Video and Report Headlines
- 4wk High-Low% Remains Bullish
- Drop and Pop for SPY and QQQ
- MDY, IPAY and IOT Follow Up
- IBB Remains with Bullish Setup
- AMGN hits Support-Reversal Zone
- VRTX Corrects after New High
- STE Breaks out of Triangle
The next Chart Trader will be posted on Tuesday morning, February 20th.
4wk High-Low Percent Remains Bullish
Fewer stocks are partaking in the current advance, but SPY remains in a short-term uptrend and 4wk High-Low Percent is bullish. The chart below shows SPY moving higher in 2024 and SPX %Above 50-day SMA moving lower (red arrow line). The indicator started the year above 90% and is currently at 54.67%. Even though fewer stocks are partaking in the current advance, the ones that are advancing are enough to maintain the uptrend in SPY.
The lower window shows SPX 4-wk High-Low Percent turning bearish on January 17th with a moving below -20%. This signal did not last long as the indicator flipped back to bullish with a move above +20% on January 29th. It remains bullish until a move below -20%.
Drop and Pop for SPY and QQQ
Stocks fell sharply on Tuesday, and then recovered with rebounds on Wednesday. This drop-pop sequence forged a short-term reaction low upon which we can base first support. The chart below shows SPY with the steep surge off the late October low and the strong advance since November 20th. I am marking short-term support at 490 and a close below this level would reverse the short-term uptrend.
The next chart shows QQQ with a similar profile. I am marking short-term support at 425.
Chart Analysis, Setups and Trading Ideas
MDY, IPAY and IOT Follow Up
The chart below shows the S&P MidCap 400 SPDR (MDY), which was first featured last Thursday (February 8th [7]). MDY broke out last Thursday and surged to a new high on Monday. It fell back with the rest of the market on Tuesday and tested the breakout zone. Tuesday’s close was just above the ATR Trailing Stop and just above the re-evaluation level at 503 (green line). MDY bounced on Wednesday and this trade is still alive. The ATR Trailing Stop remains at 504.43 and the re-evaluation level at 503.
The next chart shows the Mobile Payments ETF (IPAY), which was also featured on February 8th [7]. IPAY broke out with a surge last Thursday and hit new highs on Friday and Monday. The ETF fell back with the rest of the market on Tuesday, but firmed near the breakout zone and surged on Wednesday. The red line marks the ATR Trailing Stop (2 x ATR(22)) for reference. A close below 46.13 would trigger this stop and call for a re-evaluation.
The next chart shows Samsara (IOT), which was featured on February 6th [8] with a triangle consolidation. IOT broke out and then fell back hard with a decline below 33. The stock bounced with the rest of the market on Wednesday and held re-evaluation support at 31. I also added an ATR Trailing Stop for reference. I set the multiplier at 2.5 so the stop starts just below the late January lows. The ATR Trailing Stop is 2.5 ATR(22) values below the highest close since the breakout. It is currently at 31.46.
IBB Remains with Bullish Setup
The next chart shows the Biotech ETF (IBB) with a 24.5% surge to new highs and a pullback since mid January. This decline retraced 25-33 percent of the surge and formed a falling wedge. I view this as a correction after a sharp advance. This makes the falling wedge a bullish continuation pattern. A breakout at 136 would reverse the short-term downswing and argue for a continuation of the bigger uptrend.
AMGN hits Support-Reversal Zone
The next chart shows Amgen (AMGN) firming at a Support-Reversal Zone. This stock is part of the Healthcare SPDR (XLV) and the Biotech ETF (IBB). AMGN surged 32% and the fell hard after earnings. The long-term trend is still up and the decline retraced around half of the prior advance. This fits with a two steps higher and one step backward sequence for corrections. There is also potential support from broken resistance in the 290 area (blue shading). AMGN is attempting to firm in this area and I am marking short-term resistance with Tuesday’s high (296). A breakout here would be short-term bullish.
VRTX Corrects after New High
Vertex Pharmaceuticals (VRTX) worked its way higher from March to November and then took off in mid December. The stock surged above 400 and continued higher into early February. After a 31% advance, VRTX fell back in February and retraced around a third. The blue shading marks a Support-Reversal Zone. I call it support because of the short December pullback (blue oval). The 33-50 percent retracement zone is also here. VRTX is attempting to firm around 410 and I am marking short-term resistance at 426. A breakout here would reverse this short-term downswing.
STE Breaks out of Triangle
Steris Plc (STE) is a medical supply and services company headquartered in Dublin. The chart shows STE hitting a Support-Reversal Zone in early December and breaking out with a surge in mid December. STE then consolidated in 2024 with a triangle, which I view as a bullish continuation pattern. The stock broke out last week (6-Feb), fell back hard and then resumed the breakout with a 2.7% gain on Wednesday. I view this breakout as bullish and would set re-evaluation support at 215.
