The Indian benchmark Nifty 50 extended its corrective decline. Over the past four sessions of a truncated week, the Nifty 50 index remained largely under selling pressure. Throughout the past week, the markets continued with their process of mean-reversion. The volatility, though, did not show any major surge. The volatility gauge, IndiaVIX rose by a modest 2.11% to 14.77. The trading range over the past week stayed wider on the expected lines. The Nifty oscillated in a range of 852 points. It closed with a net weekly loss of (-615.50) points (-2.55%).

The coming week is truncated as well. Wednesday, November 20th is a trading holiday due to Assembly Elections in the state of Maharashtra. The markets are undergoing a painful mean-reversion process. As of now, though the Nifty has closed a notch below the 200-DMA which is currently placed at 23555, it has managed to defend this important support. Beyond this, the Nifty is within striking distance of the 50-week MA which presently stands at 23253. Even if the index ends up testing this level, the long-term primary uptrend would still stay intact. Two possibilities remain distinct; a relief rally in the form of a technical pullback cannot be ruled out; in the same breadth, the markets remain weak and vulnerable to extended corrective pressure.

On Monday, the Nifty will adjust to the global market setup as it will open after a gap of one day.  The levels of 23650 and 23780 may act as potential resistance points. The supports come in at 23250 and 23000 levels.

The weekly RSI is 43.26; it has made a fresh 14-period low which is bearish. It also stays neutral and does not show any divergence against the price. The weekly MACD is bearish and stays below its signal line. The widening Histogram shows accelerated momentum during the downtrend. A long black body occurred on the Candles; this showed the strength of the trend on the downside.

The pattern analysis shows that the Nifty has made a feeble attempt to defend its 200-DMA though it has closed slightly below this important point. Any further downside may see the Index testing another important support level of 50-week MA which is placed at 23253. Besides this, the index has taken support on an extended trendline which also remains in close proximity to the 50-week MA.

All in all, the markets are trading with a weak undercurrent. A technical rebound and a relief rally cannot be ruled out; however, the markets are also vulnerable to sustained selling pressure and a test of lower levels cannot be ruled out. The market breadth remains weak and this is concerning as all technical rebounds may get sold if the breadth continues to remain weak. It is strongly recommended that all leveraged exposures must be curtailed. Any technical rebound; as and when it occurs, should not be chased and all gains must be mindfully protected. A highly cautious approach is advised for the coming week.

Sector Analysis for the coming week

In our look at Relative Rotation Graphs®, we compared various sectors against CNX500 (NIFTY 500 Index), which represents over 95% of the free float market cap of all the stocks listed.

Relative Rotation Graphs (RRG) show a largely unchanged sectoral setup. Nifty Services Sector, Pharma, Financial Services, and IT sector indices are inside the leading quadrant. They are likely to continue to relatively outperform the broader markets.

The Nifty Consumption, Midcap 100, and FMCG indices are inside the weakening quadrant. These sectors are expected to continue giving up on their relative performance over the coming weeks.

The Realty, Infrastructure, PSE, Media, Auto, Commodities, and Energy indices are inside the lagging quadrant. Among these, Commodities, Energy, Realty, and Infrastructure Indices are seen improving their relative momentum against the Nifty 500 index.

The Banknifty, PSU Bank, and Nifty Metal Indices are inside the improving quadrant. A gradual betterment in their relative performance can be expected over the coming weeks.

Important Note: RRG™ charts show the relative strength and momentum of a group of stocks. In the above Chart, they show relative performance against NIFTY500 Index (Broader Markets) and should not be used directly as buy or sell signals.  

Milan Vaishnav, CMT, MSTA

Consulting Technical Analyst

www.EquityResearch.asia | www.ChartWizard.ae

With cryptocurrencies evolving from speculative assets to a global economic force, investors face a critical question: how can you filter out the noise to pinpoint coins that truly matter?

