Stocks

Micron Technology, Inc. (MU) appears poised for an explosive breakout, both technically and fundamentally. While it remains to be seen whether this materializes by its Q3 earnings report on June 25, the setup suggests a high-probability move is about to happen, and soon.

The fundamental case for a breakout is backed by MU’s deep involvement in the AI memory boom. Its high-bandwidth memory (HBM) is powering Nvidia’s next-gen Blackwell chips, demand is outstripping supply, and prices are rising. With sold-out capacity for 2025 and earnings projected to surge 437% this year, MU’s Q3 report could be the next major catalyst.

In light of these forecasts, let’s put things into context and see where MU has stood over the past year in its comparative performance with VanEck Vectors Semiconductor ETF (SMH), our semiconductor industry proxy, Technology Select Sector SPDR Fund (XLK), for a sector comparison, and Invesco QQQ Trust (QQQ), a stand-in for the Nasdaq 100 Index ($NDX).

MU vs. SMH, XLK, and QQQ: Tracking Relative Performance

Despite its recent rally, MU remains a relative laggard. Whether it breaks out will depend on how effectively it positions itself amid shifting industry dynamics.

FIGURE 1. PERFCHARTS OF MU RELATIVE TO ITS INDUSTRY, SECTOR, AND THE NASDAQ 100.  MU has been the big laggard over the past year. You need to take a closer and more detailed look to gain more insight into MU’s current upward momentum.

While analysts are optimistic about its role in the evolving AI-driven landscape, that thesis will be put to the test when the company reports earnings in the coming weeks.

A Shift in Momentum? What the MarketCarpets Are Revealing

While MU lags its industry peers, it might help you to get a more granular view of performance within the semiconductor industry. This is where the StockCharts MarketCarpets Semiconductors summary can be helpful.

FIGURE 2. MARKETCARPETS – SEMICONDUCTORS. In contrast to its peers, a 5-day view shows that MU is the strongest performer.

Though MU has trailed its industry peers over the past year, the 5-day MarketCarpets view reveals a shift in momentum. With a 13.32% gain over the past week, MU is rapidly narrowing the gap and beginning to outpace its peers.

Weekly Chart Levels: Resistance, Support, and Entry Zones

Typically, you’d drill down to a daily chart for more precision, but, with MU, the weekly chart alone highlights the key levels worth watching.

FIGURE 3. WEEKLY CHART OF MU. The weekly chart shows all key levels, from entry to profit targets and stop loss levels.

The weekly chart view clearly outlines support, resistance, and potential entry and exit points. Listed below are the key levels and scenarios to watch.

MU Price Scenarios: Breakout or Breakdown?

Watch the rectangle formation: MU is approaching a breakout above key resistance at $115, just ahead of its June 25 earnings report. A decisive move above the rectangle could trigger long entries from bullish traders.Upside scenario: A beat on earnings and strong forward guidance could fuel continued upside—unless derailed by broader geopolitical risks.Downside scenario: If the breakout fails, look for support near the bottom of the formation. The Volume-by-Price indicator shows a heavy concentration of trading at that level, reinforcing its significance as a support zone. However, a breakdown there may cast doubt on the current uptrend thesis.Profit-taking zone: If MU continues its bullish trajectory, expect resistance and likely profit-taking between $127 and $137, an area marked by multiple highs and consolidation levels throughout 2024.

Why $127 to $137, when the weekly chart shows $130 to $135? Here’s where zooming in helps.

FIGURE 4. ZOOMING N TO A DAILY CHART OF MU. This shows, in much greater detail, the potential resistance levels above.

The top and bottom of this consolidation provide a clearer view of potential resistance, which may also serve as profit-taking levels for short-term traders, so keep an eye on this.

Last thing – watch the peak: A second round of resistance and potential profit-taking may occur near $155, a key level that previously marked the stock’s all-time high.

Momentum-wise—and note we’re looking at a longer-term time frame—the Relative Strength Index (RSI) suggests there’s still plenty of room to run before MU enters overbought territory. Volume-wise, however, you will want to see the Chaikin Money Flow (CMF) levels increase once the breakout occurs, confirming that buying pressure is supporting the move.

