Of the major indices I track, 7 of the 9 finished the week higher - only small caps (IWM) and micro-caps (IWC) were down. The equal-weight S&P 500 (RSP) outperformed SPY for a change, while QQQ lagged.

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S&P 500 (SPY) Chart

SPY closed at 778.57, an all-time weekly closing high, and is in a Strong Uptrend. It finally broke above 775, the level I’ve been watching on the upside for the past few weeks. If we get some follow-through this coming week and hold above 775 on any pullbacks, that would be very bullish. Below that, 770 is the level I’m watching, with the 20 and 50-day SMAs currently around 768 and rising.

Nasdaq 100 (QQQ) Chart

QQQ closed at 751.27, another all-time weekly closing high. It pushed out to new highs early in the week, then pulled back, retesting the breakout level around 748.65, dipping below it on Thursday before closing back above it on Friday. If we stay above Thursday’s low just above 743 and a rising 20-day SMA which currently sits around 737.5, that would be bullish.

Market Temperature

The Market Temperature came in at 5.0, up from 4.9, and is back in the Goldilocks Zone after one week in Cautious.

The Tape/Trend and Monetary/Macro pillars did the lifting. About three-quarters of the Tape/Trend gain came from breadth. The share of US stocks above their 50-day moving average rose to 28.9% from 27.9% - the first weekly rise after 7 straight declines. The 200-day measure was basically flat at 43.3% from 43.2%. Both scored better as the two-week look-back compares against lower readings. SPY’s weekly RSI also rose to 65.1 from 62.2.

The Monetary/Macro gain was all the MOVE index, which eased to 98.5 from 107.3 - although it’s still well above the 82.2 of four weeks ago. The US dollar is still the biggest drag in the model, with UUP up 3.4% against its four-week comparison. The 10 and 30-year yields fell on the week, closing at 5.24% and 5.60%, respectively.

The Sentiment pillar slipped as the VIX fell to 14.8 from 15.3, which the model reads as a contrarian negative.

The Regime pillar score was unchanged to one decimal place, despite the XLY/XLP ratio being down 1.0% on the week, as staples outperformed consumer discretionary.

GICS Sector Relative Strength

Utilities, staples and energy led the sectors, while technology and industrials were the only two to finish lower. Health care went straight from Lagging to Leading, crossing both RS axes in a single week, joining energy as the only two sectors in Leading. Technology slipped into Weakening, and utilities, staples and discretionary all moved up into Improving.

It’s slightly unusual to see utilities, staples, energy and health care as the leaders for the week, whilst the S&P 500 and Nasdaq 100 both finished at all-time weekly closing highs.

Momentum Leaderboard

12 of the 20 are new again. Semis and AI hardware are gone - SMH, generative AI (CHAT), AI innovation (BAI), technology (XLK) and equal-weight technology (RSPT) - along with Ethereum (ETHA), crude (USO), genomics (ARKG), ARK Innovation (ARKK), the US dollar (UUP), growth (IWF) and Japan (EWJ).

Internet (FDN), equal-weight software (XSW) and FANG+ (FNGS) are back on the board, while software (IGV) and cybersecurity (CIBR) stay on for a 4th week. Health care is back too - XLV, equal-weight health care (RSPH) and medical devices (IHI) - along with staples (XLP), natural gas (UNG), China (KWEB and FXI), AI power & utilities (UTES) and digital infrastructure (IDGT).

Brazil (EWZ) takes number 1, and Ethereum drops off the board after 7 straight weeks at the top. Bitcoin (IBIT) now holds the longest streak on its own at 8.

7 of the 20 are in downtrend states - so a lot of the board this weekend is made up of bounces in downtrends rather than new leadership. 10 are in Strong Uptrends, from 14 last weekend.

Trend States Across the Universe

Uptrend states rose and Strong Downtrends fell, but downtrend states still outnumber uptrend states.

Energy (XLE, XOP and RSPG), broad commodities (DBC), Brazil (EWZ), equal-weight software (XSW), equal-weight health care (RSPH) and large-cap biotech (IBB) all moved up into Strong Uptrends, while Bitcoin (IBIT) and Ethereum (ETHA) slipped back to Uptrend.

Industry Breadth - Leading Stocks

Semiconductors no longer have every name above their 20 and 50-day SMAs and slipped to 9th. IT services and oil refining are now the only industries with all names above both. Integrated oil and investment banks climbed back above the 50% line.

Semis Pull Back, Software Picks Up

Semiconductors (SMH) Chart

I’ve been waiting for a pullback in SMH, which came last week. It fell 4.3% to close at 603.33. Friday’s close was weak, finishing near the lows of the day. Further weakness and a close below 598 would be a red flag. However, if it can hold this level and set a higher low, I may take a new long position, with a target around 660 and stop under 598.

Software (IGV) Chart

Software had a strong week. Cybersecurity (CIBR) was the 4th best ETF in the universe, and IGV closed above resistance around 110.50 and looks like it may make a run towards its 2025 all-time high just under 118.

Crypto

Bitcoin Chart

Ethereum Chart

Bitcoin and Ethereum both sold off quite strongly on Wednesday and Thursday, but have both recovered somewhat since. Bitcoin held up better, bouncing at its 50-day SMA, while Ethereum fell below both the 50-day and the 2515-2530 level I was watching, making a low around 2400. It’s back up to around 2550 on Monday evening Melbourne time as I post this. I am just going to watch it for now and see if it continues to move higher, or if we get a deeper pullback towards the 200-day SMA.

Trades

I added 3 new long positions last week - Snowflake (SNOW), Moderna (MRNA) and Semtech (SMTC) - and went short the Russell 2000, which I was stopped out of today (Monday). I also still have my long FCLD position.

Cloud Computing (FCLD) Chart

FCLD made a new all-time weekly closing high at 45.96. My stop is still at 42.90, but if it continues higher, I’ll move it towards breakeven.

Snowflake (SNOW) Chart

I flagged SNOW a couple of weeks ago as one that could provide a low-risk entry if it broke out of its tight range. It broke out on Friday on roughly double its average volume and closed at 368.89. I bought it early with a day-trade entry and tight stop, then sold into strength. I then bought it back around 358 after it pulled back and turned up again to make new highs for the day, again with a tight stop. The red line at 345, under Friday’s low and the breakout area, is where I’d usually have my stop on a swing trade, but I don’t want this to turn from a decent profit into a loss, so I’ve raised my stop to breakeven and may sell a portion into strength if we get it (this stock has pre and post market trading on my CFD platform which means I can be a bit more tactical without staying up too late). The target I have in mind is the September high around 384, and if it can clear that, the 2020 all-time high at 429.

Moderna (MRNA) Chart

MRNA rose 18.4% and closed at 225.00, breaking out of the range it had been in for the past few weeks between roughly 183 and 203. Like SNOW, I bought it early on Friday with a day-trade entry and sold into strength, before buying it back again around 210 as it crossed back above its daily AVWAP about 2 hours after the open. I’m not willing to let this one turn into a loss either, so I’ve raised my stop to breakeven and will look to scale out into strength, targeting close to 300. Moderna presents the full Phase 3 data for its melanoma vaccine at ESMO on Saturday October 24, so I’ll almost certainly be out before then.

Semtech (SMTC) Chart

SMTC was another name from my watchlist a couple of weeks ago - I said if it could consolidate near its all-time highs for a while, it might provide a good entry. On Friday it dropped quite severely on the open but bounced off the 20-day SMA. I bought it as it reclaimed its daily AVWAP around 187 with a stop just under 183. It stayed in a tight range throughout the rest of the day. The red line on the chart, just under the 20-day, is where I’d normally put my swing stop, but I’ll leave it on with the tighter stop as is.

Russell 2000 Futures (RTY) Chart

Last weekend I mentioned the Russell 2000 had bounced very close to its 200-day SMA. On Tuesday it rallied into the AVWAP from the March 31 low, around 2884, and was rejected. I shorted the December Russell 2000 futures contract through a CFD on Wednesday Melbourne time at 2840 with a stop above Tuesday’s high, thinking that if it breaks the 200-day SMA we could get down towards the 2565-2600 area.

Thursday’s reversal candle made me less confident in the trade - it made a lower low under the 200-day, then reclaimed it, finishing strongly. However, I kept the position on as a hedge, since I planned to add some long exposure. I tightened my stop today (Monday) to just above Friday’s high and was stopped out at 2834, for a very small gain.

The Week Ahead

The Market Temperature is back in the Goldilocks Zone. Breadth ticked higher for the first time in 8 weeks, and 76 of the 121 ETFs I track finished higher, from 40 last weekend. SPY broke above 775 and QQQ held its breakout. However, the leadership underneath rotated away from semis and AI hardware into software, health care and defensives.

I’m happy with my 4 long positions, but may add some SMH if it makes a higher low above 598 as outlined above, depending on how my other positions go. For now, I plan to run tighter stops and sell into strength, with earnings season kicking off, the mid-terms not far away and the potential for more flare-ups in the Middle East to affect markets.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. It is general information only and does not take into account your objectives, financial situation or needs. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and/or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and/or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

Of the major indices I track, only 2 of the 9 finished the week higher - the Nasdaq 100 (QQQ) and mid-caps (MDY). Only SPY, QQQ, the equal-weight Nasdaq 100 (QQEW) and FANG+ (FNGS) remain above their 20 and 50-day SMAs.

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S&P 500 (SPY) Chart

SPY closed at 769.64, in a Strong Uptrend and 1.3% below its all-time high, but only just above its 20 and 50-day SMAs, which both sit around 764. SPY is stuck in a sideways range for now. I’m still watching 775 on the upside and now Thursday’s low just under 759 on the downside. However, a close under the 20 and 50-day SMAs would be the first red flag.

Nasdaq 100 (QQQ) Chart

QQQ closed at 749.58, another all-time weekly closing high. However, Friday’s close after the gap up was a little weak and it’s somewhat extended from the 20 and 50-day SMAs. Any pullback would ideally form a higher low above the 20-day SMA.

Market Temperature

The Market Temperature came in at 4.9, down from 5.0, and is back in the Cautious Zone after one week in Goldilocks.

The Monetary/Macro pillar was responsible for all the fall - the other three pillars all rose slightly. Most of it was due to the US dollar, with UUP up 2.9% against its 4-week comparison (the DXY also closed above its late June highs). The MOVE index rose to 107.3 from 96.0, and credit spreads continued to widen. Yields on Treasuries also finished higher again, with the 10-year at 5.28% up from 5.18% and the 30-year at 5.63% up from 5.50%.

Breadth continued to deteriorate - the share of US stocks above their 50-day moving average fell for a 7th straight week, to 27.9% from 30.2% last weekend and 34.0% two weeks ago. The 200-day measure fell to 43.2% from 45.8%. However, both scored slightly better in the model again, as the two-week look-back compares against a lower reading.

GICS Sector Relative Strength

Technology, energy and utilities were the only sectors to finish higher. Energy moved from Weakening back into Leading, joining technology. Health care and communications both fell into Lagging, leaving 9 of the 11 there.

Momentum Leaderboard

10 of the 20 are new again. The mega-caps and Nasdaq names are gone - FNGS, QQQ and QQEW - along with internet (FDN), communications (XLC), AI (THNQ), equal-weight semis (XSD), cloud computing (FCLD), ARK Autonomous Tech (ARKQ) and natural gas (UNG).

Semiconductors (SMH), generative AI (CHAT) and equal-weight technology (RSPT) are all back for the first time since June, joined by energy (XOP and XLE), Brazil (EWZ), Japan (EWJ) and genomics (ARKG). Anti-Beta (BTAL) and the US dollar (UUP) are also back after one week off.

Ethereum (ETHA) holds number 1 for a 7th straight week, sharing the longest streak on the board with Bitcoin (IBIT) at 7.

Trend States Across the Universe

On aggregate, downtrend states now outnumber uptrend states by a wide margin.

Financials led the moves lower - XLF, equal-weight financials (RSPF), banks (KBE) and insurance (KIE) all slipped from Neutral into Downtrends. Health care (XLV) dropped from a Strong Uptrend straight to Neutral, and the gold and silver miners (GDX and SIL) fell from Recovering Uptrends into Recovering Downtrends.

Conversely, equal-weight semis (XSD), Bitcoin (IBIT) and Ethereum (ETHA) moved up into Strong Uptrends, as their SMAs finally returned to bullish alignment.

Industry Breadth - Leading Stocks

Semiconductors now have all 24 names above both their 20 and 50-day SMAs, joining electrical products, electronic components, engineering & construction and oil refining as the 5 industries with every name above both.

Computer peripherals saw a sharp deterioration, going from 2nd to 13th, and major pharmaceuticals dropped back below the 50% line.

What Actually Drove QQQ

It wasn’t the mega-caps. Apart from NVIDIA, the Magnificent 7 were a net drag on QQQ, mostly due to Apple (AAPL) and Meta (META).

NVIDIA (NVDA) alone accounted for roughly half of QQQ’s gain. The chip equipment makers - Applied Materials (AMAT), Lam Research (LRCX), KLA (KLAC) and ASML - added even more, despite being only about 5% of the index. Cybersecurity (PANW, CRWD and FTNT) and SpaceX (SPCX) contributed too.

The memory and storage names were a drag - Micron (MU), SanDisk (SNDK), Western Digital (WDC) and Seagate (STX) all finished lower.

57 of QQQ’s 101 holdings fell (there are 101 names because of Alphabet’s two classes of shares), and fewer than half are now above their 20 and 50-day SMAs - 49.5% and 43.6% respectively, down from 54.5% and 46.5% the prior week.

Semiconductors (SMH) Chart

SMH didn’t give me the pullback I was hoping for. It pushed higher, closing at 630.60, 6.1% below its all-time high and now more than 3 x ATR above its 20-day SMA.

Lam Research (LRCX) Chart

LRCX rose 10.2% for the week but is still around 21% below the June 30 all-time high. It’s currently more than 3 x ATR above its 20-day, but a pullback that forms a higher low above 320 could be a potential entry opportunity. Earnings are on October 22 though.

Large Caps Near All-Time Highs

I’ve included a new scan this weekend - stocks in the S&P 500, Nasdaq 100 and Russell 1000 that are within 10% of their all-time highs, with a market cap above $15 billion and at least $100 million in turnover on Friday. 87 names made the cut, and 44 of them are in Strong Uptrends. Strength in two groups stood out.

Cybersecurity

Rubrik (RBRK), Fortinet (FTNT), CrowdStrike (CRWD), Palo Alto Networks (PANW) and F5 (FFIV) all finished within 2% of their all-time highs and in Strong Uptrends.

CrowdStrike (CRWD) Chart

CRWD rose 7.1% to 270.04 - it’s not buyable here but might be on strength after a pullback towards 231-246, or some sort of consolidation that holds above this area.

Oil Refiners

Marathon Petroleum (MPC), Valero (VLO), HF Sinclair (DINO) and Phillips 66 (PSX) are all in Strong Uptrends, within 5% of their all-time highs and less than 1.5 x ATR above their 20-day SMAs. It’s a different picture from the energy ETFs - XLE and XOP, which both finished the week below their 20-day.

Marathon Petroleum (MPC) Chart

MPC rose 7.3% to 422.33, 2.0% below its all-time high. Headline risk is high for MPC and the group, but they could provide a useful hedge if Middle East tensions flare again.

Outside those two groups, the scan also shows where weakness is creeping in. 12 financials made the cut, including Berkshire Hathaway (BRK.B), Visa (V), Mastercard (MA) and JPMorgan (JPM), but none of them is in a Strong Uptrend and 11 of the 12 finished below their 20-day SMA. Pharma is similar - Johnson & Johnson (JNJ), Merck (MRK) and Vertex (VRTX) are all below their 20-day, while the life science tools names, Thermo Fisher (TMO), Waters (WAT) and Agilent (A), are in Strong Uptrends.

Trades & Follow-Ups

FCLD is still my only swing position, and my stop remains at 42.90 - my plan at this stage is to raise it to or near breakeven if it breaks out to all-time highs.

Cloud Computing (FCLD) Chart

FCLD closed at 45.06, 1.6% below its all-time high.

Ethereum Chart

ETH has been consolidating in a tight range between about 2625 and 2740, just above a rising 20-day SMA. On Friday it looked like it was going to break out, but it reversed and swiftly retested the mid to lower end of the range. It’s currently trading around 2720, on Monday early evening Melbourne time. I’d still like to see it pull back and test 2515-2530 before going higher, but I’m prepared to buy strength if it breaks above 2800.

The Week Ahead

I’m mindful the breadth divergences are getting worse. SPY and QQQ are holding up mainly due to tech names, while most of what I track outside tech looks poor. 40 of the 121 ETFs I track finished higher, from 52 last weekend. Also, the continued rise in the MOVE index makes me more cautious.

The Dow (DIA) and Russell 2000 (IWM) both bounced very close to their 200-day SMAs on Thursday, with DIA turning higher right at the February high around 505. Neither is something I’d buy, but if tech holds up and other areas start to recover, it would be a positive sign.

With the Market Temperature back in Cautious, that’s exactly what I plan to be for now.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. It is general information only and does not take into account your objectives, financial situation or needs. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and/or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and/or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

Of the major indices I track, 5 of the 9 finished the week higher, led again by tech and mega-caps. The equal-weight S&P 500, mid-caps, small caps and micro-caps all finished lower and remain under declining 20 and 50-day SMAs.

