Technical Assessment: Bullish in the Intermediate-Term

Summary

The driver of the S&P 500 (SPX), the Nasdaq 100 (QQQ), and the Nasdaq Composite has been semiconductor stocks, led by Nvidia (NVDA). That stock has soared 156% in 2024, with Micron Technology (MU +64%), Broadcom (AVGO +49%), Qualcomm (QCOM +48%) and Applied Materials (AMAT +46%) jumping as well. The slope of the semiconductor chart continues to steepen and there is a potential bearish momentum divergence. The iShares Semiconductor (SOXX) recently was 30% above its 50-week exponential average and quite extended. A pullback would be welcome, but sooner or later, the semis could go parabolic — which is fun while it lasts, but is always the ending price blowoff for an advance. Most of the other tech industries have not done well in 2024, so it’s also possible that funds taking profits in semis will move into other areas that may benefit from AI later on. Interestingly, four of the biggest Technology sector gainers recently were beaten-down stocks such as Accenture (ACN), Epam Systems (EPAM), Salesforce.com (CRM), and Cognizant Technology (CTSH). All four traced out weekly up-patterns (closed above their prior week highs) while ACN traced out a monthly up. Those stocks are clear AI beneficiaries, but likely down th