Friday December 27th
Todays report will have the normal review of the Markets, but it also has a section where I want to discuss some of these bigger fast moving stocks. Quantum Stocks and AI stocks and some tech stocks have doubled and tripled in short periods of time. They may be continuing to run into the end of the year, but also want to discuss the need to watch these during a market correction. If they don’t resist that corrective phase, they could dip lower and offer lower entry points for another run higher. If you don’t care about Quantum stocks or AI stocks, you can skip that little lesson.
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YESTERDAY I POINTED OUT THE CYCLE COUNT FOR THE GENERAL MARKETS WITH THIS CHART OF THE SPX –
Day 30 of this daily cycle will be next Tuesday, so it is quite possible that if this year-end rally continued, it could peak around that day 30 area and we’d experience a new year sell off.
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THE SPX crashed below the wedge and is now back testing it. Yesterday price dropped down and closed down slightly. As I look at this wedge and back-test, it does look complete, however price can climb up the wedge and remain below it into next week too. We are not overbought, so a year-end rally is in place and can continue. We’ll see.
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The NASDAQ also gave us a small doji and I do see MACD divergence as it reaches the former highs, so it looks likely that it will peak soon in this 3rd daily cycle and then we’d get a 4th that brings us lower into an ICL ( a normal correction that should be a buying opportunity).
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The SOXX has climbed back up to the 200sma. Enough time has gone by that many would forget that we had a strong drop last week, but we did (red arrow). I will admit that this doesn’t look bearish and the MACD looks decent, but cycle timing has up deeper in the 3rd daily cycle and due for an ICL drop.
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Recently I have been discussing…
1. The possible year-end rally now and
2. The dip into an ICL early in 2025. This should become a buying opportunity for stocks like the obvious runners AMZN, GOOG, NFLX, AAPL, etc., and also recent runners like AAOI, LMND, RKLB, SOFI, SERV, AI, SOUN, XMTR, and others on my lists. I posted this chart of RKLB for example:
In Tuesdays report I mentioned the following stocks
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RKLB – With a multiweek correction into an ICL, you may gradually see an Inverse H&S form on many stocks.
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Let’s also look at AAOI:
AAOI is one that I have traded as it ran from the $7 area to $45 since August. It started its correction recently and it dropped to the 34 sma. This was a buy with that reversal at $32. This is also a good one to find at an ICL and see where it lands. It may just put in a box consolidation up at this level.
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So this is AAOI now: After the reversal at $32 it has pushed up to $40. Will it get to the $45 area? It could with a year end rally, but then I hink that the correction would start (I see divergence). Please read the chart. We could dip to the 50sma as another buy opportunity.
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Now I’ll just discuss something else in addition to the above set ups. We have seen some extraordinary moves by the ‘AI’ sector with AI, SOUN, GFAI, BBAI , and also the Quantum Stocks like ARQQ, QUBT, QBTS, IONQ, RGTI, and finally QSI! I just wanted to mention this sector because it has still been acting bullishly, but be forewarned that it does swing intraday in a BIG way. I’ll explain that too.
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ARQQ – On December 16th I posted that I had been trading this and it entered into one of those consolidation periods. This ran from a base at $4 – $5 and rallied to $32. I tried to ride this but those swings from $23 to $30+ and back were too much for me to ignore. This reversal higher at the 13 sma was a buy however…
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ARQQ rallied to $43 and then crashed back down to the 34 sma at $24. WOW! I want everyone to know how hard that makes these to ride. That said, it rallied again yesterday and was up 50% as it raced back to $44. What is my point here?
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What is my point here? Our general markets bottomed in Aug-September, while these were still basing out. If you bought these at the ICL or when they broke out, you could ride out the Big swings here at the top, because your gains came from the $7-$10 area and then $10 to $30+. We now have an ICL coming up in 2025 and I would expect these to sell off again and consolidate. I can’t say how deep they’ll drop, but they could become nice buy entries. They could hold up with a box consolidation or give up more gains than that, so I’ll be watching Quantum stocks then too, to see if we get a good entry.
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QSI was in my report on Dec 16 as a major push higher that had now dropped back to possible support. I posted this as a place to look to buy (& I know some of us did). I mentioned that this sector was on fire, so this could join in again over time.
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QSI did hold support and bounced at the 34 sma repeatedly while the others ran away. Yesterday, however, it finally took off and as of 11:30 am it was up 30%.
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QSI by the close, it was up 65% and in after hrs it actually ran up to almost $3, being up over 100% for the day. Congrats if you held on.
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Recently we’ve discussed the bullish ‘AI’ set ups too. On December 3rd I posted this for BBAI as it rallied out of a base. SOUN & AI had already made good gains, so this was catching up. This was a good buy in the $1.75 to $2 area with this base.
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BBAI took off and ran to $4.50 and then reversed at those highs, so you could sell that reversal and lock in over 100% gains. It was then holding up at the 20 ema…
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BBAI became very choppy at that 34sma area, but it held support and after one false start and return to support, BBAI was a buy at the 34 sma and gained 10%,then 17%, and yesterday tacked on another 20%. It can keep running into the year end, and then we’ll see what happens to SOUN, BBAI, AI, etc after a good correction in early 2025.