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S&P 500 (SPY) Chart

SPY closed at 771.35, back above its 20-day SMA and back in the Strong Uptrend state, just 1.0% below its all-time high. After a big gap up and push higher on Monday, SPY held above its 20-day on a closing basis all week. It dipped below the 20-day intraday on Thursday - undercutting Monday’s low and partially filling the gap - but reclaimed it by the close and finished the week strongly. For now, the sideways action continues - I’m watching 775 on the upside and 760 on the downside.

Nasdaq 100 (QQQ) Chart

QQQ had a strong week, finishing at 744.50 - an all-time weekly closing high. After Monday’s gap up, it never tested Monday’s low, let alone its 20-day SMA. I am in wait and see mode now and would likely only take a position if it sets a higher low above the 20-day on a mild pullback or if it can trade tightly under all-time highs for a week or two, allowing the 20-day to catch up to price.

FANG+ (FNGS) Chart

FNGS finished the week at 83.75, a closing all-time high. The tight action I was hoping for to provide a low-risk entry did not occur, as it also gapped up on Monday with SPY and QQQ.

Market Temperature

The Market Temperature came in at 5.0, up from 4.5, and is back in the Goldilocks Zone, but only just.

Most of the Tape/Trend gain came from SPY moving back into a Strong Uptrend and its weekly RSI rising to 63.2 from 60.1. However, breadth deteriorated again - only 30.2% of US stocks finished above their 50-day moving average, from 34.0% last weekend and 39.7% two weeks ago. The 200-day measure fell to 45.8% from 48.0% last weekend and 51.7% two weeks ago. Both scored slightly better than last weekend though, as the two-week look-back now compares against a lower reading.

The Regime pillar rose almost entirely due to growth (IWF) outperforming value (IWD), which the model now reads as neutral rather than value-led.

The Monetary/Macro pillar fell, mostly due to the MOVE index jumping to 96.0 from 80.6, against a four-week comparison near 71. Credit spreads also weighed a little, with high yield (HYG) falling more than Treasuries (IEI) last week.

The Sentiment pillar was unchanged to one decimal place, with the VIX at 14.9 from 14.8.

GICS Sector Relative Strength

Technology, communications, health care and industrials were the only sectors to finish higher. Technology is now the only sector in Leading, as health care and energy both moved into Weakening - despite health care finishing higher.

Momentum Leaderboard

10 of the 20 are new this weekend, and they’re almost all tech and growth: AI (THNQ and BAI), technology (XLK), equal-weight semis (XSD), the Nasdaq 100 (QQQ and QQEW), growth (IWF), cloud computing (FCLD), communications (XLC) and ARK Autonomous Tech (ARKQ).

Anti-Beta (BTAL) and the US dollar (UUP) are gone, along with Silver (SLV), Platinum (PPLT), Brazil (EWZ), Crypto Miners (WGMI), equal-weight software (XSW), the health care pair of RSPH and XLV, and Genomics (ARKG).

Ethereum (ETHA) holds number 1 for a sixth straight week (I undercounted this in the last two posts) and shares the longest streak on the board with Bitcoin (IBIT).

14 of the 20 are in Strong Uptrends, from 6 last weekend.

Trend States Across the Universe

The jump in Strong Uptrends was mostly names moving up within their uptrends - SPY, software (IGV), internet (FDN), XLV and IBB came up from Uptrend, and SMH, AI Innovation (BAI) and Quantum & AI (QTUM) from Recovering Uptrend. Only 2 more ETFs are in uptrend states in aggregate and are still outnumbered by those in downtrend states.

Industry Breadth - Leading Stocks

The rotation back into tech, semis and hardware showed up clearly on this board. The top 5 industries are all tech. Electronic components jumped from 16th to 1st, ahead of computer peripherals, packaged software, semiconductors and IT services.

Energy went the other way - oil refining fell from 1st to 12th and integrated oil dropped below the 50% line.

Health care improved too, with major pharmaceuticals back above the line alongside medical specialties and biotechnology.

Precious metals stayed split for a third week - no names above the 20-day SMA, all of them above the 50-day.

The universe shrank by 25 names as QQQ’s own 12-month return rose, but on the names that were in it both weeks, the share above the 20-day SMA still rose to 56% from 42%.

Semis & AI

Semiconductors (SMH) Chart

SMH broke above the 592-600 area I was watching and closed the week at 606.56 - back in a Strong Uptrend and in Leading. The 20-day SMA is above the 50-day. Now I’d like to see a pullback that sets a higher low above the rising 20-day before getting involved.

I’ve included some charts of individual names on my watchlist below. Note, however, that Micron has earnings after the close on Wednesday. Also, I don’t currently plan to take new positions in any of these this coming week, but they are names I am watching due to their relative strength and potential for entries in the future.

Micron (MU) Chart

Snowflake (SNOW) Chart

SNOW doesn’t tend to trend smoothly - but it has been trading in a tight range recently. If it can break out to the upside, it could provide a low-risk entry.

Marvell (MRVL) Chart

MRVL also traded in a tight range last week. If this continues and the 20-day SMA catches up a bit, it could provide a good entry on a break higher.

Bloom Energy (BE) Chart

BE is trading a bit loose currently but could provide a potential entry if it tightens up under 300.

Semtech (SMTC) Chart

SMTC is trading near all-time highs. If it can consolidate here for a while, it may provide a good entry.

Trades & Follow-Ups

I didn’t add any new swing trades last week, and FCLD is still my only position.

Cloud Computing (FCLD) Chart

FCLD closed at 45.00 - 1.8% below its all-time high and back on the Momentum Leaderboard. My stop is still at 42.90. If it can break out to new all-time highs, I will raise my stop close to breakeven.

Ethereum Chart

ETH broke higher on Monday but has been pulling back since. It has been relatively orderly so far, but I wouldn’t be surprised to see a deeper pullback to 2530 or even further towards 2350-2400. I’m just watching for now and don’t have a specific entry strategy in mind. It’s currently trading around 2655, on Monday evening Melbourne time.

Yields

The 10-year yield finished the week at 5.18% and the 30-year at 5.50%, up from 5.00% and 5.33%. Bond volatility, as measured by the MOVE index, jumped with them, while the VIX barely moved. For now, higher rates aren’t affecting the large-cap indices, but I’ll continue to keep an eye out for any change in this regard.

The Week Ahead

The Market Temperature is just back in the Goldilocks Zone, but strength is concentrated in mega-caps and tech. 52 of the 121 ETFs I track finished higher, from 42 last weekend. However, breadth outside tech remains weak. The spike in bond volatility also makes me slightly cautious. I am not in a hurry to add new swing positions yet. Let’s see what the coming week brings.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. It is general information only and does not take into account your objectives, financial situation or needs. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and/or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and/or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

Everything below is as of Friday September 18 close.

Of the major indices I track, only 3 of the 9 finished the week higher - mega-caps (FNGS) and tech (QQQ, QQEW). SPY looks OK, above its 50-day SMA but the other indices all look weak. This weekend I have included The Dow (DIA) and equal weighted S&P500 (RSP) below to show how the other indices look - small and mid-caps look equally bad or worse.

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Dow 30 (DIA) Chart

S&P 500 EW (RSP) Chart

S&P 500 (SPY) Chart

SPY closed at 761.69, just above its 50-day SMA and still in an Uptrend. The initial reaction to the Fed hiking rates took it down under 750 intraday on Wednesday but it closed off the lows. It gapped up on Thursday above the 50-day and had a decent close on Friday - although less impressive than QQQ. I’m still watching for a close below 756.6 to indicate the possibility of deeper pullback. Living under a declining 20-day SMA and hanging on to the 50-day by a thread is not giving me great confidence.

Nasdaq 100 (QQQ) Chart

QQQ undercut its recent lows on Wednesday, touching 700 before bouncing. It couldn’t manage a green close, however it gapped up quite powerfully on Thursday and followed through on Friday - closing the week at 721.45 and back in a Strong Uptrend. I’m still watching 722 on the upside and 700 on the downside. It finished the week right at the top of that range, but I am hesitant to buy a “breakout” over 722 for numerous reasons, including the recent sideways action, the Market Temperature in the Cautious Zone and the weakness in nearly all the other indices. If it can break out above 722 and set a higher low on a pullback to trade against, I would consider taking a new position.

FANG+ (FNGS) Chart

FNGS is easily the best-looking index chart right now - 0.9% off its all-time high and in a Strong Uptrend. If it can tighten up for a bit here and we get improvement in the other indices and breadth, it may be buyable with minimal risk in a week or two. I plan on being patient and am not in a great hurry to do anything this coming week in terms of swing trades.

Market Temperature

The Market Temperature came in at 4.5, down from 4.8, a second straight week in the Cautious Zone.

The Tape/Trend pillar finished close to flat. Breadth continued to deteriorate - only 34.0% of US stocks finished above their 50-day moving average, from 50.3% two weeks ago, and the 200-day measure fell to 48.0% from 57.7% - however QQQ moving back into a Strong Uptrend offset nearly all of this in the pillar score.

Half the week’s fall came from the Monetary/Macro pillar, almost entirely due to the US dollar - UUP is up 1.8% against its 4-week comparison and the DXY is back above 100. The MOVE index easing to 80.6 from 82.2 offset a little.

Sentiment accounted for the majority of the rest, as the VIX dropped to 14.8 from 15.8, which the model reads as a contrarian negative.

The Regime pillar was little changed - the XLY/XLP ratio is down 2.3% over the model’s 4-week window.

GICS Sector Relative Strength

Health care and technology were the only sectors to finish higher, and both moved back into Leading - technology only just, crossing the RS-Momentum line by a tenth of a point.

Financials went the other way, straight from Leading to Lagging - it crossed both RS axes in a single week, without stopping in Weakening.

Energy stays in Leading despite a down week.

Momentum Leaderboard

11 of the 20 are new this weekend, and the mix has flipped from last weekend’s risk-off arrivals. The 0-3 month T-bills (SGOV) and 1-3 year Treasuries (SHY) are gone after just one week on the board (although BTAL remains). In their place: software (IGV, XSW and CIBR), the ARK complex (ARKK and ARKG), Crypto Miners (WGMI), health care (RSPH and XLV), FANG+ (FNGS), Silver (SLV) and Natural Gas (UNG).

The energy names fell off the board again - XOP, XLE and RSPG - along with Agribusiness (MOO). Gold Miners (GDX) and Silver Miners (SIL) also fell off the board, ending their 6-week streaks. The longest streak now belongs to Ethereum (ETHA) and Bitcoin (IBIT) at 5, sitting in the top 2 spots - ETHA holds number 1 for a third week.

Only 6 of the 20 are in Strong Uptrends, from 8 last weekend.

Trend States Across the Universe

The names tell you as much as the aggregate totals this weekend. QQQ, ARKK, ARKG, CIBR, THNQ, FCLD and growth (IWF) all moved up into Strong Uptrends, while XLI, XLRE, XLB, transports (IYT) and Germany (EWG) dropped into Downtrends, and XLF slipped from an Uptrend into Neutral.

Industry Breadth - Leading Stocks

Semiconductors moved up again, from 8th to 5th, holding 73% of its names above the 20-day SMA for a second week. However, 3 of the 4 industries that crossed above the 50 line with it last weekend - electronic components, production equipment and instruments - are now back below it. Only IT services remain above the line. Computer peripherals - which includes SNDK, STX, ANET, NTAP and WDC - remains above the line for a third week.

Health care moved in the opposite direction. Medical specialties and biotechnology are back above the line, while the major pharmaceuticals stayed below.

Precious metals stayed split for a second week - still no names above the 20-day SMA, and all 5 above the 50-day.

Semis & AI

Semiconductors (SMH) Chart

SMH tested 578 on Friday but closed off highs at 573.00. Similar to QQQ, I’d like to see it break out towards 592-600 and then pull back to set a higher low - and have the 20-day turn up and get back above the 50-day - before I’d be willing to take a decent sized new position. Its refusal so far to close under 540 gives me some confidence for now but I will wait for a better setup before entering - if we are to get out of this chop and resume a new uptrend, there should be ample opportunity to get long.

ROBO Global Artificial Intelligence (THNQ) Chart

THNQ is back in a Strong Uptrend and sits 2.7% off its all-time high - still one of the better AI charts I track. A breakout followed by a pullback that sets a higher low, above a rising 20-day is also my preferred entry for this - let’s see if we get it.

Generative AI (CHAT) Chart

CHAT held its Strong Uptrend state for a third week - although looking at the chart the trend is clearly sideways, despite finishing above its SMAs which are in bullish alignment. I’m starting to sound like a broken record - but I do not plan to buy a “breakout” above 90.7, if it comes - I’ll wait for a pullback that sets a higher low above a rising 20-day before entering.

Trades & Follow-Ups

I was stopped out of 2 more positions last week, leaving me with only FCLD.

Gold Miners (GDX)

I was stopped out of GDX at 93 on Monday. It closed the week at 95.48, back above my stop level but still below its 20-day SMA. I am not looking to get involved with this again until at a minimum it’s above the 20-day and has a close above 99 or so.

Ethereum Chart

ETH chart is from Saturday

The Clarity Act failed its Senate vote on Tuesday and the selling took out my 2460 stop. However, 2350 held nicely - as I’ve mentioned a couple of times previously I was hoping for an undercut and reclaim of 2350 to shake out anyone with their stop under this level - I like this setup/entry tactic as it also gives you a clear and sensible level for your own stop-loss placement.

I didn’t take a new position but strongly considered it on Friday, as Bitcoin did undercut and reclaim its recent range lows between Wednesday night and Friday afternoon (Melbourne time). On Friday when the US markets opened ETH ripped $100+ back up to test the Friday Sep 11 highs around 2660 - the move looked more sustainable this time and it held above 2600 on Saturday and early Sunday (Melbourne time) - but it’s now under this level around 2575. I’d like to see 2530 hold and may consider an entry if we get a bounce at or around that area. Bitcoin has also cleared 80,000 on this same move. There wasn’t one clean catalyst on Friday that I can see - the market seems to have moved past the Clarity failure, with the SEC’s new Innovation Exemption for tokenised assets helping sentiment.

I am looking to re-enter ETH, but after the explosive move between August 19-21, I am mindful we may need more time to digest and consolidate here. Crypto’s frequently erratic price action, and tendency to have pretty loose consolidations make it harder to trade, but the moves it makes sometimes offer huge asymmetric opportunities with good entries and stop placement, so it can be very profitable even with a low win rate.

Cloud Computing (FCLD) Chart

FCLD had a decent week, despite an ugly candle on Friday - it gapped up but reversed to finish near the lows of the day. It closed at 44.17, back above its 20-day SMA and technically in a Strong Uptrend, although the chart doesn’t look as good as the trend state suggests. My stop is still at 42.90.

Yields

The 10-year yield finished at 5.00% and the 30-year at 5.33%. The 10-year edged up through 5% during the week, while the 30-year was down slightly despite the hike - the Fed’s first in three years. Both remain above the levels I flagged a few weeks ago and I will continue to keep an eye on yields.

The Week Ahead

The Market Temperature is in the Cautious Zone for a second week and breadth keeps narrowing. 42 of the 121 ETFs I track finished higher, from just 19 last weekend, however the list is heavily tilted to tech, AI, health care, crypto and defensives.

The market feedback from my own trading hasn’t improved either - 2 more stop-outs take the run to 6 in two weeks. I am glad I was keeping all the positions small, so the drawdown is still minimal.

I’m down to a single position in FCLD and I’m not in a hurry to add new ones. I want to see a recovery in breadth and the other indices before taking any new positions. I will likely focus on QQQ, SMH, CHAT and THNQ, but want to see them break out and set a higher low above a rising 20-day SMA. I’ll also be watching FNGS to see if it can tighten up and then break out. Other than these I will continue watching ETH and try to work my way into a new position.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. It is general information only and does not take into account your objectives, financial situation or needs. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and/or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and/or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

Of the major indices I track, all 9 finished the week lower. Only SPY, QQQ and FNGS remain above their 50-day SMAs. The other indices all look much worse, below their 50-day SMAs and in the Neutral trend state. The question now is whether SPY, QQQ and FNGS follow them lower.

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SPY Chart

SPY closed at 764.29, slipping from a Strong Uptrend to an Uptrend. It’s only 1.9% below its all-time high, but for now looks choppy and rangebound. A close below Thursday’s low around 756.6 - which would also be below the 50-day - could open the way for a deeper pullback towards 735.

QQQ Chart

QQQ closed at 714.88, also back to an Uptrend after one week in a Strong Uptrend. Like SPY it has been stuck in a range - I’m watching 722 on the upside and 700 on the downside. Until we resolve one way or another, I intend to remain patient and sit on my hands.

Market Temperature

The Market Temperature came in at 4.8, down from 5.4 and is now in the Cautious Zone after a run of 5 straight weeks in Goldilocks.

The Tape/Trend pillar was responsible for all the fall, with SPY and QQQ both slipping out of the Strong Uptrend state and breadth deteriorating. Only 39.7% of US stocks finished above their 50-day moving average, from 50.3% last week and 50.7% two weeks ago. The 200-day measure fell to 51.7% from 57.7%.