Whether cryptocurrency trading is part of your financial strategy or not, it’s becoming clear that certain coins have moved beyond speculation and are now positioned as potential drivers of the future global economy.

Still, there’s a lot of market noise in the crypto space. You need to distinguish real geopolitical developments surrounding certain coins, domestic developments affecting crypto (like Trump’s proposal to scale back the SEC’s ability to regulate crypto), and market speculation in response to the above, which can affect many cryptocurrencies, even the most obscure ones.

A Snapshot of Crypto Leaders Over Time

Given cryptocurrencies’ sensitivity to the political and economic landscape, there will be a lot of volatility. One way to sort out the leaders is to view the StockCharts MarketCarpets for Cryptocurrencies (use the Select Group dropdown menu) over lookback periods, say, from one day to three months or more.

I like to measure Up Days minus Down Days to get a general sense of the crypto market’s performance in breadth. To do this, go to the Measurements drop-down menu and select [Up Days] – [Down Days]. Scrolling over each square will show how many up or down days are prevalent over a specified period. For instance, in 5 days, if there are 3 up days and 2 down days, the “score,” if we can call it that, will be +1 (as 3 – 2 = 1). The point here is that this view might give you a better filter for identifying market leaders.

Here’s a 5-day view of market leaders in the crypto space.

FIGURE 1. 5-DAY MARKETCARPETS VIEW OF THE CRYPTO MARKET MEASURING UP MINUS DOWN DAYS.Image source: StockCharts.com. For educational purposes.

Don’t mind the particulars for now. Just note the overall performance of the market. Compare it to this 1-month view.

FIGURE 2. 1-MONTH MARKETCARPETS VIEW OF THE CRYPTO MARKET MEASURING UP MINUS DOWN DAYS. Image source: StockCharts.com. For educational purposes.

Now, notice how there are fewer deep “greens” indicating fewer outperformers. The only coin of significance is Dogecoin ($DOGEUSD). The rest are relatively obscure. Keep that in mind as I zoom out to a 3-month view.

FIGURE 3. 3-MONTH MARKETCARPETS VIEW OF THE CRYPTO MARKET MEASURING UP MINUS DOWN DAYS.Image source: StockCharts.com. For educational purposes.

You have a few more market leaders going back a quarter. But the only liquidly-traded one is still Dogecoin. DOGE stands out as one of the top three non-stablecoin cryptocurrencies worth watching, with a unique connection to the potential “Trump 2.0” economy.

Three Crytpos to Watch Ahead of Trump 2.0

So, here they are—Bitcoin ($BTCUSD), Ethereum ($ETHUSD), and, strangely, Dogecoin ($DOGEUSD). Why?

Trump has talked about creating a strategic Bitcoin reserve as he aims to make the US the “crypto capital of the planet.” With a crypto-friendly administration and, presumably, fewer regulatory barriers, Ethereum—the second-largest cryptocurrency by market cap—will likely see growth alongside Bitcoin.

The Dogecoin case sounds a little weird. Its boost seems to be a speculative conflation of DOGE, the crypto’s ticker, and DOGE, the acronym for the proposed Department of Governmental Efficiency, co-led by Elon Musk, who happens to be a strong proponent of Dogecoin. Whatever the investment case may be, this symbolic conflation was enough to fuel the coin’s record three-year high.

Let’s look at the technicals, starting with a daily chart of Bitcoin.

FIGURE 4. DAILY CHART OF $BTCUSD. Did broad retail buying just kick in?Chart source: StockCharts.com. For educational purposes.

According to the Relative Strength Index (RSI), Bitcoin, which closed above a record-high $90K level, is well within the overbought range, hinting at a potential pullback. You’re starting to see that potentially taking shape.

