Chart Advisor: Tech’s on Cruise Control

Articles From: Investopedia
Website: Investopedia

By J.C. Parets & All Star Charts

1/ ARKW Reverses Higher

2/ Chinese Internet Receives a Boost

3/ Silver Catches a Relative Bid

4/ Bitcoin Looks Ready to Explode

Investopedia is partnering with All Star Charts on this newsletter, which both sells its research to investors, and may trade or hold positions in securities mentioned herein. The contents of this newsletter are for informational and educational purposes only, however, and do not constitute investing advice.

1/ARKW Reverses Higher

As the bull market continues, Cathie Wood’s ARK funds are finally joining our list of completed bullish reversal patterns.

Here’s a look at the daily chart of the ARK Next Generation Internet ETF (ARKW):

After a year of carving out an inverted head and shoulders formation, price soared more than 3% today, piercing above a critical resistance level that represents the August highs from last year.

Also, notice that a flat to upward-sloping 200-day moving average is present on the chart, which suggests that a transition from bearish to bullish is underway.

The fact that most speculative growth stocks are participating to the upside speaks to an increase in risk-seeking behavior. It also reinforces that a new leg higher for the entire growth complex could be well underway.

2/ Chinese Internet Receives a Boost

It’s no secret that U.S. tech stocks are on a tear. The Nasdaq 100 is up more than 40% year to date while even the most speculative tech names print new highs.

This relative strength is beginning to spill over to the periphery, mainly China.

Check out the Chinese Internet ETF (KWEB) relative to the S&P 500 (SPX):

The KWEB/SPY ratio is violating a downtrend line anchored from its year-to-date highs. While this isn’t necessarily a trade signal, it is an early indication of a potential trend reversal.

And in the context of a year-long basing process, KWEB could be due for a period of outperformance.

A relative and absolute bid for Chinese tech stocks would be another bullish data point supporting a global bull market.

3/ Silver Catches a Relative Bid

Not many assets like a falling U.S. dollar as much as precious metals. And with the U.S. Dollar Index (DXY) down almost 2% over the past two days, these shiny rocks and their associated mining stocks are getting back in gear.

But gold’s crazy cousin, silver, takes the cake, up more than 7% since yesterday.

Notice how closely the G-10 Ex-US Currency Index and the silver/gold ratio track each other:

Broad U.S. dollar weakness tends to lead to a relative bid in silver. Outperformance from this shiny white metal indicates that investors are willing to accept the increased risks associated with this high-beta play.

More importantly for the broader precious metals space, it’s a bullish development suggesting that these metals are finding their groove.

4/ Bitcoin Looks Ready to Explode

Periods of contracting price action ultimately lead strong directional trends. And cryptocurrencies have barely moved in the past month.

The daily Bollinger Bandwidth in Bitcoin (BTC/USD) is tight, reaching a historical low level of volatility.

The red lines show when bands were this tight in the past. Notice that past contractions in volatility led to explosive price action.

We do not know when or in which direction it will resolve. The chart simply suggests that the next directional move in cryptos will be powerful.

Based on the stock market’s strength, especially tech, we could see an upside resolution for Bitcoin.

Originally posted 13th July 2023 

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