The other three pillars had minimal moves, mostly cancelling each other out.

Sentiment added a little as the VIX rose to 15.8 from 14.5.

Monetary/Macro pillar fell slightly, due to the MOVE index climbing to 82 from 73, against a four-week comparison near 70.

The Regime pillar rose a touch. The XLY/XLP ratio was down week over week but scored higher due to a more favourable comparison as the strong early-August reading rolled off.

GICS Sector Relative Strength

Health care’s return to Leading only lasted a week - it’s back in Weakening after posting the worst week of any sector, down over 3.5%.

Energy, communications and technology were the only sectors to finish higher. Energy and financials are the only two left in Leading, and financials are barely above 100 on both RS axes.

Momentum Leaderboard

8 of the 20 are new this weekend. The health care and biotech names that rejoined the board last week - IBB, XBI, RSPH and XLV - are all gone, and Genomics (ARKG) dropped off with them, ending its 5-week streak.

The new arrivals signal risk-off with Anti-Beta (BTAL), the US dollar (UUP), 0-3 month T-bills (SGOV) and 1-3 year Treasuries (SHY) all joining the board. SGOV and UUP were basically flat on the week and SHY fell slightly - it wasn’t their strength causing them to climb onto the board, rather weakness in almost everything else.

Ethereum (ETHA) holds the top spot for a second week, while Gold Miners (GDX) and Silver Miners (SIL) now share the longest streak at 6 weeks.

Only 8 of the 20 are in Strong Uptrends, from 14 last weekend.

Trend States Across the Universe

Strong Uptrends halved from 34 to 16 - SPY, QQQ, financials (XLF and RSPF), software (XSW) and the whole biotech complex all slipped a state.

Downtrend states now match uptrend states at 48 apiece.

Equal-weight technology (RSPT) was the only ETF to move up into a Strong Uptrend.

Industry Breadth - Leading Stocks

On aggregate 42% of leaders are above their 20-day SMA, from 48% last weekend - but underneath, the membership of the top and bottom flipped.

Semiconductors jumped from 20th to 8th, with 73% of its 22 names above the 20-day SMA, from 27% last weekend. Electronic components, electronic production equipment, electronic equipment and IT services all crossed above the 50% line - the entire hardware complex moved up the board in one week. Names above both their 20 and 50-day SMAs, and in the Strong Uptrend state, include Micron (MU), Marvell (MRVL), Qorvo (QRVO), Semtech (SMTC), Amphenol (APH), Teradyne (TER), Keysight (KEYS), Arista (ANET), NetApp (NTAP) and HP (HPQ). The flip on this board is only one week so far, but I am watching for a possible rotation back into semis, AI names and hardware as I mentioned last week.

Pharmaceuticals, biotechnology and medical specialties all crossed below the line. Precious metals went from all 5 names above the 20-day to none, though all 5 are still above the 50-day.

Semis & AI Relative Strength

Interestingly, only 19 of the 121 ETFs I track posted a positive return last week - and 7 of those were tech and AI related: equal-weight semiconductors (XSD), digital infrastructure (IDGT), smart grid infrastructure (GRID), equal-weight technology (RSPT), data centre infrastructure (DTCR), semiconductors (SMH) and technology (XLK).

SMH Chart

SMH held up in a down week, closing at 568.53. Still in a range for now, but I’m watching 578 in the short-term and then 592 on the upside, and 540 on the downside.

Trades & Follow-Ups

All 4 of the positions I carried into the week - XPH, XSW, LIT and ATI - hit my stop-losses at the levels I originally set.

My resting buy orders for FCLD and GDX triggered last week.

Cloud Computing (FCLD) Chart

FCLD triggered at 44.25 on Tuesday and closed the week at 43.50, failing to hold its 20-day SMA. My stop is at 42.90, just under Thursday’s low of 43. I would usually give it a bit more room under a low, but I set this stop when I placed the order last week. As I finish writing this on Monday evening in Melbourne it looks like there will be some pretty large gap downs across most of tech if current extended hours prices hold, so I expect to be stopped out of this on the open.

Gold Miners (GDX) Chart

GDX triggered at 97 on Thursday and closed the week at 97.10. It gapped up on Friday and initially pushed higher, but reversed, finishing the week under its 20-day SMA. My stop is at 93, and also looks under threat with GDX down in the premarket.

Ethereum Chart

Ethereum broke out of the 2350-2550 range with a rapid move after the CPI release on Friday, going from around 2450 to 2650, between 10:30pm and midnight Melbourne time, triggering my buy stop order at 2570. There was no follow-through however, and it has since dropped back into the old range, currently trading around 2510. My stop-loss is at 2460 and has twice come very close to getting hit. I will leave the position on with the stop as is for now, despite the failed breakout on Friday.

Yields and the FOMC on Wednesday

The 10-year yield closed at 4.98% and the 30-year at 5.36%. Both are now above the levels I flagged a few weeks ago - 4.74% on the 10-year and 5.27% on the 30-year. The FOMC rate decision on Wednesday US time (early Thursday morning here) and the market’s reaction to it will be interesting.

The Week Ahead

The Market Temperature is now in the Cautious Zone after 5 weeks in Goldilocks. The Momentum Leaderboard is signalling reduced risk appetite. Of the major indices only FNGS, SPY and QQQ remain in an uptrend state and there are multiple signs of deterioration underneath the surface. The market feedback from my own trades is also telling me that less is more currently, with 4 stop-outs last week.

In terms of positioning, I have small positions in FCLD and GDX, as well as Ethereum, all with relatively tight stops. I am not in a hurry to add new positions at this stage, although I will continue to monitor semi and AI names - if SMH can clear 578-592 (and SPY and QQQ don’t break down), I’ll be looking for opportunities in that area again. Although this doesn't look probable in the short term - premarket prices are down quite significantly, with SPY, QQQ and SMH all trading near the downside levels I flagged above.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. It is general information only and does not take into account your objectives, financial situation or needs. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and/or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and/or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

Of the major indices I track, 5 of the 9 finished the week higher, but nothing moved much in either direction, except the equal-weight Nasdaq 100 (QQEW) which was down 2.5%.

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SPY Chart

SPY closed at 770.19, 1.2% below its all-time high and still in a Strong Uptrend. After gapping down on Monday and Tuesday it looked like a test of the 50-day SMA was imminent, but it held and bounced right at 760 - the high from June 2 - pretty textbook. Wednesday and Thursday were strong, with a little bit of give back on Friday. Quite impressive, but at the same time we have been going sideways for a month after the big two-day pop in early August.

My resting buy order for the S&P 500 CFD at 7580 didn’t fill. The low for the week was just under 7610. The 50-day SMA is now above my bid, so I cancelled it and have placed a couple of new orders with that risk capital (more on that below).

QQQ Chart

QQQ closed at 718.96 and is back in a Strong Uptrend, above its 20 and 50-day SMAs, which are now bullishly aligned. It held the 700-707 zone on Tuesday and Wednesday, bounced nicely on Thursday and was up slightly on Friday. The chart doesn’t look very bullish, but it doesn’t look bearish either. It’s a big consolidation that’s been going for three months now - probably exactly what was needed after the fast and furious rally off the March 30 low. If we get a close decisively below 700, I will become far more cautious with all my positions, but even more so with any tech ones.

Small and mid caps had a bad start to the week. They looked in trouble after gapping down on Monday and Tuesday, but both bounced back to finish the week slightly in the green. But both are still in Neutral trend states, below their 20 and 50-day SMAs.

IWM Chart

MDY Chart

Market Temperature

The Market Temperature came in at 5.4, up from 5.3, a fifth straight week in the Goldilocks Zone.

The Tape/Trend pillar rose, although half the move was due to QQQ moving back into the Strong Uptrend state. SPY’s weekly RSI accounted for about a quarter of the pillar increase - it rose to 64.2 from 64.0 but scored higher due to the 2-week lookback which had a lower comparison of 63.1. Week on week breadth was little changed on multiple measures. 50.3% of US stocks finished above their 50-day moving average, from 50.7%, and 56.2% two weeks ago. Overall, the breadth measures in the model still scored negatively due to the two-week look-back. However, they were less negative than last weekend and therefore added slightly to the pillar’s score relative to last week.

The Monetary/Macro pillar fell slightly - the majority due to the MOVE index rising to 73 from 71.

The Regime pillar also fell a touch. The XLY/XLP ratio was down about 1% on the week and scored even lower due to the four-week lookback which compares against the higher reading from the first week of August.

Sentiment was unchanged to one decimal place as the VIX edged up to 14.5 from 14.4.

GICS Sector Relative Strength

Energy, technology, utilities and health care finished higher, and financials were flat.

Energy and health care moved back into Leading after one week in Weakening, joining financials.

Utilities and staples moved from Lagging into Improving.

Technology is in Weakening for a fourth week.

Momentum Leaderboard

13 of the 20 are new this weekend. All 5 of the software and tech names that arrived last weekend are gone - IGV, FCLD, CIBR, FDN, FNGS - as well as equal-weight software (XSW) which had the longest streak at five last weekend. The financials (KCE and XLF), Germany (EWG), Copper Miners (COPX), Palladium (PALL), Uranium (URA) and Anti-Beta (BTAL) are also gone.

Energy is back, yet again - Crude (USO) is at number three, Oil & Gas E&P (XOP), Energy (XLE) and equal-weight energy (RSPG) at numbers 11, 12 and 13.

Health care and biotech are back too, after dropping off for a week - Biotech Large-Cap (IBB), Biotech (XBI), equal-weight health care (RSPH) and Health Care (XLV), rejoin Genomics (ARKG).

Ethereum (ETHA) and Bitcoin (IBIT) take the top 2 spots this weekend, despite not having large weekly moves.

Gold Miners (GDX), Silver Miners (SIL) and Genomics (ARKG) share the longest streak at five weeks.

14 of the 20 are in Strong Uptrends, from 12 last weekend.

Trend States Across the Universe

At the aggregate level things were basically unchanged. Underneath, Strong Uptrends fell from 38 to 34 - some notable ETFs that slipped from Strong Uptrend to Uptrend include software (IGV), cyber, copper miners and the equal-weight Nasdaq 100, while those that moved up to a Strong Uptrend include QQQ, Generative AI (CHAT) and High Beta (SPHB).

Strong Downtrends rose from 9 to 14, including all four of the US government bond ETFs I track.

Industry Breadth - Leading Stocks

This board looks a bit better than last weekend. 12 of 27 industries sit below the line, from 13 of 29, and the percentage of leaders above their 20-day SMA rose to 48% from 44%. The universe barely changed - 298 names versus 300.

Oil, precious metals and P/C insurance are still at the top of the board, and managed health care jumped from 21st to 7th.

Semiconductors improved a little, now with 6 of its 22 names above the 20-day SMA, from 1 last weekend. Packaged software lost ground, now with only 46% of names above the 20-day, down from 71%.

Semis & AI Looking Better

SMH Chart

SMH rose 2.5% and closed at 567.01, above its 20-day SMA and the AVWAP from the March 30 low. I’m not too excited yet with the 20 and 50-day SMAs still declining. But if it can close above 592, I’ll be paying a lot more attention.

Generative AI (CHAT) Chart

Generative AI (CHAT) jumped from Neutral to a Strong Uptrend, up 2.9%, closing at 89.56. This is the first AI hardware dominated ETF I track that has returned to the Strong Uptrend state in the last couple of months. I will be watching to see if it holds and whether other AI ETFs also start improving.

ROBO Global Artificial Intelligence (THNQ) Chart

THNQ, an AI ETF that is more heavily weighted towards software names, held its Strong Uptrend state until July 10 - a week or two longer than the other AI ETFs I track. It also regained the Strong Uptrend state on August 21 and held there for two weeks. However, it slipped back to Uptrend last week. The chart still looks pretty good though, particularly relative to other AI.

I wouldn’t be surprised to see a rotation back into AI and hardware names at some stage in the next month or two.

Software (IGV) Gives Back Most of Last Week’s Gains

Software (IGV) Chart

Software (IGV) was the worst ETF in the universe, down 4.5%, one week after being the best. It dropped from Strong Uptrend to Uptrend, as it closed just under its 20-day SMA. If I were long, I would want it to hold Friday’s low, or at worst Wednesday’s low around 102.50, before potentially making a run at 110.50 and then its prior ATHs around 117.90. Its uptrend off the April 10 low hasn’t been the cleanest, dropping below its 50-day SMA both in June and July. So, a deeper pullback to somewhere around the 50-day, which currently sits at around 98 (anywhere between 96-100) wouldn’t be out of character.

Follow-Up on Ethereum

Ethereum Chart

Spot Ethereum tested 2350 on Wednesday. It held successfully and is trading around 2475 as I get ready to post this. I was looking for an undercut and reclaim of 2350 to shake out those with stops sitting under 2350, but it didn’t happen. I am still looking to enter a new position, but I can finesse my entries a bit more given it trades 24/7. I may even look to do a day-trade entry in larger size and then take some off if it goes higher to lock in breakeven or close to on the trade, letting the rest run for a bigger potential move. If it’s still in the 2350-2550 range, I’d want my stop under 2350 for any swing trade portion. However, if it clears 2550, I’d most likely look to use the most recent swing low on a 30-minute timeframe. I am also considering placing a buy stop order above the recent range highs at 2570, with a stop at 2460.

Trades & Follow-Ups

Three of last week’s resting orders triggered - XSW, LIT and ATI. I had open positions in LLY and XPH which had filled the prior week, but was stopped out of LLY.

Eli Lilly (LLY) Chart

I was stopped out of Eli Lilly (LLY) at 1150 on Monday last week in the first 30 minutes of trading. The low was around 1147 and reclaimed 1150 quickly. I nearly bought it back with a stop under that low but decided not to - the right decision as it turned out. It tried and failed to reclaim the 50-day SMA on Tuesday and Wednesday and closed the week near the lows at 1149.36. It’s been living under the 50-day SMA for 7 trading days now and doesn’t look very good. If it holds 1138 it may make another attempt to go higher, but I generally don’t buy anything living under the 50-day. Even though 1 or 2 big up days would see it reclaim both the 20 and 50-day SMAs, I’m happy to wait and watch for now.

Pharmaceuticals (XPH) Chart

My entry on Pharmaceuticals (XPH) was at 70.95. It closed at 70.93, just under its 20-day SMA but above the 50-day at 69.52. My original stop is at 68.90. I must admit I do not particularly like the fact it spent pretty much all last week living under the 20-day. I am considering raising my stop closer to 69.50 but it’s probably not worth it, given I could only raise it at most 50 cents at this stage and would increase my odds of getting stopped out if it wicks below the 50-day. I will watch the price action early next week before making any decisions. However currently XBI, IBB and ARKG are all holding their 20-day SMA and look better than XPH.

Equal-weight software (XSW) Chart

Equal-weight software (XSW) fell 3.0% to 202.99, back under the prior all-time highs at 206. It bounced perfectly off the 20-day SMA on Wednesday and followed through strongly on Thursday. But Friday’s giveback and close below the breakout level wasn’t what bulls wanted to see. The only positives about Friday were holding above Wednesday’s low and closing mid-range for the day after dipping below the 20-day SMA briefly within the first 30 minutes of trading. My position triggered at 204.50 and my original stop-loss is at 197.50. However, I am considering getting a little more aggressive and raising it closer to Wednesday’s low around 200.50 - although that’s maybe getting a little cute and increases the chance of getting shaken out. The other option would be to sell if it closes below 200.50 without hitting my original stop-loss. I’ll monitor this one closely next week, as I am open-minded to a failed breakout here, or even just requiring more time to consolidate to build energy for an eventual clean breakout. With the benefit of hindsight, the entry was probably a little on the aggressive side, but I didn’t want to miss it if it took off over a few dollars on the entry price.

Lithium (LIT) Chart

Lithium (LIT) triggered at 75, with a stop at 72.20. It closed at 74.18 and Friday’s low was 73.25, so not far off stopping me out. This is my least favourite position now due to the price action (and a reminder why I prefer to buy things when the SMAs are bullishly aligned - even on a pullback to the 50-day). I was hoping to get in on a wick down under the 20-day SMA that reclaimed quickly and would like to see it living above the moving averages and 75.85. Might kick it if I don’t get stopped out by Thursday or Friday and it still hasn’t reclaimed at least all the SMAs. I try to always enter positions expecting to get stopped out - to help with the mental side of things - but I have the least confidence in this position due to the relatively poor price action last week.

ATI Chart

ATI triggered at 202.98 - I changed the buy limit from 205 to 203 during the week - with my original stop at 196.90. It closed at 210.65. I am considering raising my stop to just under Wednesday’s low of 198.46 - however I don’t want to choke off the trade too early raising my stop $1 or so, as it wasn’t a big position anyway. If it clears the 20-day currently around 216, I’ll definitely raise my stop then.

FANG+ (FNGS) Chart

I didn’t take the FANG+ (FNGS) trade. By Tuesday I already had four positions on and a resting order for the S&P 500 in decent size, which I felt was enough. Also, I felt the price action was a little loose - will keep it on the watchlist next week though.

