Major market indexes are in pullback mode. Big-stock AI meme names have kept the tech-heavy NASDAQ Composite buoyant, along with the S&P 500 which is heavily influenced by five stocks, Apple (AAPL), Amazon.com (AMZN), Alphabet (GOOG), Nvidia (NVDA) and Microsoft MSFT, two of which made higher highs on Thursday. While the NASDAQ indexes and the S&P 500 trade just below their 10-day lines, the broader NYSE Composite and small-cap Russell 2000 Indexes are much weaker with breaches of their 20-day exponential moving averages on Friday. The very narrow 30-stock Dow also busted its 20-dema and looks set to test its 50-dma with the NYSE Composite, while the Russell 2000 is headed for its 200-day moving average. A healthy consolidation and digestion phase, or the start of trouble?Perhaps one clue may be found in the action of financials, including big-stock financials and regional banks. Both the SPDR S&P Regional Banking (KRE) and the SPDR Select Sector Financials (XLF) ETFs have been in free fall for the past week.
Certainly, the action in names like Bank of America (BAC), Citigroup (C), J.P. Morgan (JPM), and Goldman Sachs (GS) over the past week raises eyebrows. In particular, the chart of GS, often considered the smartest guy in the room along with JPM, is troublesome. Is another Black Swan in the financial sector brewing?
AI meme stocks are starting to correct. In particular we would keep a close eye on Nvidia (NVDA) as the big-stock leader in the space. It held support at the 10-day moving average on Friday as it also tests the prior 419.38 peak of May 30th. Any break below these key support levels would trigger short-sale entries if they occur, but for now NVDA is holding at the 10-dma, a potential long entry spot using the 10-dma as a quick and tight selling guide.
We reported on semiconductor and AI meme stock Marvell Technology (MRVL) as a short-sale entry trigger at the 20-dema and the 58.58 intraday low of its May 26th BGU day. The BGU failure remains in effect, and we can now watch for any break back below the 20-dema as a short-sale entry trigger from here given the insignificant one-penny cushion between MRLV's 57.82 close on Friday and the 20-dema at 57.81.
In last weekend's Focus List Review we discussed the pocket pivot in Marathon Digital Holdings (MARA). At the time it was a relatively subtle pocket pivot occurring along three moving averages, the 10-dma, 20-dema and 50-dma and within an overall tightening range extended back to late April. Note that volume dried up sharply along the lows of this range a few days before the pocket pivot occurred. MARA gave buyers a quick shot at an entry on Tuesday morning as it tested the 10-dma and 20-dema and then it launched higher from there. The stock is now running into/just past the 12.82 high of April 18th.
We can see that on Friday MARA ran into double-top resistance at the left-side peak in the square-looking cup formation. After peaking at 13.10 early in the day MARA backed down to close at 12.71, just below the left-side peak at 12.82. That triggered a double-top short-sale entry using the 12.82 left-side peak as a covering guide, so this may play out in both directions depending on how this current set-up resolves from here.
The move in MARA of course correlates closely to a similar move in Bitcoin as shown by the daily chart of the Grayscale Bitcoin Trust (GBTC). Bitcoin has been rallying on a convergence of positive news, from the potential of a spot Bitcoin ETF by Blackrock (BLK) to the formation of an institutional crypto-exchange backed by Fidelity, Charles Schwab (SCHW), and Citadel. Note that unlike MARA, GBTC has cleared and closed above its own left-side peak at 18.40. We would key on GBTC here since any reversal back below the 18.40 left-side double-top peak could trigger a double-top short-sale (DTSS) entry for GBTC and likely confirm the DTSS entry that is currently in force with MARA.
The Market Direction Model (MDM) switched to a BUY signal on Tuesday, June 20, then switched back to a CASH signal on Friday, June 23, testing the potential of a low-risk entry point, thus was quick to reverse back to cash for now.