For the sake of redundancy and in case you are living under a rock and just came out to read my Daily, Nvidia (NASDAQ:NVDA) and its ginormous beat on revenues, gave the market new life.
Happily, our very own Sister Semiconductors, SMH, moved up to new all-time highs and gave our portfolios quite a boost.
Nonetheless, she has a Family.
They are:
- Granny Retail XRT
- Granddad Russell 2000 (IWM)
- Big Brother Biotechnology IBB
- Prodigal Son Regional Banks KRE
- Transportation IYT
- Bitcoin BTC/USD
While SMH has soared to new heights, the rest of the Family is far more sobering.
A couple of the members could be flashing something way more insidious than artificial intelligence is the panacea for everything.
Let’s look at the weekly charts.
XRT had a huge run 2 weeks ago because of GameStop (NYSE:GME) and AMC. Then the sector sold off with the abysmal Target (NYSE:TGT) earnings (TGT) and low consumer confidence.
The chart tells us that XRT must perform this coming week and pull herself up and away from the lower channel line.
For any further weakness, we need to watch the 200-WMA (green) to hold.
IWM looks better. However, that index first needs to clear the top of the channel line which corresponds with the March high.
Plus, 200 or the bottom of the channel is a key support to hold.
IBB has more work to do. It does though look promising if the price can climb over the 200-WMA and then over the top of the channel line.
SMH can take some time off this week and consolidate within the trading range of this past week.
She needs to wait and see how her family does. One thing we know from experience, our Sister only has legs for so long.
At some point she looks back and without her Family in tow, sells off.
Bitcoin is represented here by a daily chart.
Friday ended with an inside day, above the 50-DMA.
Momentum, according to our Real Motion indicator, tells us that he too has some work to do this week to look excited about all the recent headlines.
Finally, we have the two weakest siblings.
Transportation IYT doesn’t seem to care very much about AI right now.
In fact, one could argue that IYT hates the idea of AI given that the sector closed poorly for the 2nd week in a row.
Why? Rising freight rates, labor issues, consumer slowdown, and contraction in some areas of manufacturing all are contributing factors.
But who needs to gauge the US economy on how robustly goods (you know, things like food and oil) are moving when we can ChatGPT our way into surviving!?
IYT landed on the 50-WMA (blue). This is who we are watching as we imagine at some point so will SMH if the decline continues.
Regional Banks KRE also had a rough week. We hoped to see KRE clear the 23-month MA. Instead, KRE failed the channel line once again.
Now, KRE must reverse and give the rest of the Family some hope.
A trip to and under the 50-WMA will not bode well as commercial real estate (a big part of this sector) becomes a further drag.
The famous line from The Wizard of Oz (let’s call this wizard Jensen Huang), “Pay no attention to that man behind the curtain,” revealed that the wizard is only human.
In this case, what might remind him and all the investors (including us) in NVDA that they too are only human, is if the caution sign we see in Transportation flashes brighter.
ETF Summary
- S&P 500 (SPY) Nasty bearish engulfing pattern, but not conclusive
- Russell 2000 (IWM) 210.80 ATHs resistance 200 support
- Dow (DIA) From 40k to sitting on the 50-DMA
- Nasdaq (QQQ) Nasty bearish engulfing pattern, but not conclusive
- Regional banks (KRE) Watching the range
- Semiconductors (SMH) Inside day which is key to watch which way it goes on Tuesday
- Transportation (IYT) Clutch-must hold or else-now in distribution phase
- Biotechnology (IBB) 135 support 140 next resistance
- Retail (XRT) At least this closed back above the 50-DMA
- iShares iBoxx Hi Yd Cor Bond ETF (HYG) 77.00 once again pivotal support