Posted on July 22, 2022 by Breakout Investors
This week we’ve given you and optimist and a pessimist point of view. So how about a technician?
Semi stocks have moved higher, outpacing the broader market. The SMH ETF is up 14% in July. Is it too far too fast?
Chris Verrone, Strategas Research partner and head of technical and macro research discussed this on a recent CNBC interview.
“We look at three things if the bear is going to turn. We need to see. . .
1. Better breadth.
2. We need the macro to improve
3. We need leadership to turn over
“What we see historically coming off a low is if a bounce is going to turn into a durable advance like a new bull market we want to see the share of advancing stocks really start to surge. It’s too early to make that case. Breadth has been a little better but it’s not a surge.
“Secondly this is the seventh time the QQQ has tried to rally this year. We’re off the lows but 320 is a big number to watch.
“Macro? You have to go back to June 9th which is the last time the S&P was at 4000. Things are much better. Credit is wider, Euro is weaker vs dollar and Bitcoin is down despite this rally.
“So the last thing is leadership, the Semi’s which is such an integral part of the market over the last decade. We should look to them for some signal. Our suspicion is they are rallying in a bear market, a downtrend. The SMH has made a big move lately but that 250 area is a major, major level.
“Look for leadership to turn, look for breadth, look for macro improvements before you make a major low call. I’m not there yet. The move in the Semi’s has to persist. Only 4 of the 25 companies in the SMH are above the 200 dma. It’s still a messy group. Discretionary has to get better. Banks have to lead also. We’ve been in a bear market for 6 months, the bar to flip the script is pretty high.”
*WELL Health Provides Business Update Reflecting Strong Growth and Enhanced Revenue Outlook for Q2-2022 posts Ashleigh Day on the Feed. The symbol is WHTCF.
*Bradley Steveson directs us to an article called, “Better Choice: Lots Of Potential At A Cracking Price” on Seeking Alpha. the author says, “The pet food company believes it can grow annual top line sales to $100 million by the end of fiscal 2023, sales grew by almost 60% in the recent first quarter, and the company’s increasing gross margin bodes well for positive profitability in due time.” Brad covers promising Better Choice (BTTR).
“Musk says lithium refining a ‘license to print money,’ posts Scott Shuda. The article includes a nice list of tickers and recent news in the space.
*AEHR continued the rally ending up a additional 2.5%, closing at $12.14. It’s ‘Hotter than a jalapeño’s armpit,’
*Gas prices: The process is playing out slowly — a result of what experts call the “rocket and feather” effect: Gas prices tend to rise quickly, like a rocket, and fall more slowly, like a feather. Gas stations are quicker to increase prices and slower to reduce them to maximize profits. – NY Times
*The globe-trotting action thriller “The Gray Man” premiers tonight. Netflix spent $40M on one action scene alone. It stars Ryan Gosling and Chris Evans.
“Seriously, even the climate change deniers were like, ‘Do you mind if we protest inside? It’s hot as hell out here.’” — JIMMY FALLON
Good luck to all – Chris
Join us on the Breakout Investor Platform (BIP) to discuss AEHR, BTTR, WHTCF and other great little companies where our community shares research and analysis. We seek to be Ahead of the Curve in identifying and owning great companies with catalysts that could make them the next Breakout Investment. Membership and most of the content on BIP is free.