Chart Storm: 6 Strong Technical Set-Ups for Q4
Q4 2023: Reasons to Be Optimistic are Mounting
Any investor remotely following the US equity market probably has a decent idea of the potential negatives for the back part of 2023. Mounting geopolitical concerns (Ukraine & Israel wars), a stubbornly “hawkish” Federal Reserve intent on driving down inflation, and poor price action over the past two months (the S&P 500 Index topped 7/27), are bear arguments.
October is the Bear Market Killer
Investors shouldn’t “judge a book by its cover” despite the negatives. According to research conducted by Fundstrat Global Advisors, a mindboggling 50% of corrections have historically concluded during the month of October! Furthermore, strong end-of-year, pre-election year seasonality trends are likely to kick in.
Image Source: Ryan Detrick, Carson Investment Research
Extreme Fear
In July, the CNN Fear & Greed Sentiment indicator stubbornly hovered in an “extreme greed” reading. However, since then, sentiment has cascaded lower and is in the “extreme fear” range for the first time since equities bottomed in February. Remember, stocks tend to climb the proverbial “Wall of Worry.”
Image Source: CNN
2024 Fed Pivot is on the Horizon
The Chicago Mercantile Exchange (CME) “FedWatch Tool” analyzes the pricing of federal funds futures contracts to calculate the implied probabilities of different monetary policy decisions. Presently, the tool indicates a pause in interest rate hikes with a potential pivot to rate hikes occurring as soon as May 2024. Though May is several months away, savvy investors understand that equity markets discount the future.
Image Source: Chicago Mercantile Exchange
Bullish Technical Set-Ups are a Prerequisite for Rallies
The Q4 bull thesis above is further supported by the plethora of technical patterns emerging in market leaders. In fact, numerous bull chart patterns are a signal in itself. Below are the 6 strongest technical set-ups into Q4:
Mobileye (MBLY) is an Israeli company that violently ripped off its Monday morning lows to hold the 200-day moving average. The resilient price action is impressive, considering the attack on Israel last weekend. MBLY is a leader in the burgeoning autonomous driving space.
Image Source: TradingView
On Monday, Palantir (PLTR) broke out on massive volume. Palantir’s unique anti-terrorism product is a catalyst in this time of geopolitical chaos. The company recently scored a $400 million contract win from the UK Health Department.
Image Source: TradingView
Super Micro Computer’s (SMCI) products are used for various up-and-coming, high-growth industries, including enterprise IT, big data, cloud computing, the Internet of Things (IoT), and artificial intelligence (AI). Shares look explosive as they coil above the 50-day moving average. SMCI bulls likely want to target the open EPS gap from last quarter ~$350.
Image Source: TradingView
Uranium producer Cameco (CCJ) may benefit from geopolitical supply disruptions from Kazakhstan and Niger. Beyond rising uranium prices, tech giant Microsoft (MSFT) is rumored to use nuclear energy to power data centers to run its AI Chatbot ChatGPT. The first meaningful pullback after a massive move provides an attractive reward-to-risk zone for investors who like to “buy the dip.”
Image Source: Zacks Investment Research
Advanced Micro Devices (AMD) is a chip leader. Late last week, shares triggered a massive trendline break. The stock may want to run into EPS on 10/31.
Image Source: TradingView
EV-king Tesla (TSLA) is building a monthly bull flag pattern in the context of a massive long-term uptrend. Three Q4 catalysts exist, including: Cybertruck deliveries, the UAW strike, and the building of a new “Gigafactory” in Mexico.
Image Source: TradingView
Conclusion
As Q4 2023 unfolds, pessimism is on the rise. Nevertheless, open-minded investors will find several reasons to be bullish equities, including seasonality, sentiment, and Fed pivot potential. As a result, investors should pay close attention to the many bullish set ups emerging.
Top 5 ChatGPT Stocks Revealed
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Download Free ChatGPT Stock Report Right Now >>Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
CME Group Inc. (CME) : Free Stock Analysis Report
Tesla, Inc. (TSLA) : Free Stock Analysis Report
Cameco Corporation (CCJ) : Free Stock Analysis Report
Super Micro Computer, Inc. (SMCI) : Free Stock Analysis Report
Mobileye Global Inc. (MBLY) : Free Stock Analysis Report
Palantir Technologies Inc. (PLTR) : Free Stock Analysis Report
