Technical recap for Monday, 5/20: Equity trend bullish but a bit of an uneventful start to the week outside of Technology performance, which following a 2% gain in Semiconductor issues, managed to lead Technology higher by +1.23%. However, the broader market performance was a bit more mixed, with just four sectors positive on the day. DXY and TNX look close to breaking trendline support, but until this happens, the Equity rally might prove to be a bit choppier than desired into the end of May before a stronger push higher into June expiration. 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 as discussed last week, this larger broad-based rally will take time. However, despite some choppiness, SPX trends remain bullish and supportive of a push higher to near 5400, which might occur coinciding with a Treasury rally into mid-June.
Below is the technical writeup for this month’s Super Granny Shot selections, which are listed below in no particular order:
Alphabet (GOOGL-$176.92)
-GOOGL is arguably the most technically attractive of any of the Magnificent 7 names given its recent push back to new all-time highs, while none of the other six stocks have accomplished this feat.
-The act of having exceeded former all-time highs more than two years after this was established makes GOOGL primed for additional gains, technically speaking.
-Monthly RSI has just entered overbought territory, while weekly RSI is getting close to being overbought. However, barring any weakness in GOOGL to give back its long-term breakout, such a development doesn’t mean too much technically.
-Initial upside resistance lies near $180. However, the quickness with which this target was reached suggests that consolidation might prove brief before an intermediate-term push higher to $219.
-Strong support lies at $154, and until breached, any larger pullback in GOOGL in the months ahead would be thought to make this stock more technically appealing.
Alphabet Inc.
Arista Networks (ANET – $319.39)
-Huge low to high monthly range for this month is very supportive of additional gains.
-Break to multi-month lows proved extraordinarily short-lived and after just three out of four negative weeks from all-time highs to below $250, ANET has the possibility of making five straight weeks of gains as the stock has exceeded $315 very quickly.
-Weekly MACD has turned back to bullish territory after the cross of its signal line, and the parabolic uptrend of higher highs and higher lows at an increasing rate has been ongoing from mid-2022.
-Upside resistance looks to target $350, while $240 is a meaningful support level for ANET.
Arista Networks Inc.
JP Morgan Chase & Co. (JPM-$195.58)
-JPM remains one of the stronger Financial stocks within the current Granny shot selections, and its breakout of Fall 2021 peaks near $173 resulted in upside acceleration.
-The recent consolidation which has happened in JPM this week is thought to make the shares more attractive technically following its recent breakout back over $205.
-Despite the appearance of negative momentum divergence on weekly charts, this is not present on monthly charts,
-Intermediate-term uptrend for JPM lies near $190, and only a move below $179 would be cause for concern.
JP Morgan Chase & Co.
Transdigm Group (TDG-$1312.76)
-Remains quite attractive technically with no evidence of the recent parabolic uptrend showing any signs of weakness.
-The start of its upside acceleration last October has proven to be a very sharp, linear uptrend which has proven far steeper than its prior advance from Fall 2022, which broke out above the 2.5-year consolidation starting in March 2020.
-Weekly and monthly momentum are overbought following the last 17 of 20 months higher for TDG. However, barring a weekly close under $1185, the uptrend remains very much intact and looks resilient technically speaking.
-Upside targets lie near $1396 with intermediate-term targets just below $1500 (1497)
TransDigm Group
NVIDIA (NVDA-$947.80) Technical structure still bullish, and can allow for breakout
-It’s truly hard to be too negative on NVDA technically given the resilience of this stock having recouped the four weeks of weakness into Mid-April very quickly in recent weeks.
-Its March-to-April pullback helped to alleviate its weekly overbought conditions, while the decline into April failed to cause any meaningful technical damage.
-Its early January swing low right near $473 preceded a 2.5 month rally where prices almost exactly doubled before peaking (Its all-time high close happened on 3/25/24 at $950.02, nearly an exact doubling in price of these former lows)
-My technical ranking system still places NVDA high in the rankings of Tom Lee’s Granny Shot portfolio, with initial upside resistance found near 1067 and my intermediate-term upside projection for NVDA is $1250-$1350, and such a move will take time and might not come into fruition until next Spring, 2025.
-Technically speaking, the area near former all-time highs (~974) likely will be exceeded sometime in the next month, and might happen this week if earnings news comes in better than expected.
-In the short run, my own Elliott-wave count analysis shows a high likelihood that NVDA should push back to new highs, even if this former March peak ($974) were to hold in the short run.
-Overall, whether or not NVDA beats guidance and accelerates back to new highs away is very difficult to know technically speaking. However, from my studies on momentum, cycles, DeMark theory, Elliott-wave theory and structural pattern analysis, NVDA is still very highly ranked, and the stock continues to look attractive using my work for the prospects of a push back to new highs and gains to eventual upside targets starting near $1250. Any consecutive daily closes back above $974 should allow for additional upside progress.
–Downside support lies at $756, and while I don’t feel this should be tested in the weeks/months to come, it’s always important to monitor relevant technical levels for risk purposes. $756 will be the first important level for intermediate-term trend followers to pay attention to. If broken, such a support violation could lead to additional weakness into August before NVDA bottoms. However my trend and cyclical forecasts show a likely rally into mid-to-late June for NVDA.
NVDA Corp.
NVDA DeMark counts – Weekly and Monthly still early
A few additional charts I felt might be worth sharing, and one concerns the weekly Exhaustion count using DeMark’s TD Sequential and TD Combo indicators. As can be seen from the count below, NVDA does not currently show a confluence of upside exhaustion that would suggest any kind of peak using this system. While not shown in this report, monthly charts also are early towards showing 13 Countdown signals which often can appear when a stock is due for consolidation.
Weekly DeMark exhaustion would require at least another 3-5 weeks of gains, while monthly DeMark counts would not show any sort of exhaustion counts until early this Fall. Thus, while some investors might decide to trim/sell using their own methodologies, DeMark’s indicators clearly look early on both weekly and monthly charts.
NVDA DeMark Counts
NVDA Cycle composite on weekly basis goes higher into mid-to-late June before possible peak
My studies on daily and weekly cycles for NVDA led me to the opinion that the current rally could still have another month of upside progress using my composite on NVDA’s weekly cycles.
My composite is certainly not a perfect fit for NVDA’s past price swings, but does seem to have captured the rally from mid-2022 into 2023 along with the rally from early 2024 into mid-year.
Conversely, the peaks on this cycle composite suggested a possible high in NVDA might happen in the latter part of 2021 along with mid-2023 into late 2023. Its current outlook highlights that July into August might be the start of some consolidation. Furthermore, some Fall 2024 weakness into the November US Presidential Election looks possible before a turn back higher.
Note that the pink line shown above is not meant to be utilized for projection purposes using magnitude of swings. This measures amplitude only. Thus, the pink line turned down sharply in mid-2023 into end of year and NVDA showed just minor consolidation and not a meaningful decline like what some might infer.
Overall, the turning points of the major swings seem to be the most important, and one looks possible in late June for a peak along with August, followed by November for a low. I’ll revisit this Composite in the months ahead. (Note, as a reminder, this cycle chart is just one particular input. Moreover, it’s important to take many Fundamental and technical factors into account when making decisions.)
NVDA Cycle Composite
The technical and cyclic analysis above does not take earnings, nor the fundamentals of the underlying issuer into account. Thus, attempting to utilize any technical factors for purposes of forecasting earnings and what price movement might or might not be factored into the market is often quite difficult, and generally not recommended. The analysis above concentrates on current technical structure, momentum, seasonality and cycles, Elliott-wave counts and DeMark analysis to attempt to make technical projections. However, it remains important to reiterate that this analysis is merely one input in the process, and while important for managing risk, investors would be wise to utilize Fundamental analysis as well when making decisions.