Looking at our two momentum indicators below, the Chaikin Money Flow (CMF) shows three deep yet flattening surges suggesting high buying pressure, yet, in the On Balance Volume (OBV), the last surge shows a breakout (see green circle). Could this suggest that institutional buying occurred in September and October, followed by increased retail participation in November? If that’s the case, it will be interesting to observe how Bitcoin performs after taking a breather.

On the chart, there are three Quadrant Lines. The first two demonstrate how prices, in an uptrend, tend to bounce between the 50% or 75% lines (2nd or 3rd quadrants). The third quadrant line on the right is the one you should keep an eye on. If Bitcoin pulls back, it should bounce above the last quadrant, which also coincides with two critical levels of resistance-turned-support (see dotted magenta lines).

Let’s shift over to a daily chart of Ethereum ($ETHUSD).

FIGURE 5. DAILY CHART OF $ETHUSD. Smart money selling as retail investors scoop it up?Chart source: StockCharts.com. For educational purposes.

Like Bitcoin, Ethereum ($ETHUSD) is pulling back from its RSI-measured overbought level. However, unlike Bitcoin, the CMF and OBV are in stark divergence, possibly indicating that “smart money” buying has declined while retail buying has ramped up. If anything, this confirms forecasts of near-term weakness.

Unlike Bitcoin, Ethereum did not hit an all-time high, but this can also mean the crypto has room to run. You might expect a bounce at the 50% and 61.8% Fibonacci retracement levels (see green circle on the chart) which is further buffered by support at $2,730 (see green dotted line). However, if the uptrend resumes, take note of the three resistance levels ahead, highlighted by the magenta lines where you may see profit-taking and selling.

Let’s now look at a daily chart of Dogecoin ($DOGEUSD).

Figure 6. DAILY CHART OF $DOGEUSD. This chart looks like a meme stock, but the divergence between the CMF and OBV shows the difference between smart money and retail accumulation.Chart source: StockCharts.com. For educational purposes.

Similar to Bitcoin, Dogecoin also has a three-year high. But unlike Bitcoin and Ethereum, there’s no indication that Dogecoin will be a reserve asset, nor does it share Ethereum’s reputation for technological innovation. It started as a meme coin, and the only thing that seems to be driving its recent surge is its association with Elon Musk.

The RSI shows that Dogecoin is well-overbought. If you look at the CMF and OBV, note how larger players began accumulating Dogecoin with tremendous buying pressure long before the retail crowd noticed (see magenta square).  Now, the sharp divergence shows how “smart money” may be pulling back while retail traders are jumping in.

If you find a reason to buy Dogecoin beyond pure speculation, be aware that it has plenty of room to tumble. Note the 61.8% Fib retracement level coinciding with the coin’s 2024 high of $0.22. If it fails to bounce at this level, then the meme is over. But considering how unpredictable this coin is, look for a bounce near the 50% Fib retracement.

At the Close

In a market buzzing with hype, separating the legit from the noise takes more than following news and taking a quick glance—it’s all about using the right tools. For me, it’s about viewing MarketCarpets over different timeframes, checking up and down days to see which crypto is leading the pack. With Bitcoin and Ethereum, there’s solid institutional backing, showing they’ve got potential staying power. Dogecoin, though, feels more like a meme-fueled thrill ride, getting its boost from Elon Musk’s influence rather than fundamentals.

By looking at the daily charts and contrasting the CMF with the OBV, you can spot where the real buying pressure is—seeing institutional money flow versus the retail players. In the end, separating the signal from the noise comes down to reading the charts using the right tools.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

Should you buy calls/puts? Should you write covered calls? Or should you trade bull/bear vertical spreads?

That’s a lot to chew on — and it’s just the beginning. Once you decide on a strategy, you’ll have to decide on which strikes and expirations to choose. Trading options, after all involves analyzing a lot of data points, which can be very time-consuming.

