Diverging Tails on This Relative Rotation Graph Unveil Trading Opportunities

KEY

TAKEAWAYS

  • Comparing equal-weighted and cap-weighted sectors on a Relative Rotation Graph can offer interesting insights
  • When the trajectory of the tails and their position on the chart differ significantly, further investigation is warranted
  • At the moment, two sectors are showing such divergences

All on the Same Track… or?

The difference between equal-weighted sectors and cap-weighted sectors is obvious. Namely, the cap-weighted variant is much heavier and is impacted by the changes in some heavy-weight, often mega-cap, stocks. Nevertheless, when you plot these sectors on Relative Rotation Graphs, you will often find that their tails generally move in the same direction and/or follow the same path.

When that does not happen, when the tails of the two versions of the same sector are on different paths or in completely different positions on the RRG, it’s time to investigate.

The RRG above shows the two universes, cap-weighted and equal-weighted, plotted on the same RRG and against SPY as the benchmark. Looking closely, you will find most sector pairs on the same trajectory. If you have a SC account, you can click on the graph, open the RRG in your own account, and do a closer inspection.

*You can save RRGs as bookmarks in your browser. By doing that, you can create your own custom RRGs and save them for later retrieval. Scroll to the bottom of the page, click “permalink,” and then copy and save this link as a bookmark in your browser.

Zooming In

To get a better handle and a clearer picture, I have removed the sectors where both tails are on similar trajectories and positions and only left the tails on the graph where they differ. As a result, two sectors remain: Consumer Discretionary and Communication Services.

Consumer Discretionary

Both tails are inside the lagging quadrant. However, that is as far as the comparison goes. XLY is moving higher on the RS-Momentum scale, indicating an improvement in relative momentum, while RSPD is moving lower and is on a negative RRG-Heading. Also, the tail on XLY is substantially longer than on RSPD, indicating the power behind the move.

Looking at the composition of the sector, it’s obvious which stocks inside Consumer Discretionary are causing the difference.

AMZN, TSLA, HD, and MCD comprise 50% of the index, while AMZN and TSLA are already 38%.

Looking at the performance over the last five weeks (tail length on the RRG), we can see how the sector’s performance has shifted to the large names. The table above shows the top 50 stocks in the discretionary sector. AMZN and TSLA are in the upper end of the range, and MCD is just above XLY, which is at position 17 out of 50. This implies that most stocks are performing worse than that sector index.’

Roughly the bottom half is at double-digit declines. While AMZN and TSLA are “only” up 2.4%, they drag the sector index up to around 1/3 of the entire universe, even with HD showing a 12.5% decline over that period.

Now, look at the same table. Instead of using XLY as the benchmark, we are now using RSPD as the benchmark.

RSPD is showing up at position 27 / 50, right where you’d expect an equal weight benchmark — in the middle of the universe, balancing out all the performances.

The bottom line is that XLY has been picking up recently only because of TSLA, AMZN, and MCD. But, under the hood, most discretionary stocks are going through a horrible correction.

From a trading perspective, such observations can offer great pair trading ideas.

Communication Services

The tails for XLC and RSPC are also far apart on the RRG. XLC is still inside the weakening quadrant and has just started to show the first signs of curling back up. RSPC is deep inside the lagging quadrant at a really low reading on the RS-Ratio scale overall, and is picking up relative momentum, but no relative trend (RS-Ratio) yet.

Over the five-week period, XLC lost 2.8%, while RSPC lost 4.3%. The composition for this sector is even more top-heavy than Consumer Discretionary.

META is listed as the top holding in XLC at 21%. But when we add up the weights for Alphabet A and B, it comes out to 26%. So together, the top two stocks in XLC are a whopping 47% of the sector.