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GFAI popped and dropped and was a lagger in the AI sector, so I posted this as a buy when it broke out and back tested the base.
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GFAI popped big in early December ( I sold the pop) and then sold off back to the base and lost support, but yesterday it rallied 50%. I missed it, but you could have bought it as it re-broke above the 34 & 50sma if it was on your watch list.
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IONQ – on Dec 5th I posted this mentioning that my doctor pointed it out to me (he trades on the side). I said that I’d look for a ‘buy the dip’ opportunity rather than chase it.
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IONQ dipped to the 20 ema and reversed as a buy and then popped up almost 20% on December 16th. It then chopped sideways and has consolidated, so…
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IONQ dropped back to the 10sma and chopped bullishly sideways. IONQ was only up 1% at 11a.m., so I recommended it as a buy in a hot sector (you’d use a tight stop just in case there is something wrong with it).
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IONQ closed up over 8%. This can continue higher on Friday, we’ll see, but it lagged some of the others in this sector. It is now chopping higher after that dip from $30 to almost $50.
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QUBT was also one of those QUANTUM runners. I posted this at 11;30 am as a possible buy / lagger, because other quantum stocks were up 20-30% and this was up 7% after reversing at the 9 sma.
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QUBT closed up 12.55% , but this could continue higher if these keep running too.
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As mentioned ‘AI’ stocks had a very strong run and the company ‘AI‘ ran from a base around $22 to $45. It then became choppy and consolidated those gains. With SOUN, GFAI, BBAI running strong, I would think that this might start to move higher again and it has found support at the 34 sma around $35. This was a buy with a stop.
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We bought FCEL Around $6-$7 in November and after doubling, it continues to act well holding support.
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OKLO (NNE, SMR) have moved higher. I do wonder if this is going to pull back and continue to form a triangle. If so , this will be a buy again around $18.
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So I just wanted to review a few very bullish sectors again, so that when the Markets pull back and these consolidate recent gains, we’ll be ready to see if they acted correctly and offer up lower entry points with support.
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FROM THURSDAYS REPORT:
GOLD – When the general markets sell off, it is also possible that Gold, Silver, and other commodities that have already been selling off begin to move higher. I have already been discussing that it looks like we have an ICL in place. Now I’m seeing Gold start to look like it is forming a large triangle.
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GOLD did not sell down on Thursday, so this may be the putting a dcl in place as it climbs around the triangle.
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GDX – This looks like a bear flag and if it is, price would break lower as drawn. HOWEVER… I do see divergence and the GDX is oversold, so if Gold has bottomed, the Miners have probably bottomed too.
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I am thinking that the General Markets have been running to new all-time highs as Gold & Silver sold off and corrected. If the General Markets are due for a correction late in the 3rd daily cycle and the 4th daily cycle, Gold and Silver and Miners may rally as money flows out of stocks and into precious metals. We’ll have to wait and see, but we did see a sell off that resembled an ICL. We saw Gold then put in a R.T. daily cycle and form a bullish triangle. It tends to line up and the good news is that the Miners are still right at the lows, so pay attention to what they do as 2024 ends, and then we’ll see if buyers step in in early 2025. As for right now, the markets are adding to gains, enjoy your Friday trading and your weekend!
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~ALEX
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BITCOIN Popped later on Tuesday, but then started to roll over on Thursday, so I mentioned that we should be on day 52 and a drop into the day 60 area would lead into next week (Bitcoin trades 7 days a week, so day 60 would be next Friday on January 3rd, but the low does not have to be EXACTLY on day 60).
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Yesterday I mentioned this about BITCOIN –
I have discussed a possible $120,000 target. Can we still get there? After a drop into day 60, even if that was down at $80,000 as shown here, we could form an inverse H&S pattern and run to $120,000 in the next 60 day daily cycle. At THIS point, the Crypto stocks may follow Bitcoin higher, so we can look for buying set ups near day 60 in Crypto next week too (or the ETFs).
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I don’t know if you noticed it or not, but Bitcoin dropped on Thursday and Crypto stocks started to resist that drop. Some were down and a several were actually green, so that may be a sign that they will run after we get the next low in place.
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BITCOIN is on day 53 and the lows are due to come in next week. Crypto stocks did not drop the way we would expect them to with yesterdays drop. BTDR was actually very bullish looking.
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BTDR is not falling as Bitcoin chops and sells off lower. $18 to $24 off of support is actually quite a nice gain.
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HUT was down, but Bitcoin dropped quite a bit and usually the crypto miners will exaggerate that move lower. Hut is a $24 stock that was down 39 cents. Not bad. RIOT was down 12 cents and WULF was down 15 cents. Stocks like CAN, EBON, ANY,BKKT and a few others were actually green, so things may be developing bullishly in this sector as next weeks low in Bitcoin draws closer.