Cloud Computing (FCLD) Chart

Cloud Computing (FCLD) was down just 0.6%, still in a Strong Uptrend and 2.1% off its all-time high. It’s an interesting mix - it includes the memory names like SanDisk, Western Digital and Seagate, alongside some of the larger software names that have been doing well recently, like Microsoft, Salesforce, Snowflake and Atlassian. Over the trailing 6 and 12 months it has outperformed IGV, XSW and CIBR by a wide margin. I’ve placed an order for this, looking to buy some weakness back towards the 20-day SMA closer to 44. I have a bid at 44.25 and a relatively tight stop at 42.90. If that doesn’t play out next week, I may buy strength on a close above 45.50 or so - the same stop under 43 makes sense (or maybe the 20-day SMA), but buying strength would reduce my position size due to the wider stop-loss.

Gold Miners (GDX) Chart

Gold (GLD) doesn’t look great - down 0.5%, back below its 200-day SMA and now in a Downtrend. However, the miners look better. Gold Miners (GDX) was down 0.4% on the week, and Tuesday’s candle looked a little ugly, but it ended up bouncing off its 20-day SMA on Wednesday and Thursday. It gave back a bit on Friday but looks like it could continue higher. I’m looking to take a position, and have an order at 97, around the 20-day SMA, with a stop-loss at 93, below Tuesday’s low. Since it tends to be pretty gappy I will keep the position size relatively small, possibly adding more if it continues higher. Targets would be around 108 and then 112.50.

The Week Ahead

SPY held 760 and bounced, QQQ is back in a Strong Uptrend, and the Market Temperature sits in the Goldilocks Zone for a fifth straight week. However, the rotation continues to be fast - more than half of the momentum leaderboard turned over again, software went from best to worst performer in a week, and energy is back on the momentum leaderboard for the third time since mid-July. I’m not bearish and don’t see any compelling reasons on the charts to be so now, but I’m being conservative in my trading given the sideways, choppy action in the indices and the relatively quick rotations happening underneath.

The 10-year yield closed at 4.79%, through the 4.74% level I flagged a few weeks ago, while the 30-year closed at 5.25%, still just under the 5.27% level I was watching. The moves remain relatively small and contained, so I’m not overly concerned yet, but keeping an eye on both.

In terms of positioning, I’ll be looking to tighten my risk on ATI, XPH and XSW if they move higher next week. Same with LIT - but if it just chops sideways without stopping me out or clearing 75.85 or so, I might cut it loose - depending on how my other positions and watchlist names are going. Lastly, I have cancelled my S&P 500 CFD bid and am using that risk trying to enter GDX and FCLD as outlined above. Ethereum also stays high on my watchlist for a new entry. If I can’t day trade my way into it, I’ll place the buy stop order.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. It is general information only and does not take into account your objectives, financial situation or needs. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and/or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and/or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

Of the major indices I track, 5 of the 9 finished the week higher. Friday’s red candles across the board don’t look great. The narrative after Warsh’s Jackson Hole speech was that he was more hawkish than expected. Odds of a September Fed rate hike increased significantly, and interest rate sensitives sold off. Small and mid caps were hit hardest, both closing on their lows and under their 50-day SMAs.

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IWM Chart

MDY Chart

The SPY/RSP ratio peaked in mid-May and has been trending down since. After months of RSP outperforming SPY, some mega-cap leadership is not necessarily unhealthy in my opinion and might even be what is needed for the SPY and QQQ to go higher. Although I think semis will need to - at a minimum - stop going down as well.

SPY Chart

SPY closed at 769.35, right on its 20-day SMA and 1.3% below its all-time high, still in a Strong Uptrend. Friday’s reversal candle doesn’t look great, but SPY has held above the breakout level around 760 so far. My resting order for the S&P 500 CFD at 7580 (around 755 on SPY) never filled. I’m going to leave it for now, as the 50-day on SPY now sits at 754, just under that level. My stop-loss remains at 7495, or around 745 on SPY.

QQQ Chart

QQQ closed at 716.43, just below its 20-day SMA but above the 50-day and thus improved its trend state to Uptrend. On Monday it undercut 709 but reclaimed it on Tuesday and stayed above for the rest of the week. In fact, until Friday the chart was shaping up quite nicely. If it closed a point and a half higher (above the 20-day SMA), it would have been back in a Strong Uptrend - which is impressive given the recent underperformance of semiconductors and their high concentration in the Nasdaq 100 index, around 25 to 30%. 700 remains my line in the sand. I do not have a position as I didn’t want to buy on Friday going into the Jackson Hole event, despite the strength on Thursday. However, if I did have a position, I would exit if we got a close under 700. If we are materially under 700, the odds of a retest of 661 (the July 29 low) increase.

FNGS Chart

FANG+ (FNGS) closed at 80.85, just eking out a new weekly closing all-time high. I’m considering taking a position - ideally it can consolidate and tighten up around current levels. A small retracement back towards the 20-day SMA followed by some strength could also provide a good entry - with a stop-loss under 77.50. Although, if you wanted to give it a little more room, a stop-loss under the 50-day SMA, which is currently at 76, would be reasonable, despite being nearly 4.5% (almost 3 x ATR) below. If I do take a position, I’ll do it using the FANG+ Index CFD. The 20-day SMA currently sits at 18,475, and I would likely use the low from Monday August 24, which is 18,121.5 as my stop, since the 50-day SMA is all the way down at 17,662.

Market Temperature

The Market Temperature came in at 5.3, down from 5.7, a fourth straight week in the Goldilocks Zone, although all four pillars were lower.

The Tape/Trend pillar was down slightly. Breadth declined again - 50.7% of US stocks are above their 50-day moving average, from 56.2% - but QQQ improving its trend state to an Uptrend offset the decrease from breadth.

The Monetary/Macro pillar declined the most, with the dollar bouncing 1% and now flat over the model’s four-week lookback.

The Regime pillar also fell, but the XLY/XLP ratio was flat on the week - it scored lower only because of the four-week lookback.

The VIX fell to 14.4 from 15.1, which the model reads as a contrarian negative, so Sentiment was slightly lower - although it was unchanged to one decimal place.

GICS Sector Relative Strength

Technology, financials and communications were the only sectors to finish higher.

7 sectors changed quadrant. Financials moved into Leading and is now the only sector there - health care and energy slipped into Weakening, and materials, discretionary and staples fell back into Lagging. Technology is in Weakening for a third week. However, 7 of the 11 sit within a point of a boundary, so I’m not reading too much into any single crossing.

Momentum Leaderboard

12 of the 20 are new again. Health care and biotech are gone - XPH, XBI, IBB, IHI, RSPH and XLV all dropped off, leaving only Genomics (ARKG). Gold (GLD), silver (SLV) and platinum (PPLT) dropped off as well.

New to the board this weekend are software and tech: Software (IGV) at number two, Cloud Computing (FCLD), Cybersecurity (CIBR), Internet (FDN) and FANG+ (FNGS), plus the financials (KCE & XLF), Taiwan (EWT) and Germany (EWG).

12 of the 20 are in Strong Uptrends, from 8. Equal-weight software (XSW) has the longest streak at five.

Trend States Across the Universe

Uptrend states fell from 76 to 62 and Neutral rose from 14 to 24. Most of the downgrades were Recovering Uptrends stalling into Neutral - transports, high beta, quantum, AI, IPOs, space and data centres. Small caps (IWM) and real estate (XLRE) dropped straight into Neutral from Strong Uptrend.

Industry Breadth - Leading Stocks

13 of 29 industries sit below the 50% line, from 16 of 33, but that’s mostly because the universe shrank - the number of leaders (stocks in the Nasdaq 100 and/or the Russell 1000 that have outperformed the Nasdaq 100 over the trailing 12 months) fell from 332 to 303. Both bank industries dropped off the board entirely as they have fewer than four qualifying names left (each industry must have at least four names to be included).

Oil and precious metals still hold the top of the board.

Of the 8 technology industries on the board, only packaged software and IT services are above the 50% line. 5 of the other 6 have no names above their 20-day SMA. Semiconductors has 1 of its 21 names (Micron) above the 20-day and none above the 50-day, despite a broadly strong Thursday following Nvidia’s earnings beat.

Semis Still Struggling

SMH Chart

For consistency, I will continue to follow up on the semis. However, we’re still stuck in the range I have been discussing for a few weeks. SMH fell 1.3% and closed at 553.11, marginally below the AVWAP from the March 30 low and below its 20 and 50-day SMAs. Thursday’s gains were totally erased on Friday - not what the bulls wanted to see.

Software Breaks Out

XSW Chart

Equal-weight software (XSW) broke out to all-time highs on Thursday, clearing the December 2024 and September/October 2025 highs at 206, and closed the week at 209.20. Software (IGV) was the best ETF in the universe, up 5.9%.

I’m looking to take a position in XSW on a retracement back towards 205-206, with a stop under the 20-day SMA, around 197.50. Anyone more aggressive could use Thursday’s low at 203.90, but I’m going to give it a bit more room.

Gold and Silver Fail at the 200-Day

GLD Chart

SLV Chart

Last week I said I wouldn’t be surprised to see silver follow gold through its 200-day SMA. Instead, silver (SLV) was rejected just below its 200-day on Friday - reversing hard and printing a very ugly looking candle. It was down 4.3% for the week. Gold (GLD) closed at 408.89, back below its 200-day after clearing it the week before. Very nasty candles on both.

GDX Chart

The miners (GDX & SIL) look better and are still above their 200-day SMAs, but they need some time to consolidate and set up in a tighter pattern before I’d consider taking a position.

Follow-Up on Ethereum

Ethereum Chart

Ethereum consolidated above 2350 for a second week and is trading around 2420 as I write this on Monday. It held its gains on Friday despite the higher USD and broader pullback in rate sensitives, including gold and silver. I may take a small position here with a stop-loss under the recent lows - I’d use 2340 - but I wouldn’t be surprised to see a shakeout under 2350. If that happens, it would be a better entry in my opinion. If it moves higher, I’d be mindful of the AVWAP from the all-time high which currently sits around 2700, and 2775 just above that. First target would be in this 2700-2775 range. If we move up and clear this zone, my next target would be around 3250.

Trades & Follow-Ups

LLY Chart

I didn’t write about Eli Lilly (LLY) last week but it’s been on my radar for a few months now. I took a position just under 1200 on Wednesday, with a stop at 1150. It closed at 1174.61, below both its 20 and 50-day SMAs. If it can’t reclaim its 50-day SMA soon, I may exit the position, assuming I’m not stopped out first. But I’ll give it at least a few days here to see if it can recover.

XPH Chart

On Friday my buy limit order on Pharmaceuticals (XPH) triggered at just under 71. It closed at 70.79, just under the 20-day SMA. Friday’s action doesn’t look good - a more than 2% down day on well above average volume. My stop is at 68.90, just under the 50-day SMA.

XBI Chart

Biotech (XBI) got hit on Friday as well, but it’s still in a Strong Uptrend above its 20-day SMA. The order issue from a couple of weeks ago has been resolved with my broker. Without going into all the details, it was partially my fault. However, they did compensate me for the slowness to reach a resolution. Anyway, as it stands now, I do not have a position in XBI. That’s one of the reasons I placed the Eli Lilly trade on Wednesday.

LIT Chart

My buy limit order on Lithium (LIT) at 75 didn’t fill. I will leave it there this week and see if it triggers. My stop-loss is at 72.20, but I may bring it up a little depending on what happens. Initially, when I set the stop, I placed it under the cluster of SMAs, but I was planning to use the 20-day as the trailing stop - at least initially - and it’s rising quite rapidly, currently sitting at 74.64.

ATI Chart

I also placed a buy limit order for ATI last Tuesday, at 205. I liked the upside reversal on Monday - which allowed for a relatively tight stop-loss, as well as a clear level to know whether the trade has worked or not. It’s been trending very nicely since September 2025 and has been a very strong outperformer, returning 83% year to date and 174% over the trailing 12 months. It is quite volatile though, with an ATR percentage just over 4%. The order did not trigger as the stock stayed above 205 all week after Monday. It closed the week just above 210. I’m still undecided whether to leave the pending order as is, as I am less confident it will hold on another test of the 202-204 level. It may, but it would have been cleaner if it went up and out last week, rather than finding resistance at the 20-day SMA. I may even change the order to a buy stop and buy strength above 218-219. This would be my preferred strategy in a stronger market. However, when the general market and leaders are not trending strongly, breakouts are more likely to fail. It would also require a much wider stop-loss, as I’d still want to keep it just under 200, below the 50-day at 202, and trail it up using one of the SMAs if it keeps rising. I also sized this order as a half position, due to the general market conditions, the tight stop-loss, and the ATR% of 4% on this stock.

The Week Ahead

SPY remains in a Strong Uptrend near all-time highs, and the Market Temperature sits in the Goldilocks Zone for a fourth straight week. However, participation has narrowed, with relatively short rotations in leadership and moves that haven’t been as orderly and sustained as those you see when the environment is more favourable for swing trading. Also, the feedback I got from the market last week tells me now is not the time to be overly aggressive. LLY couldn’t hold its 50-day SMA on this pullback and XPH cut through its 20-day on Friday on high volume (although the two trades are correlated, so I take that as one data point, or maybe 1.5 at most, rather than two). Add the big reversals on Friday in gold, silver, biotech and health care, which have been the recent leaders, and you now have the new leaders stumbling, while many of the old AI leaders are yet to stabilise, let alone start new uptrends.

I am mindful not to overtrade in this environment and have already reduced my position sizing. I will reduce it further if I am unable to get traction in the coming week(s). I am also considering my overall risk, in case a few of these orders trigger in quick succession - ideally I’ll have some profit cushion and some stops at break even before entering multiple new positions. For example, I have 2 active positions and will probably have 5 resting orders going into the market open later today. If I were to risk 2% of my portfolio per trade, which I often do, and got stopped out of all of them, I’d be down 14% - not something I’d like to see in a short period of time. The fact that all the buy orders are under the current market price also makes me more wary. I usually prefer to buy strength, but in choppy or consolidating markets it tends to be a less successful entry strategy. Due to the number of resting buy limit orders I will have, I am risking less than 1% per trade for the majority of orders, in case we get a rapid decline that triggers (and stops me out of) all my orders.

In terms of new setups - XSW on a mild pullback is my favourite at this stage and Ethereum above 2350. Otherwise, I’ll leave the resting orders in the S&P 500 CFD, LIT and probably ATI as they are, and manage LLY and XPH. If we lose 700 on QQQ, which would likely coincide with further weakness in SMH, I will be far more conservative adding new long positions and probably sell any position(s) not in profit and/or add a short position or two as a hedge.

Note that US markets will be closed Monday September 7 for Labor Day, after which volume and volatility may pick up as the mid-terms approach.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and/or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

A red week for the indices across the board, but the pullbacks look relatively orderly so far.

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SPY Chart

SPY closed at 765.72, 1.8% below its all-time high and still above both its 20 and 50-day SMAs. The 755-760 area I’ve been watching is now just under the 20-day SMA, which sits just above 762. I am planning on putting in a bid for the S&P 500 CFD at 7580, which equates to around 755 on SPY, with a stop under the 50-day - but want to give it a little room, so around 7495 or 745 on SPY.

If my bid doesn’t fill, and SPY bounces from the 20-day SMA or undercuts and reclaims it without reaching my level, I will reassess tomorrow.

QQQ Chart

QQQ closed at 713.44, 4.7% below its early June all-time high and right on its 50-day SMA. However, the 20 and 50-day are still not bullishly aligned. I don’t plan to take a position in QQQ yet but will be watching to see if it holds 709 - if it does, I may also take a small position. If it fails to hold 709, then 700 is my line in the sand. Below 700 I believe it opens the possibility of a deeper pullback to retest the July 29 low around 661. That would also be confluence with a rising 200-day SMA, which currently sits just under 653.

Market Temperature

The Market Temperature came in at 5.7, down from 5.9, a third straight week in the Goldilocks Zone.

The Tape/Trend pillar accounted for the whole decline. Breadth declined, with 56.2% of US stocks above their 50-day moving average, from 62.6%, and SPY’s weekly RSI eased to 63.1 from 67.8. SPY and QQQ both held their trend states.

The Monetary/Macro pillar rose slightly due to continued weakness in the dollar.

The Regime pillar also improved a touch. However, the discretionary vs staples ratio scored higher almost entirely due to the model’s four-week lookback - the XLY/XLP ratio itself was flat on the week.

The VIX edged up to 15.1 from 14.3, which the model reads as a contrarian positive, so Sentiment rose fractionally, but was unchanged to one decimal place.

GICS Sector Relative Strength

Health care, energy and materials were the only sectors to finish higher - health care and energy remain in Leading, materials stayed in Improving.

Utilities, technology and industrials led the declines.

Five sectors changed quadrant, but four of them crossed by a fraction of a point and are bunched around the boundary lines.

Technology is in Weakening for a second week.

Momentum Leaderboard

12 of the 20 are new, and the turnover tells the week’s story. What arrived was commodities and crypto: Ethereum (ETHA) and Bitcoin (IBIT) at number one and four, Copper Miners (COPX), Platinum (PPLT), Gold (GLD), Silver (SLV), Uranium (URA) and Water Resources (PHO). The rest of the board is mostly biotech and healthcare.

All four energy names (XOP, XLE, RSPG and OIH) and all three financials (KBE, KRE and KCE) dropped off.

