AI Back In Focus
The Markets
The AI trade, specifically the semiconductor stocks, is back in focus this week.
The move started with NVDA breaking out on Tuesday. Here is the ‘heads-up’ I posted on 𝕏 before the market opened.
And here’s the action through today. The stock jumped more than $11 from Tuesday’s open to today’s high before settling to close 0.43% above yesterday’s closing price.
And it wasn’t alone. AMD was on the radar, too.
It went on to open the door to more upside, rising above the mentioned resistance areas and nearly into the gap.
Its move was helped by favorable earnings news from MU.
After forming a double-bottom pattern near the mid $80s, MU stock showed improvement ahead of the earnings reported yesterday evening.
First, it moved above the 8-day MA. Then, it crossed the 21-day MA. Then, the 8 crossed above the 21, signaling returning strength and momentum.
Earnings reports are commonly a coin flip at best. We never know with certainty the results or how the stock will react. In this case, the recent improvement preceded positive results, which took the stock sharply higher.
That jump, in turn, helped AMD and some other semi-stocks.
Not all stocks were happy, though. SMCI was hit with news of a US Justice Department probe about accounting violations. The stock keeps getting worse and is yet another example that -
News follows price.
Here’s how the rest of the market reacted, including SOXX, the semiconductor sector ETF.
The Charts
SPY is grinding higher while staying close to the 8-day MA, following closely underneath. The trend is your friend.
QQQ gapped higher out of the consolidation pattern built for several days, just below the August pivot high. It has also closed the gap from mid-July.
IWM is trying to hold up but is still having trouble getting away from the ~$218 pivot.
DIA is building the latest consolidation pattern for six days as the 8-day MA catches up and RSI stays high but not overbought. Bullish action.
With today's positive move, SOXX is back over the 100-day MA and near the $240 pivot area. Some sideways price action at these levels would make sense and allow the 8/21/50-day MAs to catch up before pushing prices higher.
DXY US Dollar Futures are also consolidating but in a bearish scenario. They’ve been trading sideways for a few weeks near the $100.32 pivot. Watch for a push lower soon to help stocks get to the next levels higher.
BTCUSD is battling with ~$65,000. If it can get and stay above that level, it will be one step closer to breaking out the descending channel pattern. Time will tell.
The Trade
Opportunities abound.
We didn’t even get to talk about China. FXI, KWEB, BABA, JD, etc, are all screaming higher on news that China will add to efforts for economic stimulus.
Even typical lagging industries are doing well. My friend
shared this the other day.It's both funny and true.
Find the trade setups, execute, and manage risk.
I’ll keep sharing some of what I see here and on 𝕏 @Andy__Moss.
Keep an eye out for some helpful new additions coming soon.
In the meantime, weekly charts will be out over the weekend. See you then.
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The Disclosures
***This is NOT financial advice. This is NOT a recommendation to buy, sell, or trade any security. The content presented here is intended for educational purposes only.