Stock Trends

Nvidia breaks out, utilities breaking down + banks ahead of earnings

Reminder that Brown Technical Insights is off next week for Fall Break. We’ll see you back here on October 21 for the Monday Morning Playbook.

Good morning,

Over the past two weeks, the Monday Morning Playbook has called out several reasons to be bullish on semiconductors, including a favorable entry point this week and a turn in the seasonals two weeks ago.

Now, the group’s most important stock is adding to the bullish narrative. Nvidia has broken out to its highest level since early July and made a significant higher high on the chart.

This week, we’ll break down the technicals for Nvidia, other notable semiconductors, and look at:

• The utilities rally running out of steam

• Financials setups ahead of earnings

• Movers on the Blue Chip Hot List

• and more!

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Nvidia breaks out + other semi strength

NVDA clears the downtrend line

Nvidia broke out from the triangle on Monday but Tuesday’s move was also significant, clearing the August highs. There’s still going to be potential resistance at $136-$141 but this thing has broken loose and we should expect more new all-time highs to be hit.

SMCI trying to bottom at key support range

Super Micro Computer added to the bullish price action for semis on Monday with a 15.8% gain. The stock is at a natural support level and a close above the 50-DMA would complete a short-term bottom.

Broadcom one of the first to a new all-time high

AVGO hit a new all-time high yesterday. A breakout from a 4-month base in a long-term uptrend is an ideal setup.

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Utilities rally loses steam

I laid out why we haven’t added utilities to our ETF portfolios in this week’s Playbook, despite the pickup in relative strength. The stocks are getting hit hard this week, validating that decision.

Duke hits lowest level since July

Duke (part of the defensive basket of our S&B 20 Index) fell 3.3% on Monday, its worst day since the bear market bottom in October 2022. That’s pushed the stock to its lowest level since July.

NextEra the sector’s worst performer (-4.3%) on Monday

Duke was bad, but NextEra was the sector’s worst offender on Monday, falling 4.3% and breaking its 50-DMA for the first time since July 25. These stocks aren’t dead forever but the short-term trend has turned and we’ll need time to see the dust settle before they will be buyable.

AEE exhibiting relative strength amid the selloff

If you want to buy utilities, the sell-off is a great way to identify relative strength winners. Ameren Corp (AEE) stands out, outperforming on Monday and still hanging within a hair of 52-week highs. In contrast, 23 of 32 S&P 500 utilities stocks have lost their 20-DMA, and 12 have lost their 50-day.

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Bank setups going into earnings