Only 8 of the 20 are in Strong Uptrends, down from 14, and 9 are in Recovering Uptrends.

Software EW (XSW) and Medical Devices (IHI) now share the longest streak at four weeks.

Trend States Across the Universe

Strong Uptrend went from 48 to 43 and Neutral from 1 to 14. The names that moved into Neutral are mostly cyclical and rate-sensitive: industrials, regional banks, the bank ETF, transports, airlines, semis and aerospace. Still, 76 of the 121 remain in one of the three uptrend states.

Industry Breadth (Leading Stocks)

Last weekend only 2 of 33 industries sat below the 50% line. This weekend it’s 16 of 33, and roughly half the names in the universe are above their 20-day SMA, down from three quarters.

The top of the board is now oil, precious metals and medical specialties.

Last weekend regional banks and major banks had every name above both SMAs, now none are above the 20-day and only 40% and 33% respectively are above their 50-day.

Technology reversed as well. Packaged software is the first tech industry on the board at 13th, and along with computer peripherals are the only ones still above the line. Semiconductors dropped to 28th of 33, with only 17% of names above their 20-day SMA and 8% above the 50-day. Electronic components and electronic production equipment have no names above either.

Semis Fail at the 50-Day

SMH Chart

SMH poked its head above 592 and its 50-day SMA on Monday but then gapped down on Tuesday and was weak for the rest of the week. It fell 4.7% and closed at 560.42, below both its 20 and 50-day SMAs. It managed to hold the AVWAP from the March 30 low, which sits around 556. If it loses that, a retest of the July 29 low at around 504 looks more likely.

XSD Chart

Equal-weight semis (XSD) fared even worse, down 8.5% on the week and the weakest ETF in the universe.

Software Showing Continued Strength

XSW Chart

Equal-weight software (XSW) gapped down on Monday but rallied through the week from there, finishing up 0.7%. It looks constructive here, consolidating just under its all-time highs from December 2024 and September/October 2025.

Commodities and Crypto

With the US dollar down again, there was a broad move into commodities and crypto. Gold and silver miners (GDX & SIL) and metals and mining (XME) had already been on the Momentum Leaderboard for a couple of weekends and were consolidating above their 200-day SMAs. GDX and SIL ripped again last week, both up over 10%. Copper miners (COPX), gold (GLD), silver (SLV), platinum (PPLT), water resources (PHO) and uranium (URA) all joined the Momentum Leaderboard this week. Crude (USO) rose 6.4% and the commodity basket (DBC) was up 4.2%.

Last week I said I had less conviction in the gold and silver miners move because spot gold and silver were still trading below their 200-day SMAs. However, gold ripped straight through it last week. Silver still sits below its 200-day, but I wouldn’t be surprised to see it follow gold this coming week.

Spot Gold Chart

Spot Silver Chart

Lithium (LIT) had a nearly 30% drawdown between early May and late July but has started to recover with gold and silver so far in August. It hasn’t moved as much as the gold and silver miners, but the chart looks like it may be setting up for continued upside and is offering a good potential risk reward trade here. I am going to try and buy weakness back towards 75, with a stop-loss under the 20-day SMA (currently around 72.5 and rising) and a potential target around 84.

LIT Chart

Bitcoin (IBIT) and Ethereum (ETHA) both had monster weeks up over 20%. Both are now above their 200-day SMA - the ETFs only just, but the spot charts are well above. It wasn’t just the big two either, with crypto total market cap excluding BTC, ETH and stablecoins up over 20% for the week as well. I will try to write a deep dive into crypto and which coins are leading later this week.

BTC Chart

Total3ES Chart

Follow-Up on Ethereum

My buy stop order triggered last Wednesday. Due to the intensity of the move, I took profits near my first target around 2350. It has been consolidating above 2350 over the weekend and so far today on Monday (Melbourne time). If I were still in the trade, I would trail my stop-loss up under 2350 to lock in some gains. Ideally it can consolidate last week’s move here for a bit and offer a new entry with good risk-return.

Ethereum Chart

Healthcare and Biotech

Healthcare (XLV) was the best GICS sector on the week and broader health care & biotech occupy 7 of the top 20 ETFs on the Momentum Leaderboard. Biotech Large-Cap (IBB) is a bit extended, around 4 x ATR from its 20-day SMA, and Genomics (ARKG) closer to 5 x ATR. Pharmaceuticals (XPH) is highly correlated with IBB but only around 2 x ATR from its 20-day. I am considering entering a position if we get a pullback towards 71, with a stop-loss under 69.

XPH Chart

Follow-Up on XBI

I am still waiting on a resolution from my broker on the missed 154.50 fill - XBI itself closed at 165.73, roughly midway between where the entry should have filled and my initial target of 174.

Yields

The 10-year yield finished at 4.74% and the 30-year at 5.28% - right around the levels I said I’d be watching last week. It’s hard to know what to make of this, especially given the announcement by Bessent that the Treasury would double its long-end buybacks, which initially caused yields to fall, only to rise again on Thursday and Friday. I am not overly concerned at this stage, but it’s something to keep an eye on in coming weeks.

The Week Ahead

Last week’s broadening stalled and semis (SMH & XSD) failed at their 50-day SMA. The four names on my watchlist (STX, TER, LITE and TSEM), some of the better-looking AI related names, had a bad week after one good day on Monday. Now only LITE is above its 20 and 50-day SMA. For now, it looks like there are better ponds to fish in.

On the positive side the major index pullbacks still look orderly for now and the market temperature held in the Goldilocks Zone. In terms of new trades, I am going to focus on SPY (or the S&P 500 CFD), LIT and XPH, and will be watching crypto closely this week.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

Of the major indices I track, only FANG+ and the Dow finished the week lower. 6 of the 9 made their highest weekly closes ever - SPY, both equal-weights (RSP & QQEW), mid caps (MDY), small caps (IWM) and micro caps (IWC). The outperformance of the equal-weight indices, along with the small and mid caps, is one of several data points showing a broadening out in participation.

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SPY Chart

SPY grinded higher throughout the week, despite the underperformance of mega-caps generally. We didn’t get the pullback I was hoping for, but I will remain patient, looking for a lower risk entry. An orderly pullback to 755-760 that finds support and bounces remains the ideal scenario for new longs in my opinion.

QQQ Chart

QQQ cleared the 726 level I was watching and closed at 731, which is about 2.0% below the June high around 746. I would be less inclined to buy a pullback in QQQ, with its 20 and 50-day SMAs not yet bullishly aligned. Further strength towards 746 and a consolidation that forms a handle, or a tight area under the ATHs - letting the SMAs catch up to price and the 20-day to cross above the 50-day, would provide an excellent new low risk entry, if it were to then break out to new highs.

Market Temperature

The Market Temperature came in at 5.9, down from 6.0, a second straight week in the Goldilocks Zone. Last week’s 6.0 was rounded up from 5.96 and the 5.9 was rounded down from 5.92, so the actual move was just four hundredths.

The Tape/Trend pillar was identical to last week. Breadth improved a touch - 62.6% of US stocks are above their 50-day moving average, from 61.4% - offset by a slightly lower RSI score - the RSI itself rose week-on-week but scored lower due to the model’s two-week lookback window.

The Monetary/Macro pillar firmed slightly, with the MOVE index easing further and the dollar drifting sideways in a range.

Regime was unchanged, with growth vs value still scoring in value’s favour.

The VIX fell again, to 14.3 from 14.9, which the model reads as a contrarian negative, so Sentiment was again the only pillar to fall (to one decimal place in the graphic it was steady at 0.4, but the raw score went from 0.42 to 0.35).

GICS Sector Relative Strength

Energy and healthcare moved back into Leading after just one week in Weakening, and financials joined them. Technology fell out of Leading into Weakening after one week.

As I wrote last week, a lot of sectors are bunched around the boundary lines, so I wouldn’t read too much into any single crossing - particularly for XLC and XLRE which both sit very close to the RS-Momentum borderline and XLF which sits right on the RS-Trend borderline.

9 of the 11 sectors beat SPY, on a week the index finished higher - a first in the 18 weeks I’ve been tracking this data.

Momentum Leaderboard

11 of the 20 are new. Energy returned after two weekends off - Oil & Gas E&P (XOP), Energy (XLE), equal-weight energy (RSPG) and Oil Services (OIH) are all back on the board. As are the financials (KBE, KRE and KCE), along with healthcare (XLV and RSPH).

Ethereum (ETHA) dropped off after six straight weekends - it had the longest streak on the board. Gold Miners (GDX) slipped from first to fourth as the miners consolidated their big gains from the prior week.

Medical Devices (IHI) at number two is the only name on the board not in an uptrend state, and 14 of the 20 are in Strong Uptrends. Last weekend only 6 were in Strong Uptrends, with 4 names still in downtrend states.

Trend States Across the Universe

Despite little change at the aggregate level, 17 names moved into Strong Uptrend and only 2 dropped out - with the net effect being 15 more names now in the Strong Uptrend state. It wasn’t just energy names either - the equal-weight Nasdaq, the Nasdaq Next Gen 100, staples, real estate, regional banks, transports and Japan all moved into Strong Uptrend states too. Nearly 40% of the 121 ETF universe are now in the Strong Uptrend state.

Industry Breadth

The broadening shows here too. 6 industries have every name above both SMAs - oil and the banks dominate the top of the board, with precious metals there for a second week.

Only 2 of the 33 industries on the board this weekend, trucking and REITs, sit below the line, which marks where fewer than half an industry’s names, on average, are above their 20 and 50-day SMAs. Two weekends ago, 19 of the 39 industries were below it. Last weekend, 8 of 37 were. If you’re wondering why the number of industries each week is different, it is because this universe contains only stocks in the Russell 1000 and Nasdaq 100 that have outperformed the Nasdaq 100 in the trailing 12 months - a floating universe.

The technology industries are improving as well. Two weekends ago, 7 of the 9 tech industries were below the line. Last weekend it was down to 2 - semiconductors and data processing services. This weekend there are none.

Semiconductors continued to improve - 88% of names are now back above their 20-day SMA, from 73%. However, only 36% are above the 50-day, up from 19% - better, but more work to be done for many of these names to repair the damage sustained in the big July selloff.

Packaged software keeps climbing up the board, placing at number 7. The industry group has 15 names this weekend, nearly all are above both SMAs, and it has the best one-month median return of any technology industry, at 10.8%.

The Return of Oil

Crude (USO) rose 7.3% and jumped from Neutral to a Strong Uptrend. Now all the energy ETFs I track are back in Strong Uptrends. The last time energy led the momentum board, in late July, it was a defensive story - Anti-Beta was at number four, Low Volatility and Utilities were on the board, and only 2 of the 9 major indices finished that week higher. This time those risk-off proxies are not on the board, 7 of the 9 indices were up - led by the equal-weight and smaller cap indices - and 88 of the 121 ETFs are in uptrend states.

USO Chart

Semis Still Below Their 50-Day

SMH Chart

SMH added 0.9% and closed at 587.8 - still below the 592 level I’ve been watching, and 0.6% under its 50-day SMA. It seems there is a bit of a battle going on at this level. I’m waiting for SMH to clear 592 before getting more bullish.

XSD Chart

Equal-weight semis (XSD) finished flat, below its 50-day SMA and right on the AVWAP from the March 30 low for a second week running. I want to see it clear those levels and potential resistance at 575.

Gold, Silver and the Miners

GDX finished flat and SIL added 1.2%, both still above their 200-day SMAs. A nice digestion after huge moves the prior week. A breakout after some more sideways action could provide an entry opportunity. However, the fact that both spot gold and silver are yet to reclaim their 200-day SMAs reduces my conviction at this stage. Although both spot contracts also had constructive looking consolidations last week.

GDX Chart

Follow-Up on the Ethereum Trade

I entered the first leg of the Ethereum position I outlined last weekend, buying around 1915, and used the tighter stop-loss under the 20-day SMA at 1875 rather than the wider one under the August 1 low, around 1820. I was stopped out on Monday overnight (Melbourne time) for a relatively small loss. The low of the week was around 1850, so the wider stop would have kept me in the trade, but I didn’t want to sit through chop on a larger decline. It also allowed me to take a bigger position for the dollar risk I allocated to that half of the position. I still have the second leg as a resting buy stop order at 1950, in case it does push higher.

Ethereum Chart

Follow-Up on XBI

A quick follow-up on XBI. I had a buy limit order at 154.50 which should have filled on Friday, but there was an execution issue which my broker is looking into. My stop-loss on this is at 149.50, with an initial target around 174, as outlined last week.

XBI Chart

The Dollar and TLT

The DXY spent another week below 100 in a tight range. As I finish writing this on Monday evening Melbourne time, DXY is down and has undercut the recent lows of the range from the last couple of weeks.

TLT closed last week at 82.04, under the 82.77 low from May I’ve been watching. The 10-year yield finished at 4.70% and the 30-year at 5.26%, both a touch higher, but they have been going sideways during August and are both yet to take out their July 31 highs, which were 4.74% for the 10-year and 5.27% for the 30-year. These are the levels I will be watching now.

The Week Ahead

The temperature held in the Goldilocks Zone and participation broadened on multiple measures. It’s even more impressive that all of this came in the face of higher oil prices and continued uncertainty in the Middle East. On the negative side, SMH still hasn’t reclaimed the 592 level - it’s been several weeks now - and there are plenty of individual AI names that still don’t look very healthy. Even among the better charts, there’s not a lot in buyable positions. I’m watching yields as outlined above, a significant break higher above their respective July 31 highs would lessen my conviction to get aggressively long. Although I always place more emphasis on the individual chart I am trading.

In terms of new trades, I am looking at SPY or CFD equivalent to retest the breakout area and buy strength on a bounce from there if it occurs. For QQQ, I would like to see a handle or tight consolidation a bit closer to the ATHs and buy a breakout. For individual stock names I am watching Seagate (STX), Teradyne (TER), Lumentum (LITE) and Tower Semiconductor (TSEM) for possible entries. All four have shown relative strength, are within about two ATRs of their all-time highs, are above their moving averages, are not extended, and have reported earnings. The only thing missing is the 20-day crossing back above the 50-day - and all four are close. I will also have a resting buy stop order for Ethereum at 1950.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

Of the major indices I track, all nine finished the week higher and, other than the Nasdaq 100, made their highest weekly closes ever.

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SPY Chart

SPY finally resolved its 2-month consolidation, driving higher on Monday and Tuesday. Tuesday’s gap and go took it to new all-time highs. Wednesday’s gap up was sold into, but selling never accelerated and Friday’s close was quite strong. If we get a bigger pullback, the top of the old range around 760 is the first level of potential support, with the 20-day SMA near 750 and rising. I would look to buy strength if we retest 755-760, but it might not be that easy.

QQQ Chart

QQQ rose 5.1% and is back above its 20 and 50-day SMAs - although they are not yet bullishly aligned. Last weekend I said I’d be watching whether it could push higher early in the week and set a higher low above 685 on any pullbacks. Tuesday’s move was explosive and the pullback on Wednesday and Thursday didn’t even take out Tuesday’s low, let alone fill the gap from Monday’s close around 700. I’d like to see that level hold, with 686 as the last line in the sand. If it can clear 726, it could make a run at the June high around 746.

Market Temperature

The Market Temperature jumped to 6.0, up from 4.8, out of Cautious, where it has been for three weeks, and back into the Goldilocks Zone. If you’re wondering why 6.0 isn’t classified as Strong, it’s because the reading to two decimal places was 5.96.

The Tape/Trend pillar drove most of the gain. QQQ improved from Neutral to a Recovering Uptrend, the SPY weekly RSI rose to 67.1 from 60.8, and breadth expanded - 61.4% of US stocks are back above their 50-day moving average, from 51.7%, and 61.3% above their 200-day, from 56.1%.

The Regime pillar also improved. High beta vs low volatility flipped back to risk-on, and the discretionary vs staples ratio continued higher. Growth vs value still scores in value’s favour.

The Monetary/Macro pillar firmed as well. The MOVE index fell around 13% on the week to 72, and the dollar eased.

The VIX fell to 14.9, from 16.0, which the model reads as a contrarian negative, so Sentiment was the only pillar to fall.

GICS Sector Relative Strength

Technology moved back into Leading after a big 7.2% week, and it’s the only sector there - for the second time in a month. Materials crossed into Improving, joining financials.

Health care and energy both dropped out of Leading into Weakening. Energy was down 3.4% and, along with utilities and real estate, was one of the three sectors to finish lower on the week.

Discretionary, industrials, communications and staples all slipped into Lagging despite all four finishing the week higher. Apart from staples they all had good weeks - they just lost ground relative to a very strong SPY.

A lot of the sectors are bunched right around the boundary lines this week. Six of the eleven sit within a point of a line, so I wouldn't read too much into any single quadrant change.

Momentum Leaderboard

Twelve of the twenty are new again this weekend. Gold Miners (GDX) tops the board after sitting in a Strong Downtrend just a week ago, with Silver Miners (SIL), Copper Miners (COPX) and Metals & Mining (XME) rounding out the top four. Palladium (PALL) and Uranium (URA) also arrived, as did the homebuilders (ITB & XHB).