Looking at the same table for XLC, we find Alphabet at the top of the list over the last five weeks. Meta is in the lower part at -9%. The sector (XLC) comes in at -2.8%, which means that META is UNDERperforming (-9% + 2.8% =) -6.2%. But Alphabet Class A is OUTperforming (10.4% + 2.8% = ) 13.2% and Alphabet Class C is OUTperforming (10.6% + 2.8% = ) 13.4%. This is a way stronger upward pull for the index than the drag caused by META.

Changing the benchmark to the EW version of Communication Services shows this table.

Again, we see the equal-weight benchmark (RSPC) dropping to near the middle of the list, balancing out the return more evenly.

All in all, this provides a similar pair trading opportunity.

This relative trend is much more mature than the XLY:RSPD pair, but, as long as the rhythm of higher highs and higher lows continues, buying the dips in this relative line offers opportunities.

Most of the time, the cap-weighted and equal-weighted versions of a sector will move more or less in tandem. But when they don’t, they’re worth investigating, as they may offer interesting trading opportunities.

#StayAlert and have a great weekend, –Julius


Julius de Kempenaer
Senior Technical Analyst, StockCharts.com
CreatorRelative Rotation Graphs
FounderRRG Research
Host ofSector Spotlight

Please find my handles for social media channels under the Bio below.

Feedback, comments or questions are welcome at [email protected]. I cannot promise to respond to each and every message, but I will certainly read them and, where reasonably possible, use the feedback and comments or answer questions.

To discuss RRG with me on S.C.A.N., tag me using the handle Julius_RRG.

RRG, Relative Rotation Graphs, JdK RS-Ratio, and JdK RS-Momentum are registered trademarks of RRG Research.

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#Diverging #Tails #Relative #Rotation #Graph #Unveil #Trading #Opportunities

Breakdown in Mega-Cap Growth Confirms Bear Phase

KEY

TAKEAWAYS

  • Early breakdowns from AAPL and TSLA provided initial warnings of a late stage bull market.
  • Exponential gains in stocks like SMCI and MSTR have now turned into steep pullbacks with both stocks breaking below moving average support.
  • With AMZN and NFLX finishing the week below their 50-day moving average, the rotation away from growth leadership may now be in full force.

While our major equity benchmarks showed incredible strength in Q1 2024, breadth conditions have been deteriorating since mid-March. Despite the weakening breadth readings, and the initial breakdowns of the S&P 500 and Nasdaq 100, leading growth names, including the formerly-described Magnificent 7 stocks, had remained in clearly-defined uptrends.

This week, some of the top-performing stocks in the S&P 500 finally broke below their 50-day moving averages. While this signal on its own is not a sign of a market top, these breakdowns represent just one of the many clear signals that the bull market off the October 2023 low may be over.

Today, we’ll briefly review some of the early breakdowns in the mega-cap growth space, how some of the top-ranked SCTR stocks have shown recent weakness, and why the “Fantastic Four” (current front-runner to replace the “Magnificent 7 moniker) breaking down may represent a key confirmation for a new bear phase.

The Early Breakdowns: Apple (AAPL) & Tesla (TSLA)

Tesla has been in a confirmed downtrend since July 2023, and Apple has appeared in a weak technical configuration since failing to break above the $200 level in December and January. But both charts have literally and figuratively made a new low this week.

Note how both charts have remained below downward-sloping 50-day moving averages since mid-January. Also observe how both have shown failed attempts to break above that moving average in recent months. When stocks are making lower lows and lower highs, and trending below downward-sloping moving averages, I’ve learned it’s best to avoid taking action until some of those conditions start to change. 


Ready to talk market breadth indicators? Our next free webinar, Breaking Down Breadth, will focus on breadth conditions now vs. previous market tops. Join me on Tuesday, April 23rd at 1pm ET as we review the current market environment through the lens of breadth indicators, compare them to conditions at previous market tops, and discuss the likelihood of further drawdowns for the S&P 500 and Nasdaq. Sign up HERE for this free webcast!


As these stocks broke down, diverging from most other leading growth names, the S&P 500 and Nasdaq 100 pushed much higher