Although it has been a while since I posted on my personal blog, you can keep up with my analysis at @annacoull on X (formerly Twitter) and two Facebook pages. One is dedicated to all things forex (https://www.facebook.com/learnforextrading), while the other focuses on stocks and general market analysis, and the link for that is https://www.facebook.com/annacoullingauthor/. Finally, there is my YouTube channel (acoull), where you will find videos and recordings of our latest webinars. And those of you who do follow one of these channels will know one reason David and I have been working to complete our stock trading and investing program, which is now ready for launch, something we are very much looking forward to. If you have signed up for the waitlist, you will soon receive an email confirming the date, and if you haven’t signed up, you can do so here: https://bit.ly/3uCSxf5
Turning to today’s market action, two major stories. The first is Apple and the current sell-off following reports China plans to ban state employees from using iPhones for government work and from being brought into the office. The second concerns Nvidia and suggestions circulating online that the recent blow-out earnings resulting in the stock price achieving a high of $502.66 may have been boosted by some very creative accounting to allow certain parties to cash out at this high. Whether that is true remains to be seen. However, what is not in doubt is at the moment, the Nvidia H100 chip at the centre of the current AI euphoria is at present unique, with demand outstripping supply.
When these narratives surrounding a stock take hold, and the price reverses sharply, it’s useful to look at the slower time charts not just for any signals of potential weakness perhaps waiting to be triggered (a bad piece of news is always helpful!) but also for clues as to whether the current reversals are simply corrections in stocks that have been dominating their sector and index since the beginning of this year. In this case, the relevant tech sector may be worth considering, and if you have seen any of my commentary on Nvidia, I first highlighted the stock back in January and the tech sector in general as one that would likely recover in 2023.
Moving to the charts, let’s start with the XLK (the ETF for technology), where tech company allocation is over 94.13%. At present, Apple is the top holding at 23.18%, and Nvidia a more modest 5.04%.
For Apple (see below), the monthly chart is also interesting, in particular the July candle, which is clearly anomalous from the perspective of Wyckoff’s third law of effort and result, suggesting we should expect weakness ahead.
In summary, what are we to make of this shaky start for September, which, for many commentators, has simply confirmed that September is likely to live up to its reputation of being the worst month for the S&P500? The macro background is certainly not supportive as bond yields continue to rise and are now joined by rising oil prices, which will feed into inflation. However, we may have some clarity next week with the CPI and Retail Sales data with the FOMC the week after. Whatever happens, it’s not going to be a quiet month for either traders or investors.
By Anna Coulling
Hi, I’m wondering if in these kind of analysis, that’s when potential important top/bottom reversals (long&mid term and, for low float/highly traded stocks, short term as well) are suspected, you have been thinking to use float analysis too. I don’t know any better technical analysis/tool to try to understand if an important (sometimes epochal) change of direction is materializing for a stock or even a whole sector/industry.
Interested in hearing your point of view. Thanks a lot.
Best, Mark
Float analysis is a topic on its own and is important which is why it is covered in our upcoming Stock Trading & Investing Program. One reason is that low float stocks are easy to manipulate, but they have their own risk profile, not least a lack of liquidity. Hope this helps. Regards. Anna