Chart Trader Samples
Reports are posted every Tuesday and Thursday morning by 8AM ET.
November 15, 2024: DDOG Bids to Reverse Extended Downtrend
The next chart shows Datadog (DDOG), which is part of the Cloud ETF (CLOU). The stock led the market from early November 2023 to early February with a 78% surge. What looked like a normal corrective wedge in March-April turned into a long falling channel (red dashed lines). Despite the duration of the decline, the stock retraced around 50% of the 78% advance. Most recently, DDOG advanced 25% into mid October and formed a flag into mid November. I view this flag as a bullish continuation pattern. A close above 132 would break the flag line and also trigger a bigger channel breakout. I would then mark re-evaluation support at 120.
November 21, 2024: IJR Tests Broken Resistance
There is a lot of chatter regarding small-caps and financials the last few weeks. These two go hand-in-hand because the financials sector is the largest (19.88%) in the S&P SmallCap 600 SPDR (IJR). Technology accounts for just 10.76%. Note that I prefer IJR over the Russell 2000 ETF (IWM) because IJR holds higher quality companies that must pass a fundamental screen. IWM is just a collection of the 2000 smallest stocks in the Russell 3000 index.
Funnimentals aside, the chart below shows IJR with a surge in November-December and a very choppy uptrend in 2024. The ETF held above the 200-day SMA the entire year and produced three triangle breakouts along the way. IJR returned to the triangle lows after the first two breakouts and held the mid September triangle breakout by establishing support in the 112-115 area. Most recently, the ETF broke out with a post-election surge and then returned to the breakout zone with a throwback to the 117-120 area. This area turns into the first support zone to watch for firming and a bounce.
October 18, 2024: Martin Marietta Reverses off Key Retracement
The next chart shows weekly candlesticks for Martin Marietta (MLM), which is in the construction materials business. MLM surged 60% and hit new highs throughout the first quarter. It then embarked on a correction from April to September. Notice that the stock retraced around half of this advance with a falling channel. The retracement amount and the pattern are both normal for corrections within bigger uptrends. MLM broke out with a surge above 550 the last two weeks and I view this as bullish. It signals an end to the correction and a resumption of the bigger uptrend. I will mark key support at 515 and re-evaluate on a close below this level. Short-term, the breakout zone around 550 turns into the first support level to watch. A throwback to this area could offer a second chance to partake in the breakout. The indicator window shows the Close/40wkSMA %Differential moving to +2.49% this week. Technically, a move above 3% would signal the start of a long-term uptrend.
October 11, 2024: QQQ and MAGS Extend on Triangle Breakouts
There are no changes on the charts for the Nasdaq 100 ETF (QQQ) and Mag7 ETF (MAGS). Both are in long-term uptrends and well above their rising 200-day SMAs. They formed triangle consolidation patterns from early July to mid September and broke out in the second half of September. After an extended advance, a triangle consolidation is a consolidation within an uptrend. It is a bullish continuation pattern that is the pause the refreshes. The breakouts signal a continuation of the long-term uptrends and new highs are expected. I am marking re-evaluation levels just below the triangle breakouts (green lines).
The first chart shows QQQ with the triangle breakout and re-evaluation support marked at 465. The indicator window shows the QQQ/RSP ratio falling in July and August as QQQ underperformed. It firmed the last few weeks and turned up.
The next chart shows the Mag7 ETF (MAGS) with re-evaluation support marked at 44. The price-relative (MAGS/RSP ratio) fell in July-August, bottomed in early September and moved higher the last few weeks (green arrow).
September 29, 2024: SPY Edges to New High
The S&P 500 SPDR (SPY) remains in a long-term uptrend. SPY tagged a new high this past week and remains well above the rising 200-day SMA. A cup-with-handle pattern formed from mid July to mid September and the ETF broke out with a surge on September 19th. With the breakout and new high, the low of the handle becomes first support to watch going forward. The trend is up as long as 540 holds.
NOC broke out of the triangle with a big move in late July and continued higher into August. This looks like a strong breakout that signals a continuation of the 60% advance. I am targeting a move to new highs (>580). The breakout zone around 480 turns into the first support zone to watch should we see a pullback. The lower window shows the Close/40wkSMA %Differential moving above 3% in late July and exceeding 10% the last few weeks. This shows the strongest upside momentum since 2022.
September 19, 2024: Bristol Meyers Consolidates after Big Move
Bristol Meyers (BMY) is a big pharma stock and part of the Healthcare SPDR (XLV), which is one of the stronger groups right now. BMY lost half of its value as it fell from 80 in December 2022 to 50 in June 2024. The stock was left for dead in early July, but suddenly sprang to life with a massive surge above 50. This is an outsized move that can jumpstart an uptrend. BMY consolidated after this surge with a pennant on the weekly chart. This would be a triangle on the daily chart because it extends seven weeks. Regardless of the pattern, an upside breakout would signal a continuation higher. A close below 47 would negate this setup.
The indicator window shows the Close/40wkSMA %Differential moving above 3% in late July. This means the weekly close was more than 3% above the 40-week SMA. This signal is relatively young, but it signals the start of a long-term uptrend. A move below -3% would result in a whipsaw.
August 30, 2024: Palo Alto Breaks Out
Palo Alto Networks (PANW) is part of the Cybersecurity ETF (CIBR). The stock was leading the market into January, but got hit hard after an earnings report in February. The stock then started working its way higher and eventually formed a large triangle consolidation. I view this triangle as a big consolidation within a long-term uptrend. This makes it a bullish continuation pattern. PANW plunged below its 200-day SMA on August 5th, but quickly recovered and broke above its June-July highs. This move broke triangle resistance and signals an end to the consolidation. More importantly, it signals a continuation of the bigger uptrend. I am marking first support at 400.
