Stock Report – Two NatGas Trades – A Leading Defense Play –  A Bullish Semiconductor

Breadth weakened into January as the market corrected, but then rebounded into February with NDX breadth leading the way. S&P 1500 breadth remains the weakest of the three (blame small-caps and mid-caps). This week’s big shift is the breakout in the 7-10 Yr Treasury Bond ETF (IEF) and the break down in the 10-yr Treasury Yield. Lower rates may seem positive for stocks, but

I will post a Market Regime update later today (26-Feb) that covers breadth, yield spreads and interest rates. The next

Stocks were hit hard the last three days with the high-beta names leading lower. Defensive groups (Healthcare, Staples, Utes) and bonds picked up the slack. Even though the weight of the evidence remains bullish for stocks, there are some sizable pockets of weakness with lower highs forming in key groups (banks, industrials, software, infrastructure), as well as fresh new lows in housing ETFs. Gold is holding strong, but Bitcoin is under pressure as part of the risk-on trade.

Today’s report features five new setups and three setups from the prior week. The Cybersecurity ETF (CIBR) is perhaps the strongest group in the market right now and we are covering two stocks from this group. We also have a data center REIT setting up as well as a Mag7 stock hitting a Bullish Setup Zone.

The weight of the evidence continues to support a bull market in stocks. All three major index ETFs are in long-term uptrends and all nine breadth indicators are on bull signals (%Above 200-day SMA, %Above 150-day SMA, High-Low Percent). The breadth indicators weakened into January as the market corrected, but then rebounded into February with Nasdaq 100 breadth

Don’t look now, but tech is back with XLK joining QQQ in the new high parade. We are also seeing new highs in ETFs related to Cybersecurity and AI, as well as breakout extensions in Software (IGV) and Cloud (SKYY). Semis continue to lag, but we will take a second look at the SMH chart with a longer timeframe. Elsewhere, ETFs related to industrials are turning back up, defense ETFs pulled back after new highs and the banking ETFs are holding their breakouts.

The weight of the evidence remains bullish for stocks (bull market). Large-caps (SPY, QQQ) are leading equal-weights, mid-caps and small-caps (RSP, MDY, IWM). QQQ is leading SPY because the former recorded a fresh 52-wk high last week. Several tech-related ETFs are leading the market with bullish setups forming in MAGS and CLOU. I am also watching the flag breakout in Industrials SPDR and setups in four related ETFs (Aerospace & Defense and Infrastructure).

There are two new setups in this report (PAYC, S), and two monitoring setups (ABNB, COIN). The latter two are monitoring setups because these stocks report earnings after the close today. Trading based on chart setups and signals is discretionary in nature. I do not

The weight of the evidence remains bullish for stocks, but signs of weakness are appearing under the surface and rates are rising. SPY is near a new high this year, but fewer stocks made it back above their 150 and 200 day SMAs this year, and there were fewer new highs. Breadth is deteriorating and we are now seeing a breakout in the 10-yr Treasury Yield. This could foreshadow a corrective period for the broader market.

Large-caps remain strong with SPY forming a bullish continuation pattern and QQQ holding its recent breakout. Small-caps, in contrast, are struggling with their breakouts and lagging. There were lots of wedge breakouts in mid January and these are holding. I am raising my re-evaluation levels on several ETFs. More recently, I am seeing short-term breakouts in ETFs related to industrials and utilities. We also cover ETFs related to AI, blockchain and managed futures.

The weight of the evidence remains bullish for stocks, but small-caps and mid-caps continue to lag. We are watching a bullish pattern in SPY and a breakout QQQ. Several tech-related ETFs extended on their mid January breakouts and hit new highs. Elsewhere, short-term bullish patterns formed for ETFs related to industrials, infrastructure and defense.
The Finance SPDR (XLF) and Communication Services SPDR (XLC) are leading the sectors with new highs here in February. The Technology SPDR (XLK) is holding up as it surged off support

The next report will be on Tuesday, February 11th.  Biotechs are making a move so we start with analysis of

The long-term trends are up for the major index ETFs and their respective breadth indicators are net bullish. Long-term breadth indicators deteriorated sharply in December and rebounded in January, but the rebounds were not that strong. Around 60% of S&P 500 stocks are above their 200-day SMAs, which means 40% are below

There were many wedge breakouts in mid January and most of these breakouts are holding. Chartists must now set the level that proves these breakouts wrong. Today’s video starts with an example using the Software ETF. We then show the re-evaluation levels for several ETFs with wedge breakouts. Elsewhere, the Technology SPDR is lagging, the Healthcare SPDR is rebounding, the Biotech ETF is going for a breakout and the Gold SPDR is leading with a new high.

The weight of the evidence remains bullish for stocks, despite an uptick in volatility and a wild news cycle. We are seeing upside leadership from finance, communication services, defense, medical devices, pipelines, cloud, cybersecurity and gold. We are also seeing lots of wedge/channel breakouts and most are holding. Here is the leading ETF symbol list

There are six stock setups today and these setups come from strong areas of the market. These include cloud computing, software, medical devices and broad retail. There is also a biotech stock in the mix. All stocks are in long-term up trends with

The long-term trends are up for the major index ETFs and their respective breadth indicators are net bullish. Long-term breadth indicators deteriorated in December, but rebounded in January. Over 60% of S&P 500, Nasdaq 100 and S&P 1500 stocks above their 200-day SMAs. New highs also rebounded as

Wait a week and the narrative will change. In mid January, our reports were featuring strength in the middle of the market and in the more mundane sectors, such as industrials, finance and utilities. Last week we saw breakouts in many tech-related ETFs as Stargate was announced. This week we are seeing AI

Today’s report covers the sell off in AI infrastructure stocks and related ETFs. Monday’s decline were excessive, and perhaps an over-reaction, but they did some damage on the charts. NVDA broke its 200-day SMA and the two semiconductor ETFs broke support. Despite a big decline in NVDA, MAGS is holding support with help from other components. We will then look at three ETFs that represent different areas of AI (infrastructure, physical, software).

The major index ETFs fell on Monday, but breadth actually improved as the average stock held up well. This strength under the hood, and this is positive for stocks outside of the AI infrastructure trade. Today’s report will show advancing stocks outpacing declining stocks and an increase in the percentage of S&P 500 above their 200-day SMA. In short, the broader market is still in good shape.