Quick Take: The Setup at a Glance

In a nutshell: Watch for a breakout above $115 ahead of MU’s June 25 earnings by setting an alert using the Technical Alert Workbench. Note that entering a position ahead of earnings is always a risky prospect. If you are planning to take any action at all, make sure it’s in alignment with your own personal trading strategy and criteria.

A beat on earnings and strong guidance could fuel further upside, but watch out! If Wall Street decides to “sell the news,” due to any detail that dampens investor or analyst sentiment, a sharp decline could follow. If MU moves strongly to the upside, look for confirmation via rising CMF levels, which would signal real buying pressure.

If the breakout fails, key support lies near the bottom of the current trading range. On the upside, expect potential resistance and profit-taking between $127–$137, with a secondary ceiling near $155. The RSI still shows room for further gains before MU becomes overbought.

Final Thoughts: Will MU Deliver on the AI Hype?

MU may be lagging now, but, as the MarketCarpets data shows, momentum is quietly shifting, and the shift may accelerate as MU approaches both a potential breakout level and its earnings date. With a critical breakout level in sight and earnings just days away, consider preparing for a potential surge in volatility, which could move the stock in either direction. If MU does break to the upside, whether it can maintain its momentum post-breakout will depend on volume, CMF strength, and how convincingly MU rides the AI memory wave.

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.

There are a few very different setups unfolding this week that are worth a closer look: two software-related names that are struggling to reclaim their winning ways, plus one lovable and reliable stock wagging its tail in the spotlight. 

Let’s break it down.

Adobe (ADBE): Mind the Gaps

Adobe Systems, Inc. (ADBE) has been a heartbreaker for investors over the last several years. ADBE stock has traded lower after six of its last seven quarterly reports. That includes consecutive losses of nearly -14%. So what should investors be watching this time around?

Coming into Thursday’s release, shares are lower by 6.4% for the year and have just made back their losses from last quarter. Overall, shares remain -35% from all-time highs set back in January 2024.

Investors will be looking for progress on the AI monetization front. Is annual recurring revenue from Adobe’s Firefly and Acrobat products showing a strong growth projection? And, perhaps more importantly, what’s the guidance going to look like? Last quarter, Adobe issued conservative guidance, and shareholders were punished as a result. Will forward-looking guidance meet investor expectations?

Technically, ADBE shares are trying to find that bottom (see chart below). Progress has been made, as the stock is taking minor steps to climb back from the morass.

FIGURE 1. DAILY CHART OF ADBE STOCK. The stock is trading between the 100- and 200-day moving averages. The stock price could gain momentum and move higher or lower after earnings.Chart source: StockCharts.com. For educational purposes.

On the chart, we’re seeing the following signs:

Shares have broken their intermediate downtrend.Shares have recaptured the 50-day moving average.Shares have almost filled the downward gap caused by last quarter’s results.Shares have recaptured the 100-day moving average and held for now.

That said, there’s still work to be done, and knowing how this stock gaps in earnings means a move may be coming.

Let’s examine those last three gaps. Each one has been negative, and each time, price action continued in the trend’s direction for several weeks before making a bottom and rallying back. The same thing happened on the last gap up, as momentum in the direction of the gap continued for weeks. Point being, it’s a good idea to watch those gaps. 

ADBE is in a “no man’s land” between key moving averages. The longer-term trend remains down, and it may take a huge report to stay above the 200-day moving average on a rally. It’s one to avoid for now, but the short-term play after earnings may be to go with the momentum of any gap.

Chewy (CHWY): Any New Tricks in Store?

Chewy Inc. (CHWY), the online retailer of pet food and pet-related products, broke out to new highs just last week ahead of this week’s earnings. Shares have been on a roll since their April 7 low, gaining over 60% in that time (see chart below).

FIGURE 2. DAILY CHART OF CHWY STOCK. The stock price has been in beast mode since early April, up more than 60%. With the stock in overbought territory, it could pull back to $44 or $40. Chart source: StockCharts.com. For educational purposes.

Technically, the stock broke out of a textbook rounded bottom base and zoomed to its anticipated upside target of $50. CHWY shares seem overextended as they have been overbought for weeks (Relative Strength Index > 80). The stock price could roll over even on good news, given its recent run. Long-term investors may want to stay in the name and sit on gains.

For those begging for a pullback, there are nice levels of support at $44 and ultimately at $40 if earnings bite investors. This should be a good opportunity to consider this name for your portfolio as the long-term technicals look great, and the company is known for its loyal user base.

