Weekly Momentum Update Video (2:08)

Weekly Size and Style Update Video (2:56)

Weekly Asset Class Group Score Update Video (3:41)

Super Micro Computer's (SMCI) shares fell sharply today after the company announced it would delay filing its annual report. The delay was preceded by accusations of “accounting manipulation,” among other things. The news sent SMCI lower by roughly 30% during Wednesday’s trading session (Source: Yahoo). SMCI’s volatility this year has been extreme with shares starting the year around $285 before marking a high over $1200 in March, and shares are now trading around $400. From a technical standpoint, SMCI dropped below the acceptable 3 technical attribute threshold on July 24th and has lost 23.09% since then, not including today’s nearly 30% decline. Instead of using its default chart because of sizing issues, the 4% chart helps tell the story of SMCI’s rapid rise and current fall. The stock has almost returned to a consolidation area that formed during the second half of 2023 before a massive breakout, so there may be some support offered around $300. However, given the size of the fall, fundamental concerns, and technical deterioration SMCI is a stock to steer clear of for now.

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Weekly Crypto Update (1:54)

The Crypto space exhaled this week, seeing many coins reverse lower or bump into noticeable resistance above current levels. This furthers the conversation around the need for continued caution for current/prospective positions as the path of least resistance looks to be lower for now. From a focused perspective, the chart of $ETH seems particularly discouraging, now sitting within one box of reversing down on its default chart. The move would see the coin fail to move past a significant level of support around $2,850, a net negative if a reversal is in store.  

Broader report pieces have touched on the weakness in equity markets seen during September. Today’s crypto piece will attempt to do the same by analyzing historical returns for Bitcoin ($BTC) during the month. We also laid out return profiles for other months, but want to focus specifically on the poor performance during a typically poor September. On average, September is the only month of the year to post a negative return since 2011, falling roughly 5%. It also holds the lowest “maximum” return of any month, suggesting upside action could be somewhat limited if the coin can best its historical averages. Averages can be artificially inflated or deflated by abnormally large or small values. This doesn’t seem to be the case however, as September has only posted a positive return for $BTC less than a third of the time. Said otherwise, price action leaves the technical picture on thin ice… and seasonal headwinds lay ahead. While history has shown cryptocurrencies have been able to avoid “normality” from time to time, avoid putting large amounts of money to work for now. 

Each week the analysts at NDW review and comment on all major asset classes in the global markets. Shown below is the summary or snapshot of the primary technical indicators we follow for multiple areas. Should there be changes mid-week we will certainly bring these to your attention via the report.

Check out this week's Major Index and DALI Overview (3:33).

While the past week’s action has been primarily dominated by US and international equities, commodities have been buoyed by Gold GC/ moving to new highs. Despite Gold’s positive action, commodities had already shed nine signals following last Wednesday’s action to firmly find itself in the 3rd position. International equities didn’t see a notable tally signal uptick but now sit in second, ahead of commodities by 12 tally signals. The asset class responsible for the loss in signals within commodities is fixed income as it picked up seven signals to inch closer to currencies in 5th.

Energy commodities were the primary culprits for the loss in signals for the broader asset class last week. This has been the case since international and commodities have been tied for more than a month now, but energy’s recent loss has been against fixed-income proxies. Among the recent RS chart changes to favor fixed income over commodities involves the Invesco DB Energy Fund DBE versus the iShares Barclays 7-10 Year Treasury ETF IEF on a 3.25% scale. After reversing into Os in June the RS chart fell to give an RS sell signal during last week’s trading, favoring the 7-10 year treasury ETF, over energy commodities. Before this, the RS chart had been on an RS buy signal for more than 12 months.

Within the DALI Asset Class matrix, energy commodities now reside in Os against all fixed income related proxies, meaning fixed income is favored in the near-term. This also puts the fixed income group in a position to gather further signals from commodities if either fixed income can continue to improve or commodities may move lower.

To provide where individual subsectors of commodities currently sit relative to the broader fixed-income asset class, the RS charts below show the Invesco DB Precious Metals ETF DBP, Invesco DB Base Metals ETF DBB, and Invesco DB Agriculture ETF DBA, against the iShares Barclays Aggregate Bond ETF AGG on a 3.25% scale RS chart.

As noted in the opening, precious metals – primarily gold GC/ – have buoyed the broader asset class within DALI. As of Tuesday’s close, precious metals proxies are responsible for more than one-third of the asset class’s total tally signal count within DALI. The RS chart of DBP versus AGG is also the only chart below to still maintain a column of Xs and favor the commodity proxy over the fixed income.

