Microsoft (MSFT)
Microsoft topped on February 13th, making a series of lower highs while the S&P 500 (SPX) continued higher. We now have Tesla, Apple, Google and Microsoft not participating in the current push higher, which is a big warning for the bulls. Not only were these stocks market leaders in 2023, but they account for ~18% of the total weighting within the S&P 500. This is a large weight around the broad market, and a divergence that should not be ignored.
Regarding MSFT, we have logged significant gains, moving it from a 8% position back to a 2% position. The valuations are at extremes, and the technical picture is concerning. Note below how we have two degrees of 5 wave patterns that started off the 2022 low. This is a mature pattern, and likely setting up for a pullback. Below $397 will be the first warning that a downtrend has started. Once we go below $365, the top will most likely be confirmed and we will set up downside targets to buy.
Nvidia (NVDA)
Nvidia started Friday up over 6% and ended the day down -5.5%. This is called a bearish engulfing candle, and can be visually seen in the below chart (the red arrow). This type of candle pattern tends to show up around trend reversals. What makes this one more notable is the fact that it happened on such heightened volume. In fact, this was the most trades shared in a day since the August, 2023 top, which started 2 month correction.
We have been patiently waiting for a prolonged reversal of this market leader. We believe that if it does not happen here, it should happen after we push towards the $1000-$1100 region on one more push higher. As long as we hold $784, the potential for another swing higher is possible. Below this level and we will start setting up downward targets to buy.
Bitcoin (BTCUSD)
We have been waiting for Bitcoin to go vertical, and it appears to have done so over the last few weeks. The vertical move tends to mark the halfway point of the uptrend, which puts our targets over the $100,000 region. However, we should see a pullback before continuing higher.
Note the weekly chart below. The Detrend Oscillator is in the same position as the 2021 peak. This oscillator loves the reverse at prior peaks and troughs. It’s at this position while the Composite Indicator is making a lower high. In other words, price is pushing higher with less momentum. These are warnings that a breather is likely to happen.
If we do pullback, we will be targeting the $57,000 region to add to our position. In order to continue higher, we must hold $40,000. Below this level and the uptrend we have been tracking will likely be over.
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