Luckily for you, the new OptionsPlay Add-On from StockCharts.com can do all the heavy lifting you need. With just a few mouse clicks, you can identify stocks and ETFs that meet specific technical criteria and view the optimal options trading scenarios. In this instructive video, Tony Zhang, Chief Strategist at OptionsPlay, and Grayson Roze, Director of Operations at StockCharts, walk you through the following features available in the OptionsPlay Add-On:

The daily OptionsPlay ChartListsOptionsPlay Strategy CenterOptionsPlay Explorer

And keep in mind, some of these features are available only on StockCharts! So whether you’re a seasoned options trader or a newbie, this video is worth a must-see. Check it out below!

This video premiered on November 14, 2024.

Now that Q4 historical bullishness has kicked in, it’s time to allow the bears to go into hibernation, while the bulls search for key leadership to drive prices higher. Before I highlight a key industry group that just moved into all-time high territory, it’s important to understand the history of the stock market and which groups tend to carry the S&P 500 higher. In other words, since the S&P 500’s 2013 breakout above the 2000 and 2007 highs, which groups have led this secular bull market advance? Well, here you go. These are the 12 best-performing industry groups since April 2013 (as you check these out, keep in mind that the S&P 500 has gained 266% over the same period):

Semiconductors ($DJUSSC): +1488%Computer Hardware ($DJUSCR): +1019%Software ($DJUSSW): +774%Specialty Finance ($DJUSSP): +709%Internet ($DJUSNS): +683%Broadliine Retailers ($DJUSRB): +653%Automobiles ($DJUSAU): +480%Home Construction ($DJUSHB): +459%Insurance Brokers ($DJUSIB): +434%Home Improvement ($DJUSHI): +424%Hotels ($DJUSLG): +419%Consumer Finance ($DJUSSF): +416%

This isn’t opinion. This isn’t a list based on current technical conditions or my favorite groups. This list is HISTORICAL FACT. These are the “risk on” groups that have led this bull market. If you’re still clinging to the hopes of a secular, or even cyclical, bear market right now, I think you need to leave personal biases at the door and look at this market objectively. All-time highs nearly always beget more all-time highs. In my lifetime, I’ve only seen TWO all-time highs that marked major tops – one in 1973 and the other in year 2000. Constantly searching for that major top is what leads to significant underperformance. Personally, I believe the next major top (leading to a secular bear market) is most likely a decade away. We’ll all find out together.

So I’m in a position believing that stock prices are going to go higher. I’m also of the belief that many of the same leaders shown above in the Top 12 groups since 2013 are going to lead the next leg higher in this secular bull market. Therefore, I’m paying particularly close attention to these charts……and one of them just broke out and started to lead on a relative basis during the past week.

Enter Software:

The absolute price breakout has already occurred. Now I’m waiting to see the relative breakout on the DJUSSW. Once that happens, I see a melt up in software stocks, especially among small and mid cap software stocks. It’s important to point out that in this environment of falling short-term fed funds rates, small and mid caps are showing tremendous leadership. As I look ahead, I believe small and mid caps will TROUNCE the S&P 500. All of this will lead to many small/mid cap software stocks tripling or quadrupling within a year. I’m going to uncover them.

On Saturday morning at 11am ET, I will be hosting a webinar, “Capitalizing On Small- and Mid-Cap Strength”. The objective of this event is to illustrate the strength in these two asset classes and to discuss potential levels of outperformance and to point out many stocks poised to lead. If you want to find stocks capable of tripling, quadrupling, or even more, then this webinar is for YOU! The webinar is completely FREE (no credit card required), but you must register for the event to save your seat – and seats are limited. For more information and to register NOW, CLICK HERE.

Happy trading!

Tom

I was originally taught to use RSI as a swing trading tool, helping me to identify when the price of a particular asset was overextended to the upside and downside.  And on the swing trading time frame, that approach very much works, especially if you employ a shorter time period for the indicator.

But RSI can also be used for longer-term time frames, helping investors to better define trend phases and identify broader shifts in momentum.  Today we’ll break down three charts that show how this application of the RSI could help you stay on the right side of strong uptrends!