Meanwhile, the RS charts comparing base metals and agriculture to AGG have been in Os since July and May, and action in August have brought additional Os. Though both RS charts still favor the commodity proxies in the long term, further outperformance by AGG could bring about a potential signal change.

Within the DALI Asset Class matrix, base metals and agriculture maintain little to no near-term relative strength but continue to maintain their ranking in the top half of the matrix based on long-term RS buy signals (the default ranking metric for the matrix tools). Precious metals continue to maintain near and long-term relative strength against other asset class proxies, and downside within this subsector may be another way that weakness for the broader asset class may be shown moving forward.

U.S. Sector Updates

The past week saw no significant technical developments in the Communication Services, Basic Materials, Utilities, Consumer Staples, Healthcare, or Energy Sectors. Those that saw noteworthy movement are included below, in order of their relative strength ranking in the DALI domestic equity sector rankings, as of 8/27/2024. Sector designations are based on DALI sector rankings and are as follows: 1 - 3 overweight, 4 - 7 equal weight, and 8 - 11 underweight.

International Equity Rundown Video (3:33)

The past week was positive for many areas across the international equity landscape, but not all countries saw improvement. The iShares MSCI EAFE ETF EFA was up 2.18%, while the iShares MSCI Emerging Markets ETF EEM was only up 0.09%. Most broad China funds posted losses, hampering the improvement of the broader emerging markets space. India continues to separate itself from other international equity regions as one of the top performing equity markets this year. This can be seen on the Asset Class Group Scores (ACGS) page, as India sits in the first ranked position out of all 134 investible asset classifications with an average score of 5.26. It is the only non-US group with a score north of 4.00, far outpacing the rest of the field.

Looking deeper at the score strength shows some surprising names at the top, including the iShares MSCI India Small Cap ETF SMIN, which has a near-perfect 5.90 score posting. This is currently the top scoring India fund, which makes sense given the fund’s 20% year-to-date return (through 8/27). SMIN has rattled off four consecutive buy signals since May of last year and is currently positioned at a double top formation at $84. A further push higher to $85 would notch another buy signal and a new all-time high for the fund. Even with the rapid improvement of SMIN, the fund still sits in an actionable trading range with a weekly overbought/oversold reading at just 43% at the time of this writing Wednesday. Those looking to add exposure toward India may consider more focused exposure in this small-cap representative. Initial support can be seen at $79, with further support seen at $72.

The US Government-long group now sits atop the ACGS fixed income rankings with an average score of 3.32; at 2.51, it also has the second highest score direction of all 134 groups in the ACGS system. On the other hand, inverse fixed income now has the third-lowest score in the system and the lowest score direction at -2.70.  The contrasting positions and score directions of the US Government-long and the inverse group reflect the magnitude of the recent improvement in the core US fixed income market.

Many core/long duration groups now have a sufficiently positive technical picture to merit consideration for inclusion in a fixed income allocation. However, much of the core market remains heavily overbought – the iShares US Core Bond ETF (AGG) has a weekly overbought/oversold (OBOS) reading of 77.5%. So those looking to add duration exposure may be best served to wait until these groups normalize on their 10-week bands.

Fed futures now pricing in a 65% chance of a 25 bps cut at the September meeting as we’ve seen expectations for a jumbo cut dwindle. The market is still pricing in 100 bps of cuts by the end of the year, implying a reduction at every remaining meeting in 2024 with one 50 bps cut.

Remember, these are technical comments only. Just as you must be aware of fundamental data for the stocks we recommend based on technical criteria in the report, so too must you be aware of important data regarding delivery, market moving government releases, and other factors that may influence commodity pricing. We try to limit our technical comments to the most actively traded contracts in advance of delivery, but some contracts trade actively right up to delivery while others taper off well in advance. Be sure you check your dates before trading these contracts. For questions regarding this section or additional coverage of commodities email james.west@nasdaq.com.

Data represented in the table below is through 8/27/2024:

Broad Market Commodities Report

Portfolio View - Commodity Indices

Weekly Commodities Video (2:39)

After a sharp drop from all-time highs, the copper continuous contract (HG/) returned to a Point & Figure buy signal this week at $4.20 – ending its longest streak of consecutive sell signals since July 2022. Technically speaking, the bounce was not a surprise. Earlier this month we highlighted major support in the $4 vicinity, an extremely stretched OBOS reading, and a steep futures curve.

If copper prices remained in freefall, it would have become increasingly concerning for the economy (likewise with crude oil). So, a rebound is nice to see from that perspective too.

Despite the selloff, copper now sits just beneath the middle of its ten-week trading band which indicates near-term normalized prices. Substantial support is offered at $3.92 while the first level of resistance is distant, currently at around $4.60, suggesting the potential for a bit more breathing room.

Daily Option Ideas for August 28, 2024