All five international names dropped off - China Internet (KWEB), China Large-Cap (FXI), Hong Kong (EWH), Germany (EWG) and India (INDA) - along with the financials (XLF, RSPF & KCE) and Anti-Beta (BTAL).

Genomics (ARKG) returned after two weekends off.

Ethereum (ETHA) now has the longest streak on the board, at six straight weeks.

Trend States Across the Universe

Quite the jump on this board. Neutral collapsed from 28 names to just 2. The biggest jump was in Recovering Uptrends - price back above at least the 20 and 200-day moving averages, but the averages themselves not yet in bullish alignment.

87 of the 121 ETFs are now in one of the three uptrend states, up from 51 - both the level and the one-week change are the largest in the five weeks I’ve been publishing it.

Industry Breadth

The turnaround shows here too. 336 of the 355 names on the board were also there last weekend - what changed is how many are back above their moving averages. On those same names, the percentage above their 20-day SMA went from 49% to 69% in a week.

Last weekend semiconductors sat third last on the board, with 8% of names above their 20-day SMA and none above their 50-day. This weekend 73% are back above the 20-day, though only 19% are above the 50-day. Seven of the nine technology industries were below the line last weekend. Now only semis and data processing services are.

Precious metals and steel have every name above both SMAs, alongside investment managers and multi-line insurance.

The Semi and AI Names Still Not Confirming

Semi and AI names generally had a big bounce last week, but many are yet to reclaim their 50-day SMA. Also, the three earnings I said I’d be watching - AMD, Western Digital (WDC) and SanDisk (SNDK) - all beat, but AMD was down just over 4% after reporting, while WDC fell over 16% and SNDK just over 10% - poor reactions from some prior leaders in the strongest tape week in months.

SMH Chart

Two weekends ago, I was watching 536 and 592 on SMH. The 536 level broke during the late-July selloff, but last week’s 7.8% rally took it back above its 20-day SMA and AVWAP from the March 30 low, closing at 582.70. However, it still sits about 2% below its declining 50-day. Further strength and a reclaim of this level would be a positive for the bulls. But I remain open-minded to the possibility of another leg down.

XSD Chart

Equal-weight semis (XSD) rose 11.7% and broke out of the descending channel it had been in since late June. It closed right at its AVWAP from the March 30 low, below its declining 50-day SMA.

Other Tech Breaking Out to ATHs

CIBR Chart

Cybersecurity (CIBR) broke out of its two-month range, up 6.6% on the week and in a Strong Uptrend.

QQQJ Chart

The Nasdaq Next Gen 100 (QQQJ) - the hundred names next in line for the Nasdaq 100 - also broke out of its two-month range.

Biotech Showing Strength Again

Large-cap biotech (IBB) made a closing weekly all-time high, and the ARK Genomics Fund (ARKG) is back on the momentum board at number nine. Equal-weight biotech (XBI) also looks good.

XBI Chart

XBI bounced after testing the 50-day SMA on Monday - up 7.1% for the week, and back above its 20-day SMA and the AVWAP from the July high. I am going to try and get back into this - ideally closer to the AVWAP which currently sits a touch over 153, with a stop-loss just under 150 and an initial target around 174, which is its 2021 all-time high.

Gold, Silver and the Miners

The metals were the story of the week. Gold (GLD) rose 7.3% and silver (SLV) 9.8%, but the miners ripped - GDX up 21.3% and SIL up 20.0%, the two biggest weekly gains of any ETF I track. Noticeably, both miner ETFs reclaimed their 200-day SMAs last week - the metals themselves haven’t yet.

Spot Gold Chart

Spot gold closed just under 4380 - which was the October 2025 high. If it clears that it could make a run for the 200-day SMA which sits around 4500.

Spot Silver Chart

Spot silver also looks like it could make a run towards its 200-day SMA, which currently sits around 71.

Ethereum and Crypto

Ethereum (ETHA) and crypto haven’t participated in 2026, however Ethereum has been carving out higher lows since the late June bottom and is back above its 20 and 50-day SMAs. It has also outperformed Bitcoin during this timeframe. I generally don’t trade anything below a declining 200-day SMA. However, I am willing to make an exception for crypto.

Ethereum Chart

I like the tight ETH setup under resistance here - especially given the action in gold and silver. I plan to take a position around current levels - currently on Sunday evening in Australia it’s trading around 1915 - and would add if it breaks above recent highs around 1940-1950. Initially my max stop-loss would be below the August 1 low, around 1820, but I may use a more aggressive stop under the lows of the last few days and the 20-day SMA, around 1875, and would raise my stop to this level if it does clear 1950, with potential upside targets at 2350 and then 2750.

Follow-Up on the Dollar and TLT

DXY Chart

The DXY spent the week below 100 - continued weakness should be a tailwind for equities, precious metals and potentially crypto.

TLT Chart

TLT recovered during the week to close right back at the 82.77 May low - with the 10-year yield easing to 4.66% from 4.74% and the 30-year to 5.21% from 5.27%. If yields continue to ease, I will be more comfortable adding risk and exposure.

The Week Ahead

The temperature is back in the Goldilocks Zone, SPY at all-time highs, breadth surged, and the momentum board turned over to a far more risk-on look. Last weekend I was neutral and in capital preservation mode, but after last week the market is signalling it’s time to start adding exposure. I’m mindful the semi and AI complex is yet to confirm - I’ll be watching SMH to see if it can clear 592 and whether QQQ continues to outperform SPY. I’ll also keep an eye on 10-year and 30-year treasury yields. However, this coming week I will look to get exposure on via XBI and Ethereum and look to add some S&P 500 through CFDs on strength after a pullback towards 7600, if we get one.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

Of the major indices I track, only the S&P Mid-Cap 400 finished the week lower. Interestingly the equal-weight Nasdaq 100 (QQEW) outperformed the cap-weighted index by more than 2%.

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SPY Chart

SPY closed above its 20-day SMA on Friday, which is what turned its trend state back to a Strong Uptrend. However, it doesn’t look particularly convincing to me. Both the 20-day and 50-day SMAs are flat and bunched together within less than 0.5% of Friday’s close.

QQQ Chart

QQQ is still in Neutral and looks weak - making lower highs and lower lows, below its declining 20 and 50-day SMAs. The weekly close was back above the AVWAP from the March 30 low, but only just, as Friday’s gap up was sold into.

Market Temperature

The Market Temperature came in at 4.8, up from 4.3, a third straight week in Cautious. The week-on-week move wasn’t quite big enough to change the direction reading, so it stays Cautious rather than upgrading to Improving.

Almost the entire change was due to SPY flipping back to a Strong Uptrend on Friday. The weekly RSI firmed slightly and breadth was little changed.

The MOVE index rose again, up 8.1% on the week. The level itself, around 83, isn’t at historically stressed levels, but the model looks at the four-week change and over that window it is up around 27%. The US dollar sold off, down over 1.5%, which offset the MOVE’s rise within the Monetary pillar, which ended up basically unchanged.

Interestingly, the VIX fell back to 16.0, from 18.6, which the model reads as a contrarian negative signal, thus the Sentiment pillar was down compared to last week.

GICS Sector Relative Strength

Only four of the eleven sectors finished the week higher, with discretionary up over 6% and utilities down over 4%. The Leading quadrant is now down to just healthcare and energy, as industrials fell out after falling 1.5% for the week.

Momentum Leaderboard

Twelve of the twenty are new this weekend. Software, internet and consumer names returned, and the energy related names all dropped off.

International names stood out - five of the twenty, with China Internet (KWEB) on top.

Six of the top ten in Recovering Downtrend states, and Anti-Beta (BTAL) on the board for a third straight week at number ten, speak to the current state of the market.

Trend States Across the Universe

Some improvement this weekend with more Strong Uptrends, and fewer Downtrends and Strong Downtrends.

Industry Breadth

One thing to keep in mind reading this board. The universe is every Russell 1000 and Nasdaq 100 stock that has exceeded the Nasdaq 100 return over the past twelve months, so it’s a snapshot of longer-term leadership. A significant part of this cohort came from a year of AI leadership. Semiconductors has more individual names (26) than any other industry - but now sits third last on the board, with only 8% of stocks above their 20-day SMA and none above their 50-day.

Seven of the nine technology industries sit below the line, which shows where the average of names above the 20 and 50-day drops below 50%. Packaged software is the notable exception, driven by the likes of Snowflake, Datadog, CrowdStrike and Palo Alto.

Integrated oil and the refiners hold the top two spots on this board, while oilfield services sits in the bottom half. The TradingView industry groups here are much narrower than the energy ETFs.

Semis

SMH Chart

Last weekend I said I was watching 536 and 592 on SMH. It closed the week at 540.53, but this doesn’t tell the story of volatility throughout the week. Monday through Wednesday, SMH was down over 10%. It bounced on Thursday and Friday, but Friday’s gap up was sold into, right around the AVWAP from the March 30 low. The chart looks broken for now, making lower highs and lower lows under its 20 and 50-day SMAs.

Levels I Was Watching on the Dollar Index and TLT

The levels I flagged last weekend were broken, but not in the way I expected.

The dollar broke down - going from about 101.5 to 99.8. However this was at least partially due to Japanese intervention in the USDJPY market late last week. It’s trading a little lower again as I write this on Monday.

DXY Chart

Chart captured Monday - the last candle is still open.

TLT broke the May 19 low of 82.77, closing at 82.25. The spike in yields is somewhat concerning. The 10-Year Treasury Yield closed at 4.74% and the 30Y at 5.27%.

TLT Chart

Follow-Up on Last Week’s Names

I didn’t put on any of the trades I outlined in my watchlist in last week’s note. On Monday the SPY and QQQ gapped up only to sell off hard in the first hour or so.

AMD, Dell (DELL), J.B. Hunt (JBHT), Targa Resources (TRGP) and ATI were hit the hardest - all slicing through their 20 and 50-day SMAs and where I would have had my stop loss during the week. Hewlett Packard Enterprise (HPE) held up better but still undercut both SMAs on Tuesday and Wednesday.

Bank of New York Mellon (BNY), Viking Holdings (VIK), Royalty Pharma (RPRX) and Millicom (TIGO) fared better, but with the volatility during the week and the uncertainty leading into the weekend regarding Iran, I was happy to just watch from the sidelines.

The Week Ahead

Looking through the individual charts this weekend, both ETFs and individual names, there’s nothing I really want to buy here. Even within the stronger looking charts I’m not seeing any clean setups. Conditions are still not favourable for my trading style, and I’m staying focused on capital preservation. Plenty of earnings again this week, but I will be particularly interested in watching the reaction to AMD on Tuesday, as well as Eli Lilly (LLY), Western Digital (WDC) and SanDisk (SNDK) on Wednesday. I’ll also be on the lookout for an IBD “Follow-Through Day” and/or whether the QQQ can push higher early in the week and have a more orderly pullback and set a higher low above 685.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

Of the major indices I track, only the EW S&P 500 and the S&P Mid-Cap 400 were up for the week. The Dow was down 39 basis points, but its three-week pullback has been orderly so far.

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SPY Chart

SPY spent another week range bound, closing below both its 20-day and 50-day SMAs. If there is further downside, the AVWAP from the March 30 low, which currently sits around 722.5, would be the first level of potential support. If that fails to hold, a test of the 200-day SMA, which sits 5.8% below Friday’s close, would be possible.

QQQ Chart

QQQ still looks significantly weaker than SPY and closed the week sitting right on the AVWAP from the March 30 low. It held on Friday, but only just. If we see further downside this week, the 200-day SMA currently sits around 643, only 6.4% below Friday’s close. Given QQQ’s ATR% is a little more than 2%, it is certainly within striking distance. There is also no obvious structure or support between the AVWAP and 200-day SMA, due to the furious April/May rally. Between April 16 and May 6 the QQQ rallied about 56 points (8.8%) in just 14 trading days, after breaking out over 637.

Market Temperature

The Market Temperature came in at 4.3, down from 4.6, posting a second straight week in Cautious. As I wrote four weeks ago in this post, a week or two in Cautious is close to a coin-flip historically. It’s sustained weakness below 4.0 that has mattered.

Last week felt worse than a 0.3 drop. The Tape/Trend pillar held up because SPY and QQQ were both already sitting in Neutral, so this inputs score remained unchanged. By design, neither index can flip to a downtrend while above their 200-day SMAs. The rest of the Tape/Trend pillar weakened - breadth and the SPY weekly RSI were both lower, which brought the pillar score down 0.2 from last week.

Regime weakened slightly, due to the XLY/XLP ratio continuing down.

The Sentiment score was unchanged to one decimal place, as the VIX barely moved on the week.

The Macro/Monetary pillar score was also unchanged.

GICS Sector Relative Strength

Eight of the eleven sectors finished the week higher while SPY finished lower. Energy, industrials and healthcare all hold the Leading quadrant, with financials, utilities, materials and real estate in Improving.

But how long can this rotation carry the S&P 500 if technology continues to underperform? XLK is roughly a third of the S&P 500, and doesn’t include Alphabet, Amazon, Meta, Netflix or Tesla.

Communications was rallying and Discretionary holding in throughout early to mid-July. However, both had big falls on Thursday July 23 and are both negative year to date, down 10.0% and 8.9% respectively.

Momentum Leaderboard

Nine of the twenty are new, with Crude oil (USO) topping the board. Energy and commodity ETFs hold five of the top ten places, and even Broad Commodities (DBC) is heavily weighted to oil, gasoline and other distillates. Anti-Beta (BTAL) at number 4 indicate risk appetite is not high. China Large-Cap (FXI) and Hong Kong (EWH) also arrived on the board, placing in the top ten.

The banks (KBE & KRE), cybersecurity (CIBR), both software proxies (IGV & XSW) and retail (XRT) dropped off, as did Genomics (ARKG) after a run of six straight weeks. It was the only name that had been on the board every week since I started publishing it.

Trend States Across the Universe

Looking at the Trend States Board this weekend there was only a little shuffling around at the aggregate level of Uptrend, Downtrend and Neutral States.

Industry Breadth

One change to this board, which I introduced last weekend. I have decided to rank it by the average of the percentage of each industry’s names above their 20 and 50-day SMAs, rather than by weekly return.

At the top end, integrated oil, electric utilities, property and casualty insurance, REITs and oil refining all have 100% of names above both SMAs.

Financials continue to look healthy. Regional banks, investment banks and investment managers all have every name above the 50-day, but fewer above the 20-day.

Biotech is holding reasonably well after the recent pullback, with 80% of names still above their 50-day SMAs.

Noticeably, no technology industry appears until you reach the bottom third of the board and all nine of them sit there.

Semis at a Crossroads

Mid-week it looked like SMH was going to play out another failed head and shoulders “top”. After a shakeout below the AVWAP from the March 30 low, on Friday July 17, and a strong start to last week, it had reclaimed the neckline of the H&S pattern and looked ready to push higher. However, it stalled under its 20 and 50-day SMAs on Wednesday and rolled over on Friday, closing just above the AVWAP, with the 20-day now under the 50-day SMA. I’m watching 536 and 592 as important levels.

SMH Chart

Levels I’m Watching on the Dollar Index and TLT

The US dollar is in a Strong Uptrend and is a potential headwind if it continues higher. I am watching 100 and 101.50 - a break higher will likely be a negative for equities. If it stays in the range or breaks lower, I would read that as a positive.

DXY Chart

TLT closed the week about half a percent above its May low (82.77). If that level breaks and yields push over 4.75-4.8% towards 5%, it will be another tick in the bearish column.

TLT Chart

Follow-Up on Last Week’s Names

Last weekend I wrote that Dell (DELL), AMD, Cisco (CSCO) and Astera Labs (ALAB), which I had pointed out the previous week had held up well, all broke down (only Dell closed the week above its 50-day SMA), and that was itself a warning. However, last week Dell and AMD recovered. CSCO and ALAB are now off my watchlist.

DELL Chart

Dell rose 10.4% and is back above its 20 and 50-day SMAs.

AMD Chart

AMD bounced hard Monday through Wednesday reclaiming its 20 and 50-day SMAs. However, Friday’s 3.3% fall put it back below its 20-day and below the prior three days’ lows, taking off some of the shine. Some tight consolidation for a bit here, before an eventual breakout would be very constructive and potentially offer a low-risk entry.

New Names on the Watchlist

These all come from the same universe as the Industry Breadth board. That is stocks from the Russell 1000 and Nasdaq 100 that have outperformed the Nasdaq 100 over the prior twelve months. I went through the charts and picked out names showing relative strength, still close to all-time highs (HPE and TIGO aside) and potentially in a position to buy this week; so in an uptrend, above their 50-day SMA and preferably 20-day SMA, but not extended from it. Honestly, there weren’t a lot of names that met those criteria and had a chart I liked. And about half will report earnings within 9 trading days, so practically they aren’t good entries because they’re unlikely to gain enough in that time to have enough cushion to hold through earnings. Also, other than HPE they are all lower ATR% names, in the 2-4% range. This isn’t necessarily bad depending on your trading style and risk tolerance, but I generally prefer names with some juice. It also is a sign of current market conditions that the higher-ATR fast movers are mostly absent from my watchlist.

