Equity trend bullish but I suspect until both DXY and TNX break trendline support that the rally could prove a bit choppier into the end of May before a stronger push higher. SPX and QQQ’s push back to new highs finally led the DJIA to exceed 40k for the first time ever to cap off a bullish (+~1.5%) week for stocks. Yet, S&P 500 Equal-weighted index along with DJ Transportation Avg along with many Small and mid-Cap Averages remain below all-time highs, and this larger broad-based rally will take time. Overall, short-term trends remain bullish, and momentum and breadth are supportive of further gains into June. NVDA’s earnings on Wednesday could prove to be a technical catalyst for the US Stock market given its 5% weighting in SPX and ongoing standing as an AI Bellwether.
Below is the technical writeup for this month’s Super SMID Granny Shot selections, listed in no particular order:
Agilysys (AGYS-$103.30)
Last week’s consolidation breakout represented the resolution of a pattern that had been present since early 2023.
-Volume expanded on last week’s breakout to the highest levels since February.
-AGYS technical pattern has been showing evidence of beginning to move higher more quickly with an increasing slope in its rising highs and lows.
-Its consolidation from January 2023 helped to lessen its overbought status, and despite a quick move back to new all-time highs this week, weekly RSI is just starting to enter overbought territory again (Which is not a bearish sign.)
-Upside resistance likely materializes in a zone initially from $115-$118.50, and then over would lead AGYS to $135-$140 which can’t be ruled out on an intermediate-term basis.
NAPCO Security Technologies, Inc. (NSSC- $47.46)
-Following a bearish breakdown last Fall, NSSC recovered quickly back to new all-time high territory this past January and its rate of ascent is steeper on this recent six-month rally then during most of 2020-2023.
-NSSC has just achieved a new short-term breakout this week on its move back above February highs at $46.21, and this should likely drive the stock up to $50-$52 initially with intermediate-term targets near $55, then $66.
– Given its consolidation from February, three months ago, this recent rally back to new all-time highs has not resulted in weekly momentum indicators like RSI getting overbought.
-Dips should make NSSC more attractive technically and only a weekly close under $38 would serve to worsen its near-term bullish technical outlook.
TopBuild Corp. (BLD- $407.63)
-Recent consolidation from BLD has not taken away from its technical attractiveness given the limited extent of the technical damage. BLD failed to even give back 38.2% of the rally from last October 2023 lows.
-Evidence of Treasury yields starting to roll over seems to have directly coincided with BLD rallying from $372 to back over $400 which is seen as encouraging.
-My cycle composite for interest rates suggests a much larger decline in Treasury yields in the months ahead. This likely can serve as a tailwind for Homebuilder performance, particularly during a bullish seasonal time.
-Initial upside resistance lies near $453, but movement above should face little real resistance until $490, then $518 as an intermediate-term target.
-Support lies near $392, then $372.50. Only a breach of $372 would serve to harm the stock’s intermediate-term bullish technical projection.
REX American Resources Corp. (REX- $56.18)
-Minor consolidation on lesser volume since April following the steep rally in late March should provide an attractive entry point for gains back to new all-time highs.
-Recent consolidation since 5/10 is particularly appealing from a risk/reward perspective, as REX -2.16% has been lower for six of the last eight trading sessions but has not broken support at April lows.
-A rally back to challenge and exceed $60.41 looks likely (5/10 intra-day high) which should drive the stock up to $64.20 without much resistance. Intermediate-term targets lie near $70 which could allow for some stalling out if approached over the next few months.
-Only a decline back under $53.64 would postpone the rally, resulting in further consolidation down to approximately $50. At this time, this is thought to be unlikely and REX looks like a great risk/reward to start turning back higher.
Eagle Materials (EXP- $242.29)
-EXP remains in near-term consolidation following its sharp rally from last Fall’s highs into a short-term peak in late March, nearly two months ago.
-Pullbacks have not resulted in any material technical deterioration that would lessen EXP’s attractiveness. Tuesday’s decline briefly fell under April lows, but snapped back quickly to hold those lows, which is thought to be bullish technically.
-This recent pullback over the last few weeks makes EXP much more appealing for those who were hoping for some weakness which might alleviate EXP’s overbought conditions.
-Weekly RSI is no longer overbought, but neutral. Meanwhile, EXP’s two-week decline found strong support near its 38.2% Fibonacci retracement zone which also lined up with Ichimoku support.
-A decline in Treasury yields in the months to come should help drive EXP back to recent highs, and this stock’s minor consolidation appears like a pause only, as part of an existing intermediate-term uptrend.
-Upside targets lie near $276.61 and over should lead EXP to $295, which represents a 1.618 Fibonacci projection of the initial rally off the 2022 lows, as projected from October 2023 lows.
-Strong support lies near 226-8, followed by $211.50 which I don’t believe should be tested or broken at this time. Any move under $211.50 changes the upward projection, creating a more negative short-term view.