Oracle (ORCL): Time to Flip the Script?

Oracle Corp. (ORCL) will report earnings on Wednesday, looking to snap a two-quarter losing streak. Shares of the software giant have rallied nicely off their lows, but are still -13% from their December peak. Investors would like to see its cloud revenue growth continue to expand thanks to agreements with OpenAI, Meta, and Nvidia.

The one concern is the continued capital spending necessary to power the data centers required to meet AI demand. Are the company’s recent capital expenditures putting pressure on margins and impacting ORCL stock’s bottom line? 

Technically, shares have been on a nice run, eclipsing key levels to get back on track. Longer-term, the stock price started the week above its downtrend line, with respect to annual highs.

FIGURE 3. DAILY CHART OF ORCL STOCK. From a technical perspective, the stock price has broken above a long-term downtrend. Will upside momentum continue after earnings? Keep an eye on this stock.Chart source: StockCharts.com. For educational purposes.

The rally looks similar to many other technology names that are trying to get back to their old highs. The good news is that, given the change in trajectory, even weakness looks to have a soft landing spot and good entry point from a risk/reward perspective.

The stock reminds me of the S&P 500 ($SPX) a little bit — struggling to get to new highs and losing a bit of momentum. A pullback to its 200-day moving average around $163 would be a natural retracement — a flag if you will — and a good entry point on any drawdown after positive news.

If any signs of strength emerge, look for shares to run into the $190s before stalling again.

The Bottom Line

We have three different stories unfolding:

ADBE’s stock needs to clear earnings hurdles and reclaim trust.CHWY’s stock is on fire, but might need to cool down.ORCL’s stock is rebuilding momentum, and has potential upside if cloud numbers impress.

Sector Rotation: A Week of Stability Amidst Market Dynamics

Last week presented an intriguing scenario in our sector rotation portfolio.

For the first time in recent memory, we witnessed complete stability across all sector positions — no changes whatsoever in the rankings.

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

Weekly RRG: Steady as She Goes

The weekly Relative Rotation Graph (RRG) continues to paint a picture of gradual shifts. Utilities and Consumer Staples, while still occupying high RS ratio levels, are moving lower on the chart. Utilities clings to the leading quadrant, but Consumer Staples has just crossed into weakening territory.

Financials and Communication Services remain in the weakening quadrant, but their RS momentum levels have stabilized. Communication Services shows a slight uptick, while Financials maintains a negative heading — albeit well above the 100 mark.

Industrials, our current star performer, continues its reign in the leading quadrant. It’s gaining ground on the RS ratio axis while experiencing a minor dip in RS momentum. All in all, the weekly picture remains essentially unchanged from last week.

Daily RRG

Shifting our focus to the daily RRG, we start to see more nuanced movements:

Staples and Utilities are rotating within the improving quadrant, losing ground on the RS momentum axis without gaining in RS ratio. This suggests further weakening on the weekly chart is likely.Financials have made their way into the improving quadrant — a positive development that builds on last week’s progress.Communication Services is practically aligned with the benchmark (SPY), showing little distinctive movement.Industrials continues deeper into the weakening quadrant, but — and this is crucial — its RRG velocity (the distance between tail nodes) is very low. This keeps the door open for a potential curl back up before hitting the lagging quadrant, which would reinforce its strong position.

Industrials: Breaking New Ground

The price chart for Industrials is confirming its current strength with a break above overhead resistance.

This breakthrough is likely to unlock more upside potential, keeping the sector firmly at the top of our list.

The relative performance continues to reflect this positive momentum.

Utilities: Struggling at Resistance

Once again, Utilities tested its overhead resistance (between 83 and 84) but failed to break higher.

Prices retreated into the range by week’s end. This setback is causing relative strength to drop back into its sideways trading range, with RRG lines rolling over.

The sector needs a swift improvement in both price and relative strength to maintain its recent strong position.

Consumer Staples: Déjà Vu

Consumer Staples finds itself in a similar boat to Utilities.

Another attempt to break overhead resistance around 83.5 was met with a pullback. This pattern has been repeating for weeks, and it’s taking its toll on the raw relative strength line.

While the RS ratio remains high — a legacy of strength since the year’s start — the rapid loss of relative momentum is causing the RS ratio to roll over.

