Wall Street is heading into a weak seasonal period after some August turbulence, but chart experts see reasons for optimism. Several technical analysts from Wall Street shops published bullish notes over the Labor Day weekend. Strong market breadth was one highlight, embodied by the recent rally for the equal-weighted version of the S & P 500 . “Last week’s notable action included a new cycle high for the equal-weighted S & P 500, indicating the cap-weighted index has masked stronger internal action. The percentage of NYSE stocks above their 200-day average is similarly coming off a reading of 65%. We’re bullish on this count because we’ve found major market peaks are often undermined by a reading below 60%,” Ari Wald, technical analyst at Oppenheimer, said in a note to clients. RSP 3M mountain The equal-weighted version of the S & P 500 finished August on an uptrend. September is typically a weak month for stocks. Over the last 50 years, this is the month with the worst average performance for the Dow Jones Industrial Average , according to Bespoke Investment Group. That history, combined with lingering concern about the steep sell-off on Aug. 5, has many traders prepared for some downside movement in the weeks ahead. However, the S & P 500 did finish August up more than 2% for its fourth straight positive month, closing above 5,600. “While we would still prefer a dip into 5400-5450 before a sustained breakout, the lack of any downside has us questioning that view. Path of least resistance is higher in early September, before downside volatility likely returns in the back-half of the month,” BTIG technical strategist Jonathan Krinsky said in a note to clients. The set-up for the market’s most important stock also has some silver linings. Stephen Suttmeier of Bank of America said in a note to clients that Nvidia appears to have some close support that could make its next significant move another rally. “NVDA is a semiconductor stock that consolidates within a bullish trend. Key supports are near 118 (chart level) and 110-106 (projected level and rising 26-week MA). If these supports hold, confidence in a bullish continuation pattern increases,” the note said. The Nvidia chart could get put to the test quickly. Shares of the chipmaker fell more than 7% on Tuesday morning, trading just under $111. — CNBC’s Michael Bloom contributed reporting.
Chart analysts see encouraging signs for stock market, Nvidia despite September’s poor history
Sep 3, 2024
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