Traders,
Finally! The pullback and base may finally be underway in semis/technology. For the run to continue and for fresh swing-long breakout opportunities in many of the leading names I’ve discussed recently, this has needed to happen. While semis, data center, space, and photonics names hopefully take a much-needed breather, there’s still a lot setting up and many names in focus for the upcoming week.
Consolidation Breakout in MSFT: There was notable strength in MSFT on Friday, along with software in general. That relative strength signaled to me, in the short term, the possibility of further rotation in the sector, and perhaps MSFT too. A close above the 100-day, along with its 10 and 20-day, was a good first step.
*Please note that the prices and other statistics on this page are hypothetical, and do not reflect the impact, if any, of certain market factors such as liquidity, slippage and commissions.
I am long against the 10-day SMA, having trimmed small into resistance on Friday. I’ll now look for an opportunity to size into MSFT if it can clear short-term resistance and follow through, with a lengthy hold against the 10-day SMA. Most importantly, I’ll be monitoring for sustained outperformance in the short-term.
Continuation in DOCN: Beautiful 8-day hold following its earnings gap and go on May 5th. The range has compressed in recent days, with key support at 150 and resistance, and a possible breakout above Friday’s high, near 160. With range contracted and momentum historically great, I’ll have this on watch for a potential continuation trade above Friday’s high. Alternatively, if air comes out of the sector and DOCN breaks and fails to reclaim 150, I might join the trend on the short side intraday.
*Please note that the prices and other statistics on this page are hypothetical, and do not reflect the impact, if any, of certain market factors such as liquidity, slippage and commissions.
Alright, now let’s cover some of the leading themes:
Neocloud / Data Center Stocks: Data center stocks have been one of the strongest themes as of late, with NBIS leading the way. I won’t go over NBIS in detail, as I have already done so consistently in Inside Access. Other names to note include IREN, CIFR, CRWV, APLD, and WULF.
*Please note that the prices and other statistics on this page are hypothetical, and do not reflect the impact, if any, of certain market factors such as liquidity, slippage and commissions.
With NBIS extended and having played out beautifully, I am not looking to buy at current prices. Rather, I’ll look for some rotation within the sector and for new leaders to emerge or play catch-up. In that regard, I am looking at CIFR and IREN – both of which have built out bases above their rising SMAs. I’ll be watching in the coming days/weeks for relative strength to creep in, and an opportunity to go long above recent pivot highs should rotation and strength hold steady.
Semiconductors: Semis are finally taking a well-deserved breather, with SOXL down almost 12% Friday, SMH down almost 4%, and NVDA down 4.4%. Now, I will not be buying the first pullback, nor will I be chasing weakness on the downside. Rather, I will be building out a watchlist, giving this theme time to build a new base, and look to get involved in the coming weeks once new bases have been built, for potential continuation. Names I will be stalking within the sector for that thesis: SOXL, AMD, ARM, NVTS, TSM, TXN, NVDA.
*Please note that the prices and other statistics on this page are hypothetical, and do not reflect the impact, if any, of certain market factors such as liquidity, slippage and commissions.
Space Stocks: Similarly, I’m looking for some digestion in space stocks before considering a long position on fresh breakouts. UFO was down almost 3% Friday, hopefully the start of a period of basing. With the SpaceX IPO potentially coming as soon as mid-June, the sector could use a multi-week period of digestion before any fireworks go off ahead of the IPO (possibly a sell-the-news event if we get a major sector run prior to the listing?). Which names am I monitoring for flows/consolidations / and fresh breakouts? RKLB, PL, SATL, VELO, RDW, and LUNR are my top five.
*Please note that the prices and other statistics on this page are hypothetical, and do not reflect the impact, if any, of certain market factors such as liquidity, slippage and commissions.