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The S&P 500 ($SPY) just continues to grind higher, but that grind may be coming to a halt, because the index today very quietly broke out late in the afternoon. One of the most active groups around continues to be the chipmakers ($SOXX) which just continues to rise, while Biotech ($IBB) shares also look like they are about to get into party mode again.
Nvidia’s stock ($NVDA) continues to struggle to rise above the $192 level, while Alphabet ($GOOGL) closed right at an all-time high. The big test to confirm a broader market breakout will be watching shares of Amazon ($AMZN), with the stock struggling around $1,000.
S&P 500 Breakout
The breakout in the S&P 500 was in such a subtle way it was hardly noticeable, but it happened as the chart below shows. One can see how the index closed just above resistance that had formed around 2,550. The last breakout occurred around 2,507, and the S&P proceeded to add on about 45 points. A move of 45 points from here adds about 2 percent to the index, and take it right to 2,600.
Nvidia Stumbles Again
The buyers are trying hard to get Nvidia to breakout, but to this point they just can’t break through. The stock continues to get held at levels below $192, and the biggest problem is the buyers may be running thin. Just look at the decline in volume over the last two days.
What also seems concerning for Nvidia, is the rest of the sector rose today. The PHLX SOXX ETF surged higher today and was even making new highs. It would seem all the concerns surrounding the Apple’s ($AAPL) iPhone production issue and the impact on the chips has died down or should have never even existed.
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The biotech ETF, IBB, also looks set to rise, as it moves closers to mid-August uptrend line. The ETF has consolidated nicely and is presently forming what looks like a symmetrical triangle, or a potential pennant. Either way, it is a bullish pattern, and that would suggest a breakout is likely on the horizon. Any rise in the shares brings it close to or above $343 resistance.
Amazon shares have been struggling to rise above $1,000, but that could change soon as well. The stock has been part of a group of companies that have been at the heart of the 2017 rally, and the market will need Amazon to rise as a sign of the health for the market. A rising market without Amazon could be a sign of underlying weakness.
Alphabet managed to get over $1,000 today, closing right near an all-time high. A move in the stock above $1010 is a clear break higher and symbolizes a breakout.
Technology ($XLK) continues to be something to watch, the ETF moved out of the upper range of the channel again, and in the past, this has signaled it was overbought. It is likely the ETF could rise further, but it also likely means the sector is in danger of running too hot. Preferably we would like to see it stay within the channel.
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Michael Kramer and the clients of Mott Capital own shares of Alphabet
Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.
Tags: Technology, Biotech, Nvidia, Alphabet, Amazon, Chipmakers, Technology