Like Utilities, consumer staples need a quick price improvement to maintain its top-five position.

Communication Services: Closing In

Communication Services had a strong week, closing near the range’s high end and approaching its previous peak just above 105.

This improvement has kept the raw relative strength line against SPY within its rising channel.

Continued strength, especially if XLC breaks above 105, should keep relative strength in an uptrend and likely cause the RRG lines to curl back up soon.

Financials: Battling Resistance

Financials continue to struggle with its old rising support line, now acting as resistance near the 52 area where the previous high is located.

This price stagnation has caused the raw RS line to break its rising support, leading the RRG lines to roll over.

The RS momentum line has already dropped below 100, and the RS ratio is starting to move lower.

We’ve seen the daily tail for XLF pick up slightly — this acceleration needs to continue in the coming weeks for XLF to maintain its top-five position.

Portfolio Performance

Due to the positions of Consumer Staples and Utilities, our top five remains defensively positioned. This has caused our underperformance versus SPY to widen slightly — we’re now just over 6% behind since the start of the year.

Is this ideal? Of course not. But here’s the thing — trend-following systems need time to play out. The worst thing you can do is abandon a strategy just because it’s going against you for a few months. (And let’s be honest, it’s only been since May — so two months.)

I will stay the course, maintain discipline, and continue to track this portfolio based on our established metrics.

It’ll be interesting to see how long it takes for this strategy to come back on top and start outperforming SPY again. Patience is key in these situations.

#StayAlert and have a great wee. –Julius

QQQ and tech ETFs are leading the surge off the April low, but there is another group leading year-to-date. Year-to-date performance is important because it includes two big events: the stock market decline from mid February to early April and the steep surge into early June. We need to combine these two events for a complete performance picture.

TrendInvestorPro uses a Core ETF ChartList to track performance and rank momentum. This list includes 59 equity ETFs, 4 bond ETFs, 9 commodity ETFs and 2 crypto ETFs. The image below shows the top 10 performers year-to-date (%Chg). Seven of the top ten are metals-related ETFs. Gold Miners (GDX), Silver Miners (SIL), Platinum (PLTM) and Gold (GLD) are leading the way. The Aerospace & Defense ETF (ITA), Transformational Data Sharing ETF (BLOK) and ARK Fintech Innovation ETF (ARKF) are the only three non-commodity leaders. The message here is clear: metals are leading.

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TrendInvestorPro has been tracking the Platinum ETF (PLTM) and Palladium ETF (PALL) since their big breakout surges on May 20th. The chart below shows PALL with a higher low from August to April and a breakout on May 20th. The ETF fell back below the 200-day SMA (gray line) in late May, but resumed its breakout with a 7.75% surge this week.

The bottom window shows the PPO(5,200,0) moving above +1% on May 21st to signal an uptrend in late May. This signal filter means the 5-day EMA is more than 1% above the 200-day EMA. The uptrend signal remains valid until a cross below -1% (pink line). As with all trend-following signals, there are bad signals (whipsaws) and good signals (extended trends). Given overall strength in metals, this could be a good signal that foreshadows an extended uptrend.

TrendInvestorPro is following this signal, as well as breakouts in other commodity-related ETFs. Our comprehensive reports and videos focus on the leaders. This week we covered flags and pennants in several tech ETFs (XLK, IGV, SMH, ARKF, AIQ, MAGS). Click there to take a trial and get your four bonuses. 

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After consolidating for two weeks, the Nifty finally appeared to be flexing its muscles for a potential move higher. Over the past five sessions, the Nifty traded with an underlying positive bias and ended near the week’s high point while also attempting to move past a crucial pattern resistance. The past week saw the Index oscillating in the 527-point range, which was in line with the previous weeks. The volatility also cooled off; the India VIX came off by 9% to 14.63 on a weekly basis. While staying largely in a range trading with a positive bias, the headline Index closed with a net weekly gain of 252.35 points (+1.02%).

Over the past couple of weeks, the Nifty has traded in a well-defined range created between 24500-25100 levels. This would mean that the markets would remain devoid of directional bias unless they take out 25100 on the higher side or violate the 24500 level. Despite visibly strong undercurrents, staying reactive to the markets rather than getting predictive would be prudent. Although there are heightened possibilities of the Nifty taking out the 25100 level, we must consider it as resistance until it is taken out convincingly.

