellwether for Tariffs and Spending

Walmart could be one of the most telling stocks when it comes to tariff impacts when they report on Thursday.

Last quarter, the company expressed caution regarding the upcoming fiscal year, cutting their EPS numbers short of analyst expectations. This conservative outlook was attributed to uncertainties surrounding consumer spending and the potential impact of tariffs. Investors will be listening closely to this report for strategies on managing tariff-related challenges, maintaining competitive pricing, and supply chain issues that may make stocking shelves more of a challenge.

Technically, shares gapped lower after the last earnings report and broke a long-term downtrend (see chart below). While price did wash out and successfully test its 200-day SMA, it hasn’t been able to make it all the way back.

FIGURE 2. DAILY CHART OF WALMART, INC. Walmart’s stock price appears to be toppy as it struggles to fill last quarter’s gap. The lack of new highs and a moving average convergence/divergence (MACD) that is extended and turning over lends to a more cautious narrative coming into this week’s numbers.

The trend is not the investor’s friend at the moment. It may be better to wait and see how this result goes and where price settles after the announcement. If you’re hoping the S&P 500 ($SPX) can get back to new highs, WMT needs to lead. Currently, the direction looks lower, but a test and hold of the 50-day SMA at the $91 level may be a better entry point as shares continue to consolidate below all-time highs and wait for more clarity on the tariff front.

Alibaba (BABA): A Wild Card

Alibaba faces a few big challenges as it heads into this week’s earnings. There are a couple of issues at play. 

First is the obvious tariff uncertainty that has clouded this market, although that looks to be heading down a path to certainty. The second is Alibaba’s AI investments. Its latest model, Qwen 2.5, is integrated into Apple’s iPhones sold in China. Seeing a push away from the American product, what impact will this have on BABA’s bottom line?

Let’s dive into the chart below.

FIGURE 3. DAILY CHART OF BABA. Technically, this stock has been all over the map. Trends change on a dime and tend to move quickly. To trade BABA, you should try to wait for bigger moves. This is why I’ve used Fibonacci retracement lines to coincide with larger consolidation areas and moving averages. 

As we head into the week, shares are in a bit of a no man’s land. There is minor support at the $118 area and major support at the 61.8% retracement level that coincides with the 200-day SMA around $102.

To the upside, resistance is up at the $143/$148 52-week high level. Amid trade deal negotiations, it may be better to watch the fundamental story unfold when trying to gauge BABA’s next move. The technicals are at a coin flip and appear to be turning lower. Given solid support levels, that is where it may be safer to add to or enter the stock. 

Final Thoughts

Earnings season isn’t just about catching the next hot stock. It’s about protecting what you’ve built while finding opportunities that fit your comfort with risk.

Under Armour could offer a short-term trade, but it’s speculative.Walmart is a reliable bellwether, but its trend is uncertain.Alibaba is full of potential, but comes with added complexity and volatility.

Always remember: there’s no need to chase every opportunity. Go after those that have a higher probability of meeting your investment goals.

Sector Shuffle: Same Players, New Positions

The past week brought an unusual shake-up in the RRG sector ranking model. While the composition of the top five sectors, and thus the bottom six, remained unchanged, every single position in the entire ranking shifted — a rare occurrence that sets the stage for what’s likely to be another interesting week ahead.

(2) Utilities – (XLU)*(5) Communication Services – (XLC)*(1) Consumer Staples – (XLP)*(3) Financials – (XLF)*(4) Real-Estate – (XLRE)*(7) Industrials – (XLI)*(6) Healthcare – (XLV)*(9) Technology – (XLK)*(8) Materials – (XLB)*(11) Consumer Discretionary – (XLY)*(10) Energy – (XLE)*

Weekly RRG

On the weekly Relative Rotation Graph, we’re seeing some interesting movements:

Staples, Utilities, and Real Estate remain in the leading quadrant, but are losing some relative momentumFinancials and Communication Services have moved into the weakening quadrant — but with high RS ratio values and room to potentially curl back up.

Daily RRG

Shifting to the daily RRG, the picture looks a bit different:

Communication Services stands alone in the leading quadrant, moving with a strong RRG headingStaples, Utilities, Real Estate, and Financials are all in the lagging quadrant — but importantly, they’re starting to curl back up.

This combination of weekly and daily RRG tails supports these sectors maintaining their top-five status despite some short-term weakness.

Utilities

It’s interesting to see Utilities — arguably the most defensive sector — take the top spot against a backdrop of strong overall markets.

The price chart shows ongoing struggles with overhead resistance, but relative strength continues to rise, cementing Utilities as the current sector leader.

Communication Services

This sector made an impressive leap from 5th to 2nd place.

Price action shows a strong rally, now holding well above the former support-turned-resistance level just below 95.

Relative strength remains within its rising channel, and while the RRG lines are pushing through the weakening quadrant, there’s still room for a potential curl back up.

Consumer Staples

Staples remains range-bound between roughly 77.5 and 82.5.

This sideways movement is reflected in both relative strength and RRG lines.

The RS ratio is at its highest level in over two years — we’d have to go back to May/June 2020 to see similar strength for this sector.

Financials

The Financials sector is holding up well, though it’s approaching the former rising support line that could now act as resistance.

Relative strength remains upward within its trend channel, keeping the RRG lines stable.

The RS ratio remains near 103, positioning Financials on the right side of the RRG.

Real Estate

Real Estate saw a slight drop last week, stalling its recent rally.

This impacts relative strength, with the raw RS line moving sideways and momentum rolling over.

The RS ratio line’s rise is slowing as a result.

Portfolio Performance

Our model portfolio composition remains unchanged this week.

We’re tracking about 3% behind the S&P 500 year-to-date, which is not unusual, looking at the backtest results. And it has not changed since last week.

Evaluating this strategy over longer periods is crucial to determining its true potential.

I am planning to write a separate article diving a little deeper into this model and its historical results, showing periods of over- and underperformance and how it has managed to outperform the S&P 500 over extended timeframes.

#StayAlert. –Julius