I have tried to be as specific as I can to show you how I consider potential entry levels. But I started writing this and annotating the charts over the weekend in Australia and will post it now as the US market opens on Monday. So, I need to be fluid, especially given the fast news cycle regarding Middle East hostilities. But it helps me to write out my analysis and ponder over the charts, and gives me a record of my thinking over time. This is not an easy market to swing trade, with few stocks trending smoothly above their moving averages, so I am being cautious and flexible, and will continue to be so until the market and individual names start trending smoothly again.

HPE Chart

BNY Chart

JBHT Chart

VIK Chart

RPRX Chart (reports August 5)

TRGP Chart (reports August 6)

TIGO Chart (reports August 6)

ATI Chart (reports August 6)

The Week Ahead

The Market Temperature is in Cautious and SPY and QQQ consolidating their big April/May gains, which is normal behaviour. However, for short/medium term swing trading - at least the way I trade - conditions are not favourable. So for me, that means less is more and I’m more focused on capital preservation right now. I didn’t put on any new swing trades last week. I may do this week, but if they get stopped out quickly, that’s valuable feedback telling me the time is still not right to get aggressive.

I have laid out some levels I’ll be watching this week. One or two data points alone won’t change my bias - which is neutral now. But if they all go one way and the future Market Temperature confirms what price is telling me, I can act with confidence within my process. To recap the markets and levels - SMH, specifically 536 and 592. QQQ holding its AVWAP from the March 30 low. TLT May 19 low of 82.77 and the US dollar Index levels 100 and 101.50.

Credit spreads and the MOVE Index show no stress yet. But in my model, both use multi-week lookbacks and I only calculate the Market Temperature once a week, so I’ll be monitoring those in real time as well.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

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SPY Chart

For all daily charts the black line is the 20-day SMA, the green is the 50-day, and the red is the 200-day. The thick black line is the AVWAP from the March 30 low.

SPY closed the week below its 20 and 50-day SMAs, dropping its trend state to Neutral. If it breaks down below Friday’s low and 739, I wouldn’t be surprised to see a test of the 725 area, which would also line up at or near the rising AVWAP which currently sits around 721.5, and will continue rising over the coming days and weeks.

QQQ Chart

QQQ looks significantly weaker than SPY. It closed about 3% below its 20 and 50-day SMAs and only slightly above the AVWAP from the March 30 low. Bulls want to see this level hold. A significant break below this AVWAP could see a test of the 200-day SMA, which currently sits at around 641 and rising. I’m not predicting that will happen, but the AVWAP sits only around 6.5% above the 200-day SMA, and the rally off the March 30 low was fast and furious, so a fast retracement is a genuine possibility to be aware of.

Market Temperature

The Market Temperature fell to 4.6 from 5.7, dropping out of the Goldilocks Zone and into Cautious for the second time in four weeks.

The Tape/Trend pillar did most of the damage. Both the S&P 500 and the Nasdaq 100 dropped from Strong Uptrends to Neutral. The S&P 500’s weekly RSI eased to 60.2 from 65.1, and breadth softened - 56.8% of US stocks above their 50-day moving average, from 58.4%, and 57.3% above their 200-day, from 57.9%.

The Regime pillar also weakened. The discretionary vs staples ratio (XLY/XLP) continued lower, and high beta vs low volatility flipped from risk-on to neutral. Growth vs value still scores in value’s favour.

The VIX rose to 18.8 from 15.0, which the model reads as a contrarian positive, and the Monetary/Macro score was unchanged to one decimal place.

GICS Sector Relative Strength

The Change column shows the shift from the prior week's quadrant.

Momentum Leaderboard

Twelve of the twenty names are new this weekend - the energy complex, the banks, healthcare and retail arriving, while the tech and AI cohort that rejoined last weekend dropped off after a single week, along with Bitcoin and the biotechs.

The new Weeks column shows how long each name has held its place. Genomics (ARKG) is the only one that’s been on every board since I started publishing it six weeks ago, with Cybersecurity (CIBR), equal-weight software (XSW), Insurance (KIE) and Pharmaceuticals (XPH) at four straight weeks.

Two notable things worth pointing out are Anti-Beta (BTAL) at #1 on the board - a fund that shorts high beta. But BTAL is still just a bounce in a massive downtrend, and the same goes for VIX short-term futures (VIXY), whose RS-Momentum jump was the largest of any ETF I track - it’s a product that bleeds value over time through futures roll costs. I would not trade either of these products, but their appearance on the leaderboard is interesting.

Trend States Across the Universe

The number of ETFs in an uptrend state fell from 65 to 49 - nineteen dropped out and only three moved up into one.

Industry Breadth

This new graphic takes every stock in the Russell 1000 and Nasdaq 100 that has outperformed the Nasdaq 100 over the past twelve months - 367 of them as of July 17 - groups them by industry and shows how the median stock in each group did and what percentage of the group are above their moving averages.

The five weakest industries are all AI and electronics related. Semiconductors, electronic components and electronic production equipment finished the week with not a single name above its 20-day SMA. At the other end, regional banks and property and casualty insurance have every name above both the 20 and 50-day, and major pharmaceuticals 88% and 94%.

Follow-Up on Last Week’s Names

Last weekend I mentioned Dell (DELL), AMD, Cisco (CSCO) and Astera Labs (ALAB) as names holding up relatively well. However, all four broke down last week, which is itself a warning.

ALAB Chart

ALAB ended the week roughly 40% off its June 30 high and closed below its 20 and 50-day SMAs.

CSCO Chart

Cisco also closed below its 20 and 50-day SMAs.

AMD Chart

AMD lost its 20-day and closed just below its 50-day SMA.

DELL Chart

Dell held up better than the others - still holding its 50-day SMA.

The Week Ahead

The temperature is back in Cautious, and while one week here is close to a coin-flip historically, the absence of a short-term trend in SPY and QQQ tells me to be patient. Last week I didn’t put on any new swing positions - all I did was day trades, mostly shorts on Thursday and Friday.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

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SPY Chart

For all daily charts the black line is the 20-day SMA, the green is the 50-day, and the red is the 200-day. The thick black line is the AVWAP from the March 30 low.

SPY held its 50-day SMA on Wednesday during the midweek pullback and finished the week strongly, closing less than 1% from an all-time high.

QQQ Chart

QQQ closed below its 50-day SMA on Tuesday and failed to reclaim it on Wednesday, despite having a strong day after the initial gap down. But it also finished the week strongly, closing just back above its 20-day SMA, and is back in a Strong Uptrend.

Market Temperature

The Market Temperature came in at 5.7, up from 5.6, holding in the Goldilocks Zone. On the surface almost nothing changed. Underneath, the pillars mostly offset each other.

The Tape/Trend pillar firmed. The QQQ moved from an Uptrend back to a Strong Uptrend and the SPY’s weekly RSI rose to 65.1 from 62.7. Breadth eased slightly, with 58.4% of US stocks above their 50-day moving average, from 59.4%, and 57.9% above their 200-day, from 59.1%.

The Regime pillar improved as the discretionary vs staples ratio (XLY/XLP) continued to turn up. High beta vs low volatility remains risk-on, and growth vs value still scores in value’s favour - though growth outperformed on the week itself, with Russell 1000 Growth (IWF) up 2.3% and Value (IWD) flat, but the ratio is still below its moving averages, so the model’s signal hasn’t flipped.

Sentiment and Monetary/Macro went the other way. The VIX fell to 15.0 from 15.8, which the model reads as a contrarian negative. Bond volatility edged up, with the MOVE index at 69.6 from 65.4, and the dollar ticked higher.

GICS Sector Relative Strength

Technology (XLK) is back in Leading, up 2.9% on the week, after spending two weeks in Weakening. It’s the only sector there. Industrials (XLI) crossed out of Leading into Weakening after a 1.1% decline.

Financials (XLF) is the only sector in Improving, up 0.2% on the week.

The other eight sectors are all in Lagging. Health Care (XLV) fell 1.8% and dropped out of Improving, as did Discretionary (XLY), up 0.1%, and Communications (XLC), despite being up 1.9%. Energy (XLE) was the strongest sector on the week, up 3.5%, but remains in Lagging with its RS-Trend just under the 100 line. Materials (XLB) fell 2.2%, Staples (XLP) 1.0%, Utilities (XLU) 0.8% and Real Estate (XLRE) 0.5% - all remaining in Lagging.

Momentum Leaderboard

There are eight new names on the board this weekend. Ethereum (ETHA) now tops it, with Bitcoin (IBIT) and China Internet (KWEB) also on the board, but all three are still in downtrends and a long way off their highs.

Technology (XLK), Cloud & Storage (FCLD), AI & ML (THNQ), Internet (FDN), the equal-weight Nasdaq 100 (QQEW), FANG+ (FNGS) and IPOs (IPO) all rejoined the board. XLV fell off the board, but healthcare sub-sectors - ARK Genomics (ARKG), Biotech (XBI), Pharmaceuticals (XPH) and large-cap biotech (IBB) are all still there, as are equal-weight financials (RSPF) and Insurance (KIE).

Trend quality improved. Thirteen of the twenty are in Strong Uptrends, up from nine last week, and only three - ETHA, IBIT and KWEB - are in downtrend states.

Still no semiconductor names on the board for a third straight week. SMH and XSD have RS-Momentum readings of 99.4 and 97.0.

Trend States Across the Universe

Something new I’ll be tracking each week - the count of all 121 ETFs in my universe by trend state.

The reason I want to track this: the quadrant map narrowed last week. Lagging went from 40 names to 62, because most things lost ground against a strong SPY week. But the absolute picture barely moved - 65 names are in one of the three uptrend states versus 63 the week before. The narrowing is relative, not a breakdown in underlying trends.

China and Crypto Bounce - Within Downtrends

China Internet (KWEB) rose 5.6% and China Large-Cap (FXI) 4.9%, with FXI crossing into Improving to join KWEB. Bitcoin (IBIT) rose 3.9% and Ethereum (ETHA) 5.2%. KWEB, FXI and IBIT all upgraded from Strong Downtrends to Downtrends, and ETHA was already there. All four are still a long way underwater - IBIT and ETHA sit roughly 50% and 63% below their all-time highs.

Tech, Semis and AI Bounce

Mega-cap tech was strong, as seen in FANG+ (FNGS). It’s still in a Recovering Uptrend, but another strong week would likely flip it to a Strong Uptrend.

FNGS Chart

Semiconductors (SMH) rose 3.2% and sits above its rising 50-day SMA, though still below its 20-day. Equal-weight semis (XSD) added 1.4% but looks the weaker of the two.

SMH Chart

XSD Chart

Generative AI (CHAT) rose 3.3% after holding the AVWAP from the March 30 low, which is where I said last weekend I’d be watching for a bounce.

CHAT Chart

The RS-Momentum moves across the AI complex were the biggest of the week. CHAT went from 90.5 to 99.1, Digital Infrastructure (IDGT) from 91.0 to 99.0, Data Center Infrastructure (DTCR) from 89.0 to 95.6 and SMH from 92.9 to 99.4. Crypto miners (WGMI), which mostly trade as an AI compute proxy now, had the biggest RS-Momentum gain of any ETF I track, from 79.4 to 94.9 after a 4.3% week, but still looks weak, with price unable to close above the AVWAP from the March 30 low. None of them have crossed back above 100 yet. Re-accelerating, but not yet outperforming SPY on RS-Momentum.

WGMI Chart

Healthcare Slides and Biotech Hit on Friday

XLV was weak and dropped out of Improving, while equal-weight healthcare (RSPH), which was on the all-time-high list a week ago, fell out of Leading - both now sit in Lagging.

XLV Chart

Biotech’s weekly numbers hide the story. XBI finished the week down only 0.9%, but 3.2% of that came on Friday - an ugly candle after the run it’s had since mid-June. Large-cap biotech (IBB) fell 1.9% and ARK Genomics (ARKG) 3.7%. Pharmaceuticals (XPH) was up 1.9%.

XBI Chart

Aerospace & Defense Rejected at ATHs

A week after crossing into Leading and sitting 2.7% from an all-time high, Aerospace & Defense (XAR) fell 5.6% and now sits in Lagging. Its trend state went from a Strong Uptrend to Neutral, and its RS-Trend fell more than 8 points.

XAR Chart

Financials Stall

Last weekend Insurance (KIE), equal-weight financials (RSPF), Financials (XLF) and Capital Markets (KCE) were all on the momentum leaderboard. Last week XLF rose 0.2%, RSPF 0.6%, KCE 1.7%, and KIE fell 1.0% - only equal-weight financials and insurance retained their place on the leaderboard but dropped nine and fourteen places respectively.

All six financial ETFs we track lost RS-Momentum. The big banks (KBE) were up 0.2% and the regional banks (KRE) finished flat, but both dropped out of Leading into Lagging, sitting right on the boundary.

Despite the slowing momentum, all six remain in Strong Uptrends. The big banks kick off earnings season on Tuesday next week.

KBE Chart

The Week Ahead

The temperature is steady in the Goldilocks Zone, SPY and QQQ are back above their 20-day SMAs in Strong Uptrends. However, both are still consolidating in a range and lack shorter term trend direction. The rotation swung back towards tech and AI names; I will be watching next week to see if that continues. I scaled out of my biotech (XBI) position and sold Eli Lilly (LLY) last week but would buy them back if they can consolidate here for a bit, or even on some strength after a deeper pullback to their 20 or 50-day moving averages. I am waiting for SPY and QQQ to resolve from their consolidations before aggressively entering new positions. I did enter the S&P 500 CFD on Monday, as I mentioned last weekend, but did not hold through Tuesday and Wednesday’s pullback. A few individual names I’m watching that have held up relatively well are Dell (DELL), Advanced Micro Devices (AMD), Cisco (CSCO), and Astera Labs (ALAB).

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

However, the weekly numbers hide how the picture changed mid-week.

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SPY Chart

For all daily charts the black line is the 20-day SMA, the green is the 50-day, and the red is the 200-day. The thick black line is the AVWAP from the March 30 low.

Monday and Tuesday were strong. The SPY reclaimed its 20-day SMA on Tuesday and held above it into Thursday’s close - but the back half of the week the relative strength was concentrated in financials, healthcare, and some of the FANG+ mega-cap names.

QQQ Chart

The QQQ looked the better of the two mid-week, with a strong Tuesday close above its 20-day SMA. However, the selling kicked in on Wednesday with a gap down and close near the lows, and continued on Thursday, falling 1.7%, with the losses concentrated in the semiconductor and AI names. SMH fell 4.5% on Thursday alone and equal-weight semis (XSD) 6.7%. The QQQ finished the week back below its 20-day SMA, sitting just above its 50-day.

Market Temperature

The Market Temperature rebounded to 5.6 from 4.7, moving back into the Goldilocks Zone after a single week in Cautious. Last weekend I wrote that a single week in Cautious is close to a coin-flip, and that it’s sustained weakness below 4.0 that has historically mattered.

The recovery came mostly from the Tape/Trend pillar. The S&P 500 went from Neutral directly back to a Strong Uptrend, the weekly RSI rose to 62.7 from 58.4, and breadth improved for a second week - 59.4% of US stocks are above their 50-day moving average and 59.1% above their 200-day.

Monetary/Macro also firmed. The dollar pulled back after several strong weeks, bond volatility eased with the MOVE index at 65.4, and credit spreads tightened.

The Regime pillar improved as the discretionary vs staples ratio (XLY/XLP) turned back up. High beta vs low volatility remains risk-on, and growth vs value still favours value, both unchanged.

Sentiment was the only pillar to fall. The VIX dropped to 15.8 from 18.4, which the model reads as a contrarian negative.

GICS Sector Relative Strength

Only Industrials (XLI) sits in Leading after a 1.5% week. Technology (XLK) held in Weakening on a flat week. Discretionary (XLY) was up 2.4%, and Communications (XLC) 3.2%, both crossed up from Lagging into Improving, joining Health Care (XLV), up 2.1%, and Financials (XLF), the strongest sector on the week, up 3.8%. Materials (XLB), up 0.8%, and Real Estate (XLRE), down 1.2%, dropped out of Leading, while Utilities (XLU), down 1.0%, and Staples (XLP), up 0.3%, slipped out of Improving - all four into Lagging. Energy (XLE) fell 1.2% and went from Weakening into Lagging.

Momentum Leaderboard

There are nine new names on the board this weekend. The healthcare and biotech leadership held its ground. ARK Genomics (ARKG) still tops the board, with Biotech (XBI), large-cap biotech (IBB) and Pharmaceuticals (XPH) all in the top dozen and all in Strong Uptrends.

Three of the new arrivals are financials - equal-weight financials (RSPF), broad financials (XLF) and Capital Markets (KCE) - joining Insurance (KIE), which sits second on the board after a 5% week. There are no semiconductor names on the board for a second week. Trend quality is much the same as last week, with nine of the twenty in Strong Uptrends and four in downtrend states.

All-time Highs

The Dow (DIA), Insurance (KIE), Russell 1000 Value (IWD), Health Care (XLV), equal-weight healthcare (RSPH), Pharmaceuticals (XPH), large-cap biotech (IBB), equal-weight financials (RSPF), and the equal-weight S&P 500 (RSP) all finished the week within 0.4% of all-time highs.