The coming week is set to see a stable start; the levels of 25150 and 25400 are likely to act as resistance points. The supports come in at 24800 and 24500. The trading range is expected to get wider than usual.

The weekly RSI is 60.94; it continues to remain neutral and does not show any divergence against the price. The weekly MACD is bullish and remains above its signal line. A strong white candle emerged; this shows the bullish trend that the markets had during the week.

A pattern analysis of the weekly chart shows that the Nifty resisted the upward rising trendline that began from the low of 21350 and joined the subsequent rising bottoms. The Nifty has attempted to penetrate it after resisting it for a couple of weeks.

Overall, the coming week may see the markets trading with an underlying bullish bias. However, for this to culminate in a good trending move, the Index will have to take out the 25100-25150 zone convincingly on the upside. Until this happens, the markets may continue to consolidate in a broad trading range. Unless there is a strong move that surpasses the 25100-25150 zone, one must consider this level as an immediate resistance point. Some pockets have run up too hard over the past few days; one must also focus on protecting gains at current levels rather than chasing the up moves. Fresh purchases must be kept limited in stocks with strong technical setups and the presence of relative strength. A cautiously positive approach is advised for the coming week.

Sector Analysis for the coming week

In our look at Relative Rotation Graphs®, we compared various sectors against the CNX500 (NIFTY 500 Index), representing over 95% of the free-float market cap of all the listed stocks. 

Relative Rotation Graphs (RRG) show that the Nifty PSU Bank Index continues to build on its relative momentum while staying inside the leading quadrant. It may continue outperforming the markets relatively. The Infrastructure, Consumption, and PSE Index are also inside the leading quadrant but are seen giving up on their relative momentum.

The Nifty Bank Index has rolled inside the weakening quadrant. The Nifty Services Sector, Financial Services, and Commodity Indice are also inside the weakening quadrant. Individual performance of components from these groups may be seen, but overall relative performance may slow down over the coming weeks.

The Nifty FMCG Index has rolled inside the lagging quadrant. The Nifty Metal and Pharma Indice are languishing in this quadrant. The Nifty IT index is also inside the lagging quadrant but is seen in a strong bottoming-out process while improving its relative momentum.

The Nifty Energy, Media, Realty, and Auto Indices are inside the improving quadrant and may continue improving their relative performance against the broader markets.

Important Note: RRG™ charts show the relative strength and momentum of a group of stocks. In the above Chart, they show relative performance against NIFTY500 Index (Broader Markets) and should not be used directly as buy or sell signals.  

Milan Vaishnav, CMT, MSTA

Consulting Technical Analyst

www.EquityResearch.asia | www.ChartWizard.ae

Stay ahead of the market in under 30 minutes! In this video, Mary Ellen breaks down why the S&P 500 just broke out, which sectors are truly leading (industrials, technology & materials), and what next week’s inflation data could mean for your portfolio.

This video originally premiered June 6, 2025. You can watch it on our dedicated page for Mary Ellen’s videos.

New videos from Mary Ellen 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.

This week, we got a smorgasbord of jobs data — JOLTS, ADP, weekly jobless claims, and the nonfarm payrolls (NFP). Friday’s NFP, the big one the market was waiting for, showed that 139,000 jobs were added in May, which was better than the expected 130,000. Unemployment rate held steady at 4.2%, and average hourly earnings rose 0.4% for the month.

The stock market rallied on the news. The S&P 500 rose above the 6000 level and closed slightly above it. That’s the first time the index has hit the 6K level since February. And the party wasn’t just in the S&P 500. All the major stock market indexes closed higher, and the Cboe Volatility Index ($VIX) closed below 17, suggesting investors are pretty complacent.

Sector Performance: Tech Takes the Lead

When you look at which sectors did best this week, it’s pretty clear that Technology was leading the charge. But is the leadership as strong as it was last year?

To answer, we can begin by taking a look at the MarketCarpet for S&P Sector ETFs below. It clearly illustrates the strength of the Technology sector.

FIGURE 1. WEEKLY PERFORMANCE OF THE S&P SECTOR ETFS. Technology is in the lead while Consumer Staples is the laggard.Image source: StockCharts.com. For educational purposes.

Now, if you drill down, it’s evident from the MarketCarpet of the Technology Sector that heavily weighted large-cap stocks, across the many different categories within the sector, displayed strong performance for the week.

FIGURE 2. WEEKLY PERFORMANCE OF TECHNOLOGY SECTOR. Large-cap heavily weighted stocks were in the green this week.Image source: StockCharts.com. For educational purposes.

Semis Grind Higher

Within tech, the semiconductors look especially strong, with several dark green squares in the MarketCarpet. This warrants a closer look at this industry group.

The weekly chart of the VanEck Vectors Semiconductors ETF (SMH) shows an upside move, with the ETF trading above its 40-week simple moving average. However, SMH is still underperforming the SPDR S&P 500 ETF (SPY). The Relative Strength Index (RSI) is trending higher and is in better shape since the end of March, but needs to gain more momentum to push it into overbought territory.

FIGURE 3. WEEKLY CHART OF VANECK VECTORS SEMICONDUCTOR ETF (SMH). While the price action in SMH is leaning towards the bullish side, it’s underperforming the SPY and needs more momentum.Chart source: StockCharts.com. For educational purposes.

If SMH continues to move higher with strong momentum, it would be a positive indication for the equity markets. However, there are several moving parts that investors should monitor.

Closing Position

While stocks are inching higher on low volatility, news headlines disrupt trends, sometimes drastically.

The weakening U.S. dollar and rising Treasury yields can sometimes signal headwinds for the stock market. Next week is going to be all about inflation, and we’ll get the Consumer Price Index (CPI) and Producer Price Index (PPI) for May.

With the job numbers in the rearview mirror, investors will be focused on inflation, especially since the Fed meets the following week. As of now, the Fed isn’t expected to make any changes to interest rates until perhaps their September meeting. Let’s see if next week’s inflation data changes the picture.

Watch the price action unfold by monitoring the StockCharts MarketCarpets and the StockCharts Market Summary page.

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.

All of our major indices continue to rally off the April 7th, cyclical bear market low. A couple, however, have broken out of key bullish continuation patterns that measure to all-time highs. I’ll focus on one in today’s article.

Russell 2000

The IWM is an ETF that tracks the small-cap Russell 2000 and it’s chart couldn’t be much more bullish right now. After setting an all-time high on November 25, 2024 at 243.71, the IWM fell into its own cyclical bear market, dropping to a low of 171.73 on April 7th. That represented a drop of 71.98 points, or 29.54%, well beyond the 20% cyclical bear market threshold. A bottoming reverse head & shoulders pattern formed and I’ve been awaiting for a breakout above neckline resistance at 211. We saw that on today’s open after nonfarm payrolls highlighted our somewhat resilient economy as jobs came in ahead of expectations and the unemployment rate held steady. Check out this chart on the IWM:

I’m not saying that we’ll see a straight up move to 249, and short-term direction could be impacted by how we finish today. A weak afternoon could lead to further short-term selling, possibly back to the rising 20-day EMA. But, ultimately, and during 2025, I’m looking for that all-time high. A strong finish this afternoon and close on or near the daily high would add more bullishness to this chart.

Leading Stocks in Leading Industry Groups

The small cap IWM is no different than any of our other major indices, like the S&P 500 and NASDAQ 100. When you see an index breakout, you need to look to the leading stocks in that area in order to outperform the benchmark index. We started our Leading Stocks ChartList (LSCL) two weeks ago and the results have been absolutely phenomenal so far, which I would expect them to be. After last week, we produced our 2nd weekly LSCL and the results have been awesome once again. There were 43 stocks included and 32 of the 43 have outperformed the S&P 500 this week. That’s similar results to our first weekly LSCL.

Individual stock leaders from our LSCL included the following big winners as of 1pm ET today:

PRCH: +16.89%DOMO: +15.75%LASR: +15.40%HOOD: +15.10%QBTS: +13.17%TTMI: +11.62%ZS: +10.76%

These are exceptional returns when you consider the benchmark S&P 500 gained just 1.38% this week.

I want to provide all of our followers a SPECIAL OFFER to join our FREE EB Digest newsletter. Subscribe HERE with only your name and email address (no credit card required), and we’ll provide you a link and password to download this unique Leading Stocks ChartList (LSCL) and check it out for yourself. You need to be an Extra or Pro member at StockCharts in order to download the ChartList into your account. Basic members and non-members can view the ChartList and check out the stocks we include for next week.

Happy trading!

Tom

Silver just hit a 13-year high, breaking above a key resistance level that could ignite a major bull run. Some metals analysts now say a rally to $40 isn’t a long shot, but a matter of time. So, are the odds finally shifting in favor of the bulls?

And, more importantly, is now the time to capitalize on silver’s breakout?

To answer, let’s break down the key technical levels and explore the fundamental factors that may (or may not) fuel silver’s next major move.

Gold vs. Silver: A Look at Intermarket Momentum

In the StockCharts Market Summary, the Intermarket Analysis panel highlights various commodities and indexes. You’ll notice that SPDR Gold Shares (GLD) is leading the group with the largest positive three-month price change and StockCharts Technical Rank (SCTR) score.

FIGURE 1. MARKET SUMMARY INTERMARKET ANALYSIS PANEL. Gold is significantly outperforming other commodities.

While silver is missing from this panel, the intermarket analysis chart to the right of the panel, which plots a one-year chart of intermarket performance, allows you to add silver to the group.

FIGURE 2. ONE-YEAR CHART LAYING OUT THE INTERMARKET ANALYSIS COMPONENTS. iShares Silver Trust (SLV) (color-coded gray) and its latest intermarket performance reading is highlighted by the magenta box.

Is Silver Undervalued? Understanding the Gold-to-Silver Ratio

Note the wide performance gap between GLD and SLV. Let’s look at a chart illustrating the gold-silver ratio ($GOLD:$SILVER).

FIGURE 3. 15-YEAR CHART OF GOLD-TO-SILVER RATIO. The ratio is above both averages, suggesting that silver is undervalued.

Take a look at the blue and green bands. Both represent the common gold-to-silver ratio levels that many, if not most, analysts use.

The blue band (60:1 to 65:1) reflects the long-term post-1971 average.The green band (70:1 to 75:1) reflects the 10-year modern average.

When the ratio is above these bands, silver is typically undervalued relative to gold. This can signal three possible outcomes:

Silver rises while gold declines.Both rise, but silver outpaces gold.Both fall, but silver falls less.

The key question now: If silver is undervalued, does the technical setup support an actionable bullish resolution?

SLV Breaks Out: Key Support and Resistance Levels to Watch

In the daily chart below, SLV recently broke above key resistance at $31.75, exiting a wide trading range that stretched down to $26.25. The Quadrant Lines symmetrically divide the entire zone, providing more clarity to the trading volume and price behavior.

FIGURE 4. DAILY CHART OF SLV. Support levels are highlighted within the four quadrants dividing SLV’s 8-month trading range.

Here are a few key insights to consider:

The Stochastic Oscillator is reading “overbought,” suggesting that a pullback is likely in the coming sessions.Buying pressure is stronger than at any point over the past year, according to the Chaikin Money Flow (CMF), suggesting that SLV, even in the case of a pullback, may have enough volume-driven momentum to drive prices higher.The first quadrant, shaded green, marks the breakout level and top of the eight-month trading range.The second quadrant, shaded yellow, marks the highest concentration of trading activity and various levels of support and resistance.The third quadrant, shaded red, marks another level of support before the bottom of the range, which also marks the lowest support level over the last eight months.

If SLV pulls back but investor conviction remains strong, a bounce is likely within the first two quadrants, particularly the second (yellow) quadrant. However, if SLV drops below the second quadrant and enters the third (shaded red), it signals weakening sentiment and suggests the breakout has failed, pulling SLV back into the trading range that has dominated over the past eight months.

Will Silver Hit $40? Forecasts and Fundamental Tailwinds

Some analysts are expecting $SILVER to rise to around $40 an ounce. SLV’s price equivalence is around $37–$38 per share.

From a technical perspective, historical resistance levels are often target zones for those looking to take profit or unload positions. Here are the historical resistance levels to watch in SLV (pull up a 20-year chart of SLV to see these levels):

$36.44 – the February 2012 high$42.78 – the August 2011 high$48.35 – the April 2011 high

These are the levels reached since the last major silver boom in 2011. SLV may (or may not) reach these levels, but it’s important to see the proverbial “roof” before you hit it.

