It has been a great month for the stock market as the “bubble fear” is already emerging just ahead of the Thanksgiving holiday. In terms of the sector ETF, it has been quite a race in terms of performance as we approach the end of the month.
After the close, we get the earnings from the top-performing stock of the year, NVIDIA
The weekly and daily technical studies are positive for NVDA with no divergences or signs yet of a top. However, NVDA is extended on the upside as it is 6.3% above its 20-day EMA. That increases the odds of a pullback to the 20-day EMA at $470.53 as NVDA was over 7% below it in late October. Just last week it was over 7.25% above its WMA.
In terms of the SPDR Sector ETFs, the Technology Sector (XLK
Looking at the monthly performance of XLK going back to 2015, XLK has had monthly gains of over 10% only 6 times out of past 106 months. The largest gain of 13.7% came in April 2020 as XLK rebounded from the Covid low.
The daily chart of XLK shows a strong close on Monday as once again the high was very close to the daily starc+ band. The trading range, lines a and b, was completed on November 6th. XLK is 4% above the 20-day EMA at $176.55 while the September high was $177.38.
The daily relative performance (RS) moved above the resistance at line c, at the start of November which indicated it was again a market leader. It is still acting strong as it is well above its rising WMA. The on-balance-volume (OBV) made a new high for the year in October as it was leading prices higher. As XLK was making a new correction low on October 26th, the OBV was making a higher low, line d. This bullish divergence was a strong reason to be long XLK.
The weekly and daily advance/decline analysis remains positive and is likely to stay positive even if we get a 1-3% market pullback. It should set up another good risk/reward entry for those who are patient.
Editor’s Note: NVDA just released earnings as they reported better than expected earnings and revenues but did note that Chinese restrictions on chip exports could lower sales.