DIA Chart

IWD Chart

XLV Chart

IBB Chart

Semis and AI Names Down, Software Up

Semiconductors (SMH) fell 3.2% on the week and equal-weight semis (XSD) 2.8%. Generative AI (CHAT) fell 5.2%, Data Center Infrastructure (DTCR) 7.2% and AI Innovation (BAI) 4.3%. Crypto miners (WGMI), which mostly trade as an AI compute proxy now, fell 19.1% - the worst week of any ETF I track. Bitcoin (IBIT) and Ethereum (ETHA) rose 3.0% and 8.2% for the week and both made the Momentum Leaderboard. However, they remain in severe downtrends, still more than 50% and 65% below their all-time highs.

SMH Chart

XSD Chart

CHAT Chart

WGMI Chart

IGV rose 6.1%, despite that ETF containing many of the crypto miner names. Equal-weight software (XSW) was up 5.3%, and cybersecurity (CIBR) 6.2%, back in a Strong Uptrend. IGV is still in a Downtrend, 3.6% below its 200-day SMA. XSW doesn’t look as bad, above its 200-day, but I’m not looking to trade them until their moving averages align bullishly.

IGV Chart

CIBR Chart

Financials - Insurance and Capital Markets Lead

Within financials, the strength was in insurance and capital markets rather than the banks. KIE rose 5.0% and KCE 3.9%. The banks looked good until Thursday, when both KBE and the regional banks (KRE) sold off to finish the week roughly flat - KBE up 0.3% and KRE down 0.2%.

KIE Chart

Rates Up, Rate-Sensitives Down

Treasury ETFs fell across the curve, with the 20+ year (TLT) down 2.1%, and every fixed income ETF I track dropped from Improving into Lagging. The rate-sensitives went with them. Utilities and Real Estate lost RS ground, as mentioned above, and the homebuilders were hit harder - Home Construction (ITB) fell 1.9% and Homebuilders (XHB) 2.7%, both dropping out of Leading.

TLT Chart

Aerospace, Defense and Space

Aerospace & Defense (XAR) rose 4.9%, crossed into Leading and is now in a Strong Uptrend, only 2.7% from an all-time high. ARK Space (ARKX) rose 6.1%, also crossing into Leading.

XAR Chart

The Week Ahead

The temperature is back in the Goldilocks Zone and the SPY returned to a Strong Uptrend, but the leadership picture is very different to what we have seen for most of the year. The names at all-time highs are healthcare, financials, value, and the Dow. I will be watching the semi and AI ETFs next week to see if they can hold around their 50-day SMAs and/or AVWAP from the March 30 lows. That would be a logical place for a bounce, but I’m not in a hurry to add back individual stock exposure until it becomes clearer the volatility has settled. I was stopped out of Teradyne (TER) on Thursday, which was the last remaining position I held in AI-related stocks. Currently, my only positions are in XBI and Eli Lilly (LLY). I am considering entering a new position in the S&P 500 index CFD on Monday with a stop under last Thursday’s low and the 50-day SMA, which sits just below that. If semi and AI names bounce next week, I may look to play that through the Nasdaq 100 index CFD. However, if the pullback continues, I will monitor for stocks holding up and showing relative strength for my watchlist.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

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SPY Chart

For all daily charts the black line is the 20-day SMA, the green is the 50-day, and the red is the 200-day. The thick black line is the AVWAP from the March 30 low.

After Monday’s failure and Tuesday’s gap down, the chart has a very different look compared to last weekend. Friday’s low bounced right at the AVWAP from the March 30 low. However, I want to see it regain the 20-day SMA, which sits at 743.60 as I write this, before getting bullish again.

On the other hand, if we are to have another leg down, I would be looking at the 690 to 695 zone, which is the convergence of the rising 200-day SMA and the prior highs from January and February this year, as potential support.

QQQ Chart

The QQQ looks stronger than the SPY. It’s still holding its 50-day SMA for now. But as with the SPY, I will be waiting for a reclaim of the 20-day SMA, which currently sits at 724.76, before getting bullish or aggressive. If we get a flush lower and undercut the June 9 low, I would be looking at the AVWAP as potential support. If it could undercut and then rally from there, that may be the reset needed before a new leg up. But if it were to continue lower, I would be looking at the 632 to 637 zone, which is the convergence of the 200-day SMA and the prior highs in October last year and January this year.

FNGS Chart

FNGS is the ugliest chart of the three. Friday’s candle undercut the AVWAP and closed positive, but it still has a lot of work to do to get back above its 50-day SMA and declining 20-day SMA. There’s potential support not far below at the 200-day SMA, which currently sits at 68.78, but if it loses that, the chances of a more substantial drawdown in the SPY and QQQ would increase significantly.

Market Temperature

The Market Temperature fell to 4.7 from 5.7, dropping out of the Goldilocks Zone and into Cautious. That’s a full-point fall, which is very uncommon. In the ten-year backtest of the model, a one point or greater weekly drop only happened in around 7% of weekly observations.

The majority of the drop came from the Tape/Trend pillar. The S&P 500 lost its uptrend and slipped to Neutral, and the Nasdaq 100 dropped from a Strong Uptrend to an Uptrend. The S&P 500’s weekly RSI fell to 58.4 from 66.3. Breadth, though, went the other way: the share of US stocks above their 50-day moving average rose to 58.1% from 53.1%, and the 200-day count to 58.2% from 55.0%.

On the Monetary/Macro side, the dollar had another strong week and remains in a Strong Uptrend. Bond volatility ticked up slightly, with the MOVE index at 66.8, and credit spreads widened a touch, though both stayed at relatively low levels.

The Regime pillar also eased, on the back of the discretionary-to-staples ratio (XLY/XLP) turning lower; the high-beta and growth-versus-value signals were unchanged.

Sentiment was the only pillar not to drop on the week. The VIX rose to 18.4 from 16.8, which the model reads as a contrarian positive.

A word on the interpretation of a Cautious reading. A single week in Cautious is the model’s least reliable signal. In backtesting, the 4-5 band is the one zone that flipped sign out of sample, so one week here is close to a coin-flip. The reading that really mattered is sustained weakness below 4: when the temperature stayed below 4.0 for two weeks or more, a genuine drawdown has followed around nine times out of ten, while a one-week dip that recovers has almost always been noise. So caution is warranted and I will trade accordingly. However, the next few weeks will be telling.

GICS Sector Relative Strength

There were some very notable changes to the RS map last week. Technology (XLK) fell 5.4% and dropped out of Leading into Weakening.

Communications (XLC) fell 3.0% and Discretionary (XLY) 2.4%.

The genuine strength was in the defensives: Health Care (XLV) was the standout, up 7.3%, with Utilities (XLU) and Real Estate (XLRE) up around 3% each and Staples (XLP) up 1.7%.

One caveat in reading the map, though: with the S&P 500 down 2.4%, a sector only had to fall less than the benchmark to gain ground against it. Materials (XLB) crossed into Leading while finishing the week down, so some of the broadening is relative rather than absolute strength.

Momentum Leaderboard

The leaderboard looks very different than it did last weekend. Thirteen of the twenty names are new, and the entire semiconductor and AI cohort that had been consistently dominating it dropped off - the only tech-related name still on the board and in an uptrend is cybersecurity.

Six of the top nine are now healthcare or biotech, led by ARK Genomics (ARKG) up over 12% and Biotech (XBI) up over 10%, with Pharmaceuticals (XPH) and large-cap biotech (IBB) close behind. Homebuilders, real estate, insurance and the regional banks are also in the top 20.

The quality of the leadership is worth noting, though. A week ago, sixteen of the top twenty names were in Strong Uptrends. Now only nine are, with a handful - software, water, medical devices, natural gas - sitting in downtrend states.

The Week Ahead

What stands out most is how much the picture changed in five days. Not just the one-point drop in the market temperature, but the price action on the charts throughout the week. Going into Monday the Nasdaq 100 looked ready to break out to new all-time highs. I was long and preparing to add more exposure during the week. However, on Monday, before reaching an all-time high, the QQQ reversed and closed lower on the day. Then there was the large gap down on Tuesday. Thursday’s gap up rejected right at the declining 20-day SMA. Friday’s close was weak and only just above the 50-day SMA. The SPY was even weaker. For these indices to recover and make new all-time highs, the mega-caps need to stop falling. Since they carry such a heavy weighting in the SPY and QQQ, even with a broadening out, I don’t think the other sectors are large enough to carry the indices to new all-time highs.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

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SPY Chart

For all daily charts the black line is the 20-day SMA, the green is the 50-day SMA, and the red is the 200-day SMA.

QQQ Chart

FNGS Chart

Market Temperature Up to 5.7

The Market Temperature rose to 5.7 from 5.3 and held in the Goldilocks Zone. The lift came entirely from the Tape/Trend pillar. The QQQ flipped back into a Strong Uptrend, while the S&P 500 held its Uptrend, finishing right on its 20-day SMA rather than above it. The S&P 500’s weekly RSI also edged up to 66.3 from 65.1 - a small move week-on-week, but the model has a 2-week lookback window, so it gave the score a bigger lift. Breadth held roughly steady, with the share of US stocks above their 50-day moving average easing only slightly to 53.1% from 56.6% and the 200-day count flat near 55%.

On the Monetary/Macro side, bond volatility compressed further, with the MOVE index down to 65.4 from 69.4. The US dollar had a strong week, which the model reads as a drag. I’ll be watching the dollar closely over the week ahead. If it keeps moving up strongly, it could cause some headwinds for equities.

Sentiment stayed a small negative: the VIX eased to 16.8 from 17.7, which the model treats as a contrarian signal. The Regime pillar score held steady, unchanged from last week.

DXY Chart

GICS Sector Relative Strength

Only two of the eleven GICS sectors are in Leading: Technology (XLK), up 3.6%, and Industrials (XLI), which crossed in from Weakening after a 2.7% week. Two sectors sit in Improving, Financials (XLF) and Discretionary (XLY), and none are in Weakening.

That leaves seven in Lagging. Materials (XLB) dropped out of Leading after leading the week before, and Real Estate (XLRE), Staples (XLP) and Health Care (XLV) all slid from Improving to Lagging. Energy was the softest sector, with XLE off 6.6%.

Momentum Leaderboard

Tech and AI names dominate the top 20 again, with Taiwan (EWT) and Korea (EWY) the only international names to make it.

Tech & AI Related Names Resume Their Outperformance

SMH rose 6.4%, its second strong week running, and equal-weight semis (XSD) 5.0%, both in Strong Uptrends and sitting at or near their highs.

SMH Chart

XSD Chart

ARK Genomics (ARKG) jumped over 10% but is still a long way off its prior all-time highs.

The new-issues ETF basket (IPO) had another big week and still sits second on the table.

QTUM is on the verge of a breakout to all-time highs.

Crypto miners (WGMI) sit in fifth place again, even though Bitcoin (IBIT) and Ether (ETHA) are both in Strong Downtrends - most crypto miners trade as an AI proxy now.

WGMI Chart

Biotech firmed too. XBI is back in Leading and has finally broken out of the range it’s been in since mid-April.

The Nasdaq Next Gen 100 (QQQJ) looks like it might be ready to make another run: Leading, in a Strong Uptrend, and within 2.5% of its all-time highs.

The Banks Stall Out

The banks stalled out right at their recent highs. I posted on X midweek about the bearish engulfing candles on the S&P Bank ETF (KBE) and the Regional Banking ETF (KRE).

By Thursday’s close it had fed through to the relative strength. KBE slipped from Leading to Lagging and KRE from Leading to Weakening. Broad financials (XLF) held positive on the week but printed a bearish engulfing candle on Thursday.

KBE Chart

KRE Chart

XLF Chart

The Week Ahead

The Market Temperature is up slightly to 5.7 and the QQQ reclaimed and held its 20-day SMA, so I’ll be looking to add more exposure this week, primarily in tech and AI names and probably through ETFs and Nasdaq 100 CFDs, as most of the leading AI names have very high ATRs and the individual stock positions I’ve currently got on don’t have enough of a cushion yet for me to add new positions aggressively. I also like XBI here and bought the breakout on Wednesday.

I’ll update and post my This Week’s Trading Plan later tonight, if I have time, or tomorrow, Melbourne time.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

In my June 3 update I had four positions on - CIEN, HUT, MKSI and KLAC. Three are now closed and one’s still running. Here’s what happened.

CIEN - stopped out at $607.23 on June 3, the same day that update went out. I’d moved my stop up to $607.50 ahead of earnings and it pulled back and stopped me out. +8.5% on the trade. It had a very negative reaction to the earnings and price has continued lower since then - it closed at $446 on Friday June 12.

HUT - moved my stop to $117.85 to lock in some profit after an ugly looking daily candle on Tuesday June 2. Stop got hit on June 5 at $117.31. +3.4% in the end - but I never let a decent winning trade turn into a loser and the stop served its purpose here.

MKSI was a loss. During the June 5 selloff my stop was hit and I exited at $305.52, down 8.2% from my $332.82 fill.

KLAC I am still in but took half off on Friday June 12 in the pre-market. KLAC did a 10-for-1 split on June 12, so I got 10 shares for each 1 held - same position, just 10 times the number of shares at a tenth the original price. I took half off at $239.45 for a touch over +22%, which was 2.4R (2.4 x my original risk on the trade). The other half is still running with the stop up at breakeven, $196.01. It closed on Friday around $253.

On the daily charts, the black line is the 20-day SMA, the green is the 50-day SMA, and the red is the 200-day SMA.

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The plan for the week ahead

I put out my Market Temperature piece earlier today. The short version: strength broadened out last week across semis, small caps, cyclicals and international, but the SPY and QQQ still haven’t reclaimed their 20-day SMAs. I want to see the indices reclaim this moving average before I get aggressive with new positions.

So, this is a plan for how I’ll approach the week without a list of exact entries. There’s event risk over the weekend, with the potential signing, or non-signing, of the MOU between the US and Iran. No point suggesting precise entry levels on a Sunday night (Melbourne time) when these names could gap significantly in either direction. However, I know where my stops will be if I enter.

Here’s how I’m thinking about it. If there’s an agreement and the market starts running when the futures open, I’ll take a position in the Nasdaq 100, through CFDs (contracts for difference), which are available in Australia. I use them for a lot of my short-term and swing trading. I’ll be looking to enter on a break back above the 20-day SMA. That gets me in without waiting for the US market to open. And because they basically trade 24/5, I can manage risk more tightly and take a larger position.

For the individual stocks, I’ll watch the pre-market Monday without committing to a specific entry level in advance. If nothing happens over the weekend and stocks are opening a little up or down with no breakout and no severe gap down, I’m considering taking some early entries in half position size before a breakout, then leaving a resting buy stop order for the second half, probably with a tighter stop on the second piece. If it looks like there will be a severe gap down on the US open - I’m not interested and will patiently wait it out.

The names below all held up well through the early-June pullback and are consolidating near all-time highs or already making new ones.

The names

Teradyne (TER) - automated test equipment for semiconductors and electronics. Weakening, Strong Uptrend. Up 12.7% last week (week ending June 12). 9.4% above the 20-day SMA (1.4x ATR), 6.9% ATR. 4.5% below its all-time high. RSI 58.

Consolidating since making an all-time high at the end of April. Volatility is contracting and it’s making higher lows. My stop would sit below $356.60, under the 20 and 50-day SMAs and the low on Thursday, June 11.

Semtech (SMTC) - analog and mixed-signal chips. Leading, Strong Uptrend. Up 10.4% last week. 7.9% above the 20-day SMA (1.0x ATR), 7.7% ATR. 3.3% below its all-time high. RSI 62.

Consolidating since late May. Had a shakeout under the 20-day SMA on Tuesday, June 9. My stop would sit under $150, below the 20-day SMA, if buying on a breakout. If I take an early entry, I’ll use $143.61 to give it a little more room.

DigitalOcean (DOCN) - cloud infrastructure for developers. Weakening, Strong Uptrend. Up 0.3% last week. 4.2% above the 20-day SMA (0.5x ATR), 7.7% ATR. 7.6% below its all-time high. RSI 61.

Consolidating tightly since the earnings gap up on Tuesday, May 5. It’s held its 20-day SMA the whole time, other than a shakeout on Tuesday, June 9, where it breached it during the trading session but closed back above it. I’m strongly considering an early entry in half size on this one. If I do, my stop will probably sit under $148.23, the low from Thursday, May 28, although I may use a tighter stop under $153.71 - the shakeout low on Tuesday, June 9 - depending on the entry price.

Western Digital (WDC) - hard drive and flash storage maker. Weakening, Strong Uptrend. Up 10.0% last week. 8.7% above the 20-day SMA (1.4x ATR), 6.2% ATR. 6.6% below its all-time high. RSI 61.

Trending beautifully for over a year. During the recent pullback, it undercut its 20-day SMA but recovered strongly last Thursday and Friday. My stop would sit under $480.87, the pivot low from the recent pullback.

On watch - the steel names

Two steel names I’m watching. After a strong week for materials (XLB), I flipped through all the individual stock charts and these two stood out. Both finished last week at all-time closing highs, but they’re the most extended names on my list. I’d want a pullback or some tightening first, or maybe just use a tight stop - though entering here with the tighter stop is a lower-probability trade.

Nucor (NUE) - steelmaker. Lagging, Strong Uptrend. Up 4.7% last week. 8.4% above the 20-day SMA (3.0x ATR), 2.8% ATR. 0.9% below its all-time high. RSI 73.