Major market indexes moved sideways over the past week. The NASDAQ Composite Index posted three distribution days over the holiday-shortened four-day trading week as AI Meme and other techs ran into some selling as they reach extended positions on the upside. Money rotated sharply into commodity-related areas of the market which is indicated by the relative outperformance of the 3600-stock plus strong NYSE Composite Index which includes many of these names.
Big-stock AI Meme leaders Nvidia (NVDA) and Super Micro Computer (SMCI) are in interesting chart positions. NVDA has been flopping around the $900 Century Mark and closed down for the week as it now attempts to hold support along its 20-dema. If it can, and volume dries up sharply, then this could offer a VDU type of entry using the 20-dema as a tight selling guide. SMCI posted volume on Thursday that was 72.5% below average so this would present a VDU long entry using the 20-dema as a tight selling guide. If either NVDA or SMCI bust 20-dema then they would trigger short-sale entries at that point so this can also be watched for.
AI Meme darling Arm Holdings (ARM) triggered a short-sale entry at the 20-dema on Tuesday and remained below the line all week long. Each rally back up into the line has offered a lower-risk short-sale entry opportunity using the 20-dema as a covering guide, and unless and until ARM can regain the 20-dema that would remain the case going forward.
Arista Networks (ANET) has continued to move higher, defying two violations of the 20-dema on the way up. Prior to the first violation, ANET had held support along the 20-dema for over 15 weeks. Using the Seven-Week Rule would have sold one out well before the highs of two Fridays ago week. No rules are perfect, however, and this example proves that point. The bearish action surrounding those 20-dema violations, however, may have been a cautionary sign as the stock continued to make new highs. After the prior week's breakout to higher highs, ANET closed three days above the $300 Century Mark, posting a peak at 307.74. On Tuesday of this past week it reversed and failed at the $300 Century Mark to trigger a Livermore Century Mark short-sale entry at the $300 level. As it now sits on top of the 20-dema we would be watchful for any break below the 20-dema which could trigger a secondary short-sale entry.
At the time of this writing Bitcoin ($BTCUSD) is not reacting to the Friday PCE inflation data as it tracks sideways within the handle area of a short cup-with-handle formation. With markets closed on Friday there is no way for traders to react to the Friday data, leaving only crypto currencies as a vehicle for any such reacting. So far, however, $BTCUSD is holding steady.
While $BTCUSD acts well, crypto miners diverged on Thursday as CleanSpark (CLSK), Marathon Digital Holdings (MARA), and Riot Platforms (RIOT) all ran into selling interest and reversed from intraday highs to close near their lows for the day. In fact, CLSK triggered a double-top short-sale (DTSS) entry as it reversed along the 23.45 left-side peak of February 27th. CLSK was down an additional 10% after-hours on Thursday on reports of a secondary offering. This offering came in at $800 million, above the expected $500 million. Two principles also sold shares in CLSK before the larger than expected offering which did not sit well with investors. That said, CLSK has done offerings in the past to expand their operations, and this time appears to be similar. CLSK continues to exceed its goals. With a market capitalization of $4.2 billion, an $800 million stock offering would effectively dilute CLSK shares by 19%. Their earlier $500 million secondary is being used to boost their hashrate to 36 EH/s, up from the current 15 EH/s as the company said it expects its hash rate to double in the first half of 2024 on the back of a recent agreement to purchase four new mining facilities in Mississippi, worth $19.8 million, which produced an immediate 2.4 exahashes per second (EH/s) for the firm. The current $800 million secondary will add an additional 34 Ex/s which would bring them to 70 EH/s by sometime next year. CLSK has the lowest cost production to mine one Bitcoin post-halving at $26,900, a Jan 12 CoinShares research report found. Meanwhile, RIOT reversed at its 50-dma and 200-dma to trigger its own short-sale entry at the moving averages. MARA reversed badly on Thursday from the intraday highs but for now is holding above 50-dma support.
Gold broke out to all-time highs this week as the futures finished the Thursday trading session at $2,254.80 an ounce. The Van Eck Merk Gold Trust (OUNZ) broke out of a short, three-week flag formation on strong volume on Thursday. Silver continues to lag as the Aberdeen Physical Silver Shares (SIVR) found ready support at the 20-dema. We reported early on Thursday of a possible pocket pivot at the 20-dema in silver, but volume faded as the day wore on. Nevertheless, both metals acted well heading into Friday's PCE inflation data. If gold continues to hold at current levels we would expect silver to play catch up, so we will be alert to any opportunities that may develop in the coming week.
The Market Direction Model (MDM) remains on a BUY signal.