Chips are in control
Last week we were watching for a pause or pullback. Friday-Tuesday were not fun, a lot of the big movers of this trend definitely pulled back, but they were all quickly supported by major levels. Most stocks had a constructive pullback to the 4-week and bounced.
The overall action in leading stocks was incredibly constructive.
When you zoom out although those 3 days were not easy in real-time, it was nothing compared to the moves higher the leading stocks have had the past 7 weeks. Well deserved pullback, and impressively supported.
Although Semis are the top dogs, last week we saw back to back high participation days. Lots of stocks moved higher. Last week we were discussing how participation was lackluster outside of semis. Its not on its own a sign the market is going to go up or down.... but its always a positive to see back to back broad breadth.
The strongest stocks are all related to AI infrastructure. Everything related to compute and chips. The report from April 12th "The whole AI stack is moving" continues to be true almost 2 months later.
THE group to focus on. Historical move higher.... was barely able to pull back or rest before more buyers stepped in.
Continue to see good action and rotation into software. The biggest standout here is the amount of stocks that surprised on earnings and gapped higher into fresh new trends.
One of my favorite fundamentals to look for is 3 quarters accelerating sales. A lot of these names with this are in Software. DOCN DDOG BB FTNT CRWD.
Neocloud group breaking out to new highs just as many of the neoclouds are also coming up the right sides of their base (stocks below)
My Focus
Below I have another close up view of the action as well as a video overview of exactly what I see here.
Past 3 weeks have been very tight and on the same base pivot.
This is what I would consider very controlled action which makes me believe earnings week was the shakeout and its more likely to go higher.
The past 3 weeks it never undercut the low of that earnings candle = subtle sign of strength.