HubSpot Inc. (HUBS)

Earlier this week on my daily market recap show I was asked about HubSpot which has recently become overbought.  The viewer was concerned about potential downside given the overbought conditions.

What we reviewed was that while an RSI above 70 is considered overbought, an RSI above 80 is considered “extremely overbought”, or what we would often call, “the good kind of overbought.”  Why consider such a high RSI to be a bullish tell?  Just look to the left on the chart of HUBS, at similar readings in June 2023 and December 2023.  In both cases, the stock briefly pulled back soon after.  And in both cases, the stock went on to make a new 52-week high within a month.

NVIDIA Corp. (NVDA)

Another stock that has shown a similar run of “the good kind of overbought” signals is Nvidia.  There have been three such occurrences over the last two years, and in every instance, these signals have occurred not at the end of the uptrend phase, but in the middle!

It’s worth noting here that Nvidia, along with most other semiconductor stocks, are nowhere near the overbought region given their recent weakness.  NVDA is actually featuring the dreaded “bearish momentum divergence” which often serves as a leading indicator of a bearish rotation!

GoDaddy Inc. (GDDY)

GoDaddy is another chart which has recently shown an RSI level above the 80 threshold.  And while that could mean a brief countertrend pullback is in store, it also suggests that the long-term uptrend may still be in place.

The last time GDDY saw an RSI above 80 was in November 2023, just before an incredible bullish phase that arguably is still in place in November 2024.  So while I could see a short-term pullback as a reasonable expectation between now and year-end, this configuration also serves to reinforce the broader uptrend phase that is still active.

As I was first learning technical analysis back in the day, I thought chart reading was all about finding signals and just blindly following them.  Over the years, I’ve come to appreciate that indicators like RSI have layers of value.  Mindless investors take indicators at face value.  Mindful investors have learned to dig deeper and appreciate the values of learning from previous market cycles!

RR#6,

Dave

PS- Ready to upgrade your investment process?  Check out my free behavioral investing course!

David Keller, CMT

President and Chief Strategist

Sierra Alpha Research LLC

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice.  The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.  

The author does not have a position in mentioned securities at the time of publication.    Any opinions expressed herein are solely those of the author and do not in any way represent the views or opinions of any other person or entity.

In today’s DP Alert short video we discuss the key support levels for Gold as it has likely begun a longer-term correction. We also take a look at Gold Miners under the hood! Charts and commentary are taken from our subscriber-only DP Alert publication. Subscribe now and try us out for 2 weeks using coupon code: DPTRIAL2.

Below are the charts that we used in the video for your review:

Introducing the new Scan Alert System!

Delivered to your email box at the end of the market day. You’ll get the results of our proprietary scans that Erin uses to pick her “Diamonds in the Rough” for the DecisionPoint Diamonds Report. Get all of the results and see which ones you like best! Only $29/month! Or, use our free trial to try it out for two weeks using coupon code: DPTRIAL2. Click HERE to subscribe NOW!

Learn more about DecisionPoint.com:

Watch the latest episode of the DecisionPointTrading Room on DP’s YouTube channel here!

Try us out for two weeks with a trial subscription!

Use coupon code: DPTRIAL2 Subscribe HERE!

Technical Analysis is a windsock, not a crystal ball. –Carl Swenlin

(c) Copyright 2024 DecisionPoint.com

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.

Helpful DecisionPoint Links:

Trend Models

Price Momentum Oscillator (PMO)

On Balance Volume

Swenlin Trading Oscillators (STO-B and STO-V)

ITBM and ITVM

SCTR Ranking

Bear Market Rules

In this exclusive StockCharts video, Joe explains how to use an 18 simple moving average in multiple timeframes to identify when a stock has confluence amongst 2-3 timeframes. He shows how to start with the higher timeframes first, before working down to the lower ones. Joe then covers the shifts that are taking place in the sectors; in addition, he shows a nice feature in StockChartsACP that can help zero you in on new emerging strength. Finally, he goes through the symbol requests that came through this week.

This video was originally published on November 13, 2024. Click this link to watch on StockCharts TV.

Archived videos from Joe are available at this link. Send symbol requests to stocktalk@stockcharts.com; you can also submit a request in the comments section below the video on YouTube. Symbol Requests can be sent in throughout the week prior to the next show.

Palantir Technologies (PLTR) has occasionally appeared in the Top 10 StockCharts Technical Rank (SCTR) Reports. More recently, it has reached the top 5, making it a stock worth analyzing.

Palantir is a data analytics company that could benefit from the AI boom. On November 4, after reporting better-than-expected quarterly earnings, Palantir’s stock price rose 23% and has continued rising since then. The stock price is up over 250% this year. Given this performance and being added to the S&P 500 in early September, PLTR has a lot of upside potential.

FIGURE 1. PALANTIR IN THIRD PLACE. The stock’s recent price action has made PLTR a contender for a closer look.Image source: StockCharts.com. For educational purposes.

The weekly chart of Palantir stock paints the picture, and the dramatic price rise last week is very clear. After breaking through all resistance levels, the stock price is in a position to navigate uncharted territories. This makes it difficult to forecast Palantir’s stock price, but, given how far the stock price has come, it’s worth keeping an eye on it.

FIGURE 2. WEEKLY CHART OF PALANTIR STOCK. The stock price has broken through all resistance levels and is now in uncharted territory. How much higher can it go?Chart source: StockCharts.com. For educational purposes.

The daily chart (see below) shows that the uptrend is still going strong.

FIGURE 3. PALANTIR STOCK’s UPWARD TREND. The SCTR score has been above 80 since the early stages of the uptrend in the stock price. The relative strength index and full stochastic oscillator are in overbought territory.Chart source: StockCharts.com. For educational purposes.

Palantir is trading above its 15-day exponential moving average (EMA), its relative strength index (RSI) is well above the 70 level, and the full stochastic oscillator shows the stock is in overbought territory. Notice that the SCTR score has been above 80 since June 2024, when PLTR started its ascent. The bull run has been going on for a while, and recent price action shows that this stock has a lot of momentum.

When To Buy PLTR Stock

Palantir stock’s price action after its recent earnings report has been euphoric, so a correction would be healthy. When a stock is trading at its all-time high, it’s difficult to determine how deep a pullback would be. I am currently using the 15-day EMA as a potential support level, although I might have to tighten it depending on how the stock behaves in the next few trading sessions.

There are signs of a pullback surfacing. The red body of the last candlestick bar is the first since its last earnings report. Note the decline in trading volume while prices were rising. These are signs of a price decline, but, if the overall market remains bullish, the price decline may not be deep enough to reach the 15-day EMA. I might shorten it to a 10-day or even a 5-day EMA to use as a support level.

I would enter a long position when the price reverses on increasing volume and hold it until momentum decreases enough to justify exiting it. I would use a trailing stop to exit the position. Since PLTR is an AI-related stock, I would also monitor the performance of other AI stocks. If interest tapers, I would either avoid adding long positions or, if I own the stock, sell at least some of my positions.

The Bottom Line

I’ve added PLTR to my WatchLists ChartList (to organize your ChartLists, use the StockCharts ChartList Framework) and to one of my Dashboard panels to monitor it regularly. I wouldn’t want to miss an opportunity to ride Palantir’s rally.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

When a stock shows an RSI value above 80, is that a good thing or a bad thing? In this video, Dave reviews a series of examples showing this “extreme overbought” condition, highlights how these signals usually occur not at the end of, but often earlier in an uptrend phase, and unveils how to use the StockCharts platform to scan for stocks meeting this criteria today!

This video originally premiered on November 13, 2024. Watch on our dedicated David Keller page on StockCharts TV!

Previously recorded videos from Dave are available at this link.

The post-election euphoria may have taken a breather on Tuesday, as the US stock market indexes closed lower. The tech-heavy Nasdaq Composite ($COMPQ) was only lower by 0.09%, whereas the S&P 600 Small Cap Index ($SML) was down the most—it closed lower by 1.54%.

A MarketCarpets Ride

On a day when the equity indexes closed lower, Tuesday’s StockCharts’ MarketCarpets shows that the downward move was mostly from a handful of sectors. Materials, Health Care, Real Estate, Utilities, Industrials, and Energy were the worst hit. Consumer Discretionary was also hit hard, except for Amazon.com, Inc. (AMZN), the highest cap-weighted stock in the sector.

FIGURE 1. MARKETCARPET FOR TUESDAY. Although a lot of sectors were a sea of red, the Mag 7 stocks closed higher.Image source: StockCharts.com. For educational purposes.

What stands out in the MarketCarpet is that the heavily weighted Mag 7 stocks, NVDA, MSFT, GOOGL, AMZN, META, and NFLX, closed higher for the day. AAPL was the exception—it closed unchanged. So, it’s unsurprising that Communication Services and Technology were Tuesday’s top performers.

Because most of the largest cap-weighted stocks closed higher, pulling up the Nasdaq 100 Equal-Weighted Index ($NDXE) chart made sense. The daily chart below shows that the index is still bullish despite Tuesday’s pullback, a decline of -0.41%. $NDXE broke above its July high post-election and is trading relatively close to its all-time high.

FIGURE 2. DAILY CHART OF NASDAQ 100 EQUAL WEIGHTED INDEX ($NDXE). Even though the large cap-weighted stocks performed well, the equal-weighted index is also bullish despite underperforming the Nasdaq 100 Index ($NDX).Chart source: StockCharts.com. For educational purposes only.

The last bar on the chart hit the November 7 (the last large body day) low and bounced back. Since the long body of November 7, there are now three short bodies, suggesting that market participants aren’t decisive in one way or another (see the candlestick bars within the green rectangle).

Note that $NDXE is underperforming relative to the Nasdaq 100 Index ($NDX), which isn’t unusual. What is interesting to see is that the relative performance is declining. This may mean that we could see a rotation into Technology and Communication Services as the year plays out.

Finding Stocks Using MarketCarpets

With many mega-cap tech stocks trading at elevated prices, does this mean the less sought-after smaller-cap tech stocks won’t see much upside movement? Not necessarily. One way to identify some of the smaller-weighted tech stocks is to look for technically strong stocks within the top-performing sector that are lower priced.

For example, expand the Technology sector in the MarketCarpet (click Technology header) and follow the path below:

Select SCTR from Measurements > 1M Change from Color By > Equal Weight from Size By.

I use the equal weight because it makes it easier to identify the different stocks. Note that this is just an example; you can use any parameters that meet your investing needs.

The screenshot below is the result of the above-mentioned selection criteria.

FIGURE 3. DIVING DEEPER INTO THE TECHNOLOGY SECTOR. Organizing the MarketCarpets by SCTR and equal weight makes it easier to identify the technically strong stocks.Image source: StockCharts.com. For educational purposes.

The table on the right displays the top performers based on your selected criteria. Mouse over the squares of those top performers and, from the thumbnail chart, identify the stocks that meet your price-per-share threshold. Then, double-click on the tile in the MarketCarpet to see the Symbol Summary page for your selected stock. From here, you can do a deeper analysis; if the stock has upside potential, add it to an appropriate ChartList. Set a price alert so you’re notified when the alert is met.

The bottom line: The stock market offers many opportunities. The key to taking advantage of those opportunities lies in your market analysis. The StockCharts MarketCarpets help you do a top-down analysis of the market to identify stocks or ETFs to trade.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.