Super “SMID” Technical Picks

Near-term trends still appear to have limited upside, despite Technology having outperformed in a way that’s largely holding up indices like SPX and QQQ to the detriment of Equal-weighted index gauges.  US Dollar and Yields have shown more evidence of turning higher, and this could be a bearish development for stocks given prior correlation tendencies.  Both Healthcare and Financials look to be at resistance and this could prove to be a headwind for Equities over the next month

US Equities fell in broad-based fashion on Wednesday but managed to recoup some of that damage by end of day.  Greater underperformance was witnessed from the broader market than in Cap-weighted indices, but yet six sectors still fell greater than 1% on the day in Equal-weighted terms, and SPX fell beneath my stated $4739 support from 1/11/24 intra-day lows.

Bottom line, I’m not certain that SPX, QQQ need to immediately pull back to violate early January lows and this might be a February theme. 

–Specifically, both US Treasury yields and US Dollar are both nearing initial resistance, and any stalling out on this rally could coincide with SPX attempting a bounce into end of month

–Cycles show an excellent likelihood of a possible peak from 1/28-1/30 which coincides with important three, and six-month anniversaries of prior SPX turns.  Rallies into this time should dry up and start to turn lower into February.

–January is proving choppy, as believed might be the case technically, but until SPX-4682 is broken, this remains short-term consolidation only, and not a large pullback.

SUPER SMID Technical Picks – The following five names are ranked top within Tom’s new SMID (Small and Mid-cap) Granny-shot list based on my own subjective technical analysis which incorporates momentum, technical structure, counter-trend exhaustion (or lack thereof)  The following five names are considered to be my own Personal “Crème of the Crop” within Tom Lee’s 46 new SMID Granny Shot stocks from more than 2,293 Small and Mid-cap Stock ideas.

Installed Building Products (IBP- $183.43)

-Short-term consolidation since late December following its breakout to new all-time highs makes this attractive

-Daily closes above $188 should help lift IBP to $222, and intermediate-term targets at $248

-Momentum remains quite strong and recent consolidation has helped to alleviate some of the weekly overbought conditions

-Similar to other SMID Granny-shot picks like BLD -0.47% , IBP is part of the Building/Construction theme which is one of my top technical sub-sectors for 2024, specifically given the prospects of lower yields into July/August of this year.

-Pullbacks to $160-$170, while not expected, but which cannot be ruled out in the months ahead, would create a more appealing risk/reward opportunity.

Installed Building Products Equity

Gibraltar Industries (ROCK- $79.75)

–This Fabricated Metal and Hardware name is quite constructive technically, with positive, but not overbought momentum and excellent technical structure.

-The act of having exceeded August 2023 peaks and having held above this level despite Interest rates bouncing over the last five weeks makes this quite attractive technically

-A rally back to test all-time highs looks likely in the months ahead but should be particularly strong as this bounce in rates subsides and gives way to a pullback under 4.00%.

Resistance lies at $100-$105, while support should materialize at $68-$70 on any weakness.

Gibraltar Industries Equity

Deckers Outdoor Corp. (DECK- $724.49)

-DECK 0.33%  is set to make new a new all-time weekly high close potentially this week on any Friday 1/19/24 close above $702.81. 

-This represents an official breakout above last year’s highs, arguing for strength up to $796, then $887.

-Similar to the April 2023 weekly close above September 2021 peaks, this current push above last December highs keeps the near-term trend quite appealing.

-While momentum might start to diverge negatively in the weeks to come, DECK has shown little to no evidence of any price deterioration and maintains a stellar intermediate-term trend.

-Breaks of $651, while not expected, would likely not immediately be buyable technically speaking and would postpone the rally.

-Intermediate-term support lies at $575-$604, which would constitute an excellent technical risk/reward on any weakness in the months ahead.

Deckers Outdoor Corporation Equity

Super Micro Computer (SMCI- $318.43)

-Recent consolidation presents a very attractive risk/reward opportunity for SMCI following a successful retest of all-time highs from last August.

-Technical pattern resembles a large “Rounding Bottom” pattern following its rally from April-August of 2023, when price escalated more than  279% in less than four months’ time.

-Technically, I expect SMCI could likely resolve this consolidation from last August with another upside breakout, which would occur above $360.

-Upon exceeding $360, movement up to resistance ranges initially at $392-$400, then $492-$500.

-Strong support lies at $295-$305 and only a weekly close under $275 would serve to postpone the rally

Super Micro Computer Equity

Insight Enterprises (NSIT- $181.31)

-December 2023 breakout above August 2023 highs keeps this in excellent technical shape.

-NSIT has more than doubled from Fall 2022 lows and has shown no evidence of any technical deterioration that would warrant avoiding it.

-Recent escalation last month happened on the heaviest volume since Spring 2023 which keeps this in good shape technically

-Upside targets lie near $200-$210 initially, while any pullback to $170-$175 should represent an attractive opportunity

Insight Enterprises Equity