Technical recap for Tuesday, 6/25: Equity trend should be close to finding a bottom and turning back higher to new highs into July after just a minor three-day pullback in Technology. Broader market performance has proven impressive in the last week, and should be a driving reason why Stock indices continue to push higher in the month of July. DXY and TNX look close to breaking down, and likely trend lower into September. Overall, despite Tuesday’s resumption in Technology strength while the broader stock market showed more weakness, I expect to see Sectors like Healthcare, Financials, Consumer Discretionary and Industrials build on recent strength to rally in the month of July. SPX along with QQQ trends remain bullish and supportive of a push higher to near 5700 in SPX, and it’s thought that mid-July could prove to be more important than 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-$184.03)
-GOOGL remains one of the more technically attractive names within the “Magnificent 7” following its 16% rally after it broke back out to new all-time highs in April.
-Monthly RSI has just entered overbought territory, while weekly RSI is getting close to being overbought. However, DeMark’s counter-trend exhaustion indicators suggest another 6-8 weeks of gains might be possible before any real consolidation gets underway.
-Rally above initial upside resistance $180 should lead to $199 without much trouble. Furthermore, intermediate-term targets based on the High to low range from 2021 projects up to $220-$225.
-Near-term weakness should be held near initial support at $176. However, structural intermediate-term 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.
Arista Networks (ANET – $334.53)
-Recent push back to new highs in June keeps this trend heading higher with higher highs and higher lows.
-ANET has begun a stair-stepping trend this year, with each of its prior pullback attempts proving remarkably short-lived ahead of another push back to new highs. ANET 0.73% has now risen for eight of the last nine months.
-Weekly MACD turned back to bullish territory in mid-June 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 $360, while $307-$312 is the first real zone of downside support while $240 is a meaningful intermediate-term support level for ANET.
JP Morgan Chase & Co. (JPM-$198.07)
-JPM remains one of the stronger Financial stocks within the current Granny shot selections, and maintains a strong intermediate-term uptrend despite the choppiness since March.
-The recent breakout this week of the one-month consolidation from May should allow JPM to trend back to new highs into July. Financials have been the 2nd best performing sector over the last week, with returns greater than +1.50%.
-Despite the negative momentum divergence on weekly charts, this is not present on JPM’s monthly charts, and the stock maintains a healthy intermediate-term uptrend
-Intermediate-term resistance for JPM lies near $210, while strong support is found at $190. Only a move below $179 would be cause for concern.
Transdigm Group (TDG-$1,320.36)
-Remains quite attractive technically with its minor consolidation since May not showing any meaningful structural break of TDG’s ongoing uptrend from last Fall.
-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 -0.86% . 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). Support on pullbacks would initially materialize near $1297, with breaks of that level leading down to $1172.
NVIDIA (NVDA-$126.09)
-NVDA remains the top performing stock YTD in the SPX and NASDAQ 100, having risen more than 55% in the last two months since April lows, and 146% YTD through 6/25/24. Movement back to challenge $140 looks likely into July.
-Its sharp three-day decline in June helped to alleviate its weekly overbought conditions, but appears like a short-term decline only which should stabilize and rally back into mid-July with no significant technical damage.
-My technical ranking system still places NVDA higher than any other stock in the rankings of Tom Lee’s Granny Shot portfolio, and I anticipate a push back to challenge June peaks as July gets underway.
-In the short run, downside support lies at $115-$116 while movement under that level should find strong intermediate-term support near $97-$102. Resistance above $140 lies near $156.
-NVDA’s cycle composite shows the potential for late July weakness and then weakness from September into the US Election, so failure to rise back to challenge $140 into mid-July could result in additional consolidation into early August.
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 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.)
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.