What This Means for SLV Traders Going Forward

With silver breaking out and momentum accelerating, SLV could be setting up for a sustained move. So watch the depth of the pullback, if it happens. You will want to see a bounce above $29 (the lower part of the second quadrant); movement below that is not favorable to the bulls. And, last but not least, remember things can change quickly as geopolitical developments and economic news unfold.

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.

Most religions of the world have the fundamental beliefs that are strikingly similar to the Ten Commandments. History has taught humanity that life does not seem to work well without such guiding principles. As responsible parents, we should have a parallel foundation of ten life skills that we impart part to our children. Your list will vary from mine, of course, but these are the ten essential precepts which I imparted to my son.

Learn the basic life skills such as hygiene, cooking, cleaning, etc.Develop and maintain positive relations with friends and family.Keep a positive ‘can-do’ attitude exuding confidence and good self-esteem.Have strong ethics and values centered around honesty, morality and empathy for others.Develop strong communication skills, both verbal and written.Develop strong problem solving skills, curiosity, education, and rational thinking.Set goals and maintain the motivation to overcome life’s inevitable challenges.Appreciate the spiritual side of life.Keep healthy habits pertaining to diet, exercise, and lifestyle.Understand the tenets of financial literacy relating to money, saving, budgeting, and spending.

Many parenting books have been written on each of these ten topics, but I’d like to highlight the last one – #10. I propose that financial literacy alone has 10 essential skills that we should cultivate in our children. Giving them the gift of a money-wise toolkit along with your time will go along way to ensure their long-term success. It will be the proud legacy you leave and how you’ll be remembered.

These are my Ten Financial Commandments to teach your offspring.

Start early and encourage your kids to embrace investing as a hobby. It’s intellectually stimulating and they’ll meet great people.Invest consistently and regularly. Don’t try to time the market. As of yet, no one has successfully created that algorithm.Warren Buffet famously described the magic of compounding as “the eighth wonder of the world.” He likened it to a snowball rolling down a long hill, accumulating more snow as it rolls. Do the math; it’s true.Avoid debt and leverage. Buying a house or college loan aside, credit card debt and onerous fees can ruin you.Ignore fads and hot tips. You’ll be inevitably late, pay too much and experience the bursting of the bubble eventually.Day trading is not investing, and it’s important to understand the difference. If you are an adrenaline addict and absolutely must day trade, then allocate a small percentage of your portfolio to this activity and consider it your “funny money” that’s expendable. Trading is indeed part of successful investing, but overtrading is not.Pay attention to fees. One percent a year may not sound like much, but when you do the calculations and look at a 10-15 year timeframe, you’ll lose out big-time. Fees represent your money that doesn’t get reinvested or compounded for you over the span of those 15 years.Be careful which assets you marry. Some have long-term handcuffs, high fees, unattractive risk-to-reward ratios and low probabilities of making you wealthier. I’ve never forgotten this famous quote from John Bogle, who founded Vanguard: “Don’t look for the needle in the haystack; buy the haystack.” In other words, buying the S&P 500 Index (SPY) is a reasonable strategy.Investing is a marathon, not a sprint. Young people often think that if they lose big, they’ll have many years to recover. My point is, why lose at all? Asset protection should always be a paramount objective throughout one’s life. Start young.Be action-oriented. Start today. Don’t procrastinate. Don’t make excuses. Buy a good investment book. (I humbly suggest the one I wrote with my son.) Start a free trial at StockCharts.com. Do some paper trading. You might discover you are the second coming of Warren Buffett!

In a spirit of full disclosure, it’s important that I acknowledge the other half of the equation in writing about the ten basic life skills and financial commandments instilled in my son. He was also raised by a devoted and well-educated mother who has an MBA and understands the markets as well.

The bottom line: teach your children about money management. If you don’t, you are intentionally placing them instead into the hands of that merciless professor called “Experience”. The tutorial will be ruthless, and the lessons learned will be costly and late.

Trade well; trade with discipline!

Gatis Roze, MBA, CMT

StockMarketMastery.com

Author, “Tensile Trading: The 10 Essential Stages of Stock Market Mastery” (Wiley, 2016)Developer of the “Stock Market Mastery” ChartPack for StockCharts membersPresenter of the best-selling “Tensile Trading” DVD seminarPresenter of the “How to Master Your Asset Allocation Profile DVD” seminar

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