Equity trends from August remain bullish, but yet there’s been some noticeable divergence that’s cropped up when viewing SPX and QQQ vs. the Equal-weighted SPX in recent weeks. Monday brought about some cross-asset volatility in Interest rates, commodities, and also Currencies, which makes keeping a close eye on the Equity trends important this week, given recent divergences. Key Technology stocks like NVDA broke down on Monday under $137, and the divergences in stocks like NVDA, AAPL, MSFT, and GOOGL vs. the regular market look to be important to watch carefully. Overall, I’m expecting a trend reversal this week, and any move in SPX under 5845 would signal the start of a move down to test and briefly undercut early November lows into early to mid-December. This would line up with cycle projections and recent lackluster breadth. Note, short-term pullback should represent an excellent buying opportunity for markets into December for a rally back to year-end, in my view.
I’ll address this week’s price action tomorrow and what might be in store. At present, tonight’s report concentrates on top technical ideas from Tom Lee’s Large-cap Stock universe.
Top Technical Stock Writeups:
Tesla Inc. (TSLA 7.65% -$338.59)
-Increasing evidence of positive mean reversion to other Magnificent 7” names, with TSLA having gained over 50% just in the last five weeks.
-Early July three-year consolidation breakout resulted in upside acceleration, which has carried weekly RSI to overbought levels.
-TSLA has now retraced 78.6% of its prior decline from late 2021. While minor pullbacks could happen in the next couple of weeks, the intermediate-term trend has turned higher and should result in a pushback to new all-time highs.
-The next meaningful area of upside resistance lies at $414.50, and movement above should allow for a push to 505-510.
-Important technical zone of support lies between $272-$276, which should provide buying opportunities for a pushback to new highs.
Tesla, Inc.
Block Inc. (SQ- $90.75)
-Intermediate-term trend improved with SQ’s breakout to the highest levels since early 2022.
-A technical breakout of $87.52 last week cleared three meaningful intermediate-term peaks over the past two years.
-The technical structure resembles a reverse Head and Shoulders pattern that was just exceeded.
-Volume spiked meaningfully on the rally over the last few weeks, which is bullish.
-Upside targets could materialize near $135, or even $165, into next Spring, and it’s thought that SQ has officially bottomed, technically speaking.
Block, Inc.
Meta Platforms (META-$565.11)
-The most technically attractive of any of the Magnificent 7 names structurally, given its stellar technical pattern and no evidence of intermediate-term deterioration.
-Minor consolidation over the last eight weeks has not resulted in hardly any real deterioration for META.
-Support to buy dips in META lies near $542 initially, then $525.
-Rally back above $600 should help META possibly push up above $660 into next Spring.
Meta Platform, Inc.
Palo Alto Networks (PANW- $386.38)
-Recent breakout back to new highs followed by 2.5 weeks of consolidation makes PANW quite attractive technically.
-The act of having pushed above February 2024 peaks at $380.84 makes PANW the most appealing of any of the Cyber-security stocks.
-Support to buy dips into December lies near $370-$375, which adjoins its uptrend from August lows.
-The ability to climb back over $404 should lead to PANW pushing higher up to $440, then $460.
Palo Alto Networks, Inc.
J.P. Morgan Chase (JPM- $250.29)
-JPM’s push above early November peaks at $248 represents a minor base breakout which has carried JPM to even loftier heights.
-Despite weekly RSI having reached overbought levels, there is no evidence of any weakness that would be suggestive of upcoming trend failure.
-Volume spiked sharply on the early November breakout and followed through again on Monday (11/25), reaching the highest level of the past week.
-While Financials are admittedly overbought, JPM stands out as being a “best of class” stock and a leader within Financials.
-Financials sector itself achieved a relative breakout when eyeing Equal-weighted Financials vs. Equal-weighted SPX going back over the last few years. This keeps Financials in excellent shape technically speaking.
JP Morgan Chase & Co.
Super-SMID Technical ideas:
-IES Holdings (IESC 5.31% - $279.68).
-Sterling Infrastructure (STRL 2.49% - $196.33).
-Applied Industrial Technologies (AIT 2.50% - $278.55).
-United States Lime & Minerals (USLM 1.07% -$148.55).
-Him & Hers Health Inc. (HIMS -2.48% -$31.35).
