Stocks ended the week on a low note following a hot Producer Price Index (PPI) report on Thursday that saw headline PPI print 0.6% month-over-month vs. expectations of 0.3%, while core PPI came in at 0.4% vs. expectations of 0.3%. Tech names were hit hard as the NASDAQ Composite ended the week below its 20-dema on heavy triple-witching options expiration. After a week of higher-than-expected inflation data we will get a chance to see how this figures into the Fed's thinking when they release their latest policy announcement on Wednesday. Higher rates for longer due to persistently high levels of inflation may slow the uptrend as weakness has been observed in a number of key names.
AI Meme semiconductor and tech names that were acting well last week have started to show some cracks. The two strongest leaders in the space, Nvidia (NVDA) and Super Micro Computer (SMCI) both posted Century Mark short-sale entry triggers this past week. NVDA did so at the $900 level while SMCI did so along the $1200 level. Both stocks closed below their respective 10-dmas on Friday.SMCI will join the S&P 500 Index this Monday, March 18th. The stock had posted a climax top four weeks ago before the announcement that it would be added to the SPX sent it gapping to new highs. Once it joins the SPX, however, it could revisit the sub-$1,000 price area.
AI Meme semiconductor darlings during the prior week, Advanced Micro Devices (AMD) and Marvell Technology (MRVL) as they streaked to new/higher highs gave those moves up this week as both stocks broke down hard and ended the week below their respective 20-demas. MRVL did one better by closing below the 50-dma after initially triggering a short-sale entry at the 20-dema on Monday and Tuesday. AMD, which closed below its 20-dema is technically in a short-sale entry position using the 20-day line as a covering guide.
AI Meme and big-stock clouds Salesforce.com (CRM) and Service Now (NOW) both sliced through moving average support on Friday to trigger short-sale entries. CRM did so at its 50-dma while NOW gapped below its 10-dma and 20-dema before slashing through its 50-dma to trigger a second short-sale entry on the same day.
We can now add these names to the list of AI Meme and tech leaders that have come undone, many of which began coming apart weeks ago. A sampler of six of these big-stock techs and AI meme names that have seen their wheels fall right off over the past few weeks, with Adobe (ADBE) gapping even lower on Friday after reporting unimpressive earnings Thursday after the close.
AI Meme and big-stock NASDAQ name Alphabet (GOOGL) had previously come apart over a month ago before shaking out and bottoming along its 200-dma last week. The ensuing six-day rally ended Friday with a big-volume reversal at the 50-dma where the stock was a simple short-sale entry using the 50-dma as a covering guide.
Bitcoin ($BTCUSD) posted fresh all-time highs this week but the crypto hype is now running full steam as the pundits suddenly come out of the woodwork with outlandish price targets. Most of these same pundits did not see the turn off the lows to begin with, and we would exercise caution at current levels. $BTCUSD has had a huge run off even the January lows and ran into stiff selling on Friday as the crypto currencies in general came under selling pressure. $BTCUSD held a sharp pullback to the 20-dema, its first real test of the line since the latest move higher that began in early February, as we reported at the time. With Bitcoin spot ETFs continuing to attract large inflows, the overall uptrend in Bitcoin may continue. Global liquidity, however, is far weaker than observed in 2020-2021 though still in a rough uptrend. Central banks will have to continue to print to keep pace with servicing their onerous levels of debt so expect this uptrend to continue.
Crypto miners CleanSpark (CLSK) and Marathon Digital Holdings (MARA) have also come under some selling pressure, CLSK to a far lesser extent than MARA, however. CLSK has been able to hold support along its 20-dema but any decisive break of the line could trigger a short-sale entry within the context of a continued pullback in $BTCUSD. MARA, on the other hand, ignored the new highs in $BTCUSD this past week by posting lower lows all week long.
Over the past two weeks MARA has triggered short-sale entries at first the 20-dema and then the 50-dma as it now moves lower towards its 200-day moving average. Note that both CLSK and MARA are forming fractal head and shoulders formations where MARA has already busted its descending neckline while CLSK has so far held support along its flat neckline.
The Market Direction Model (MDM) switched to a CASH/NEUTRAL signal on Monday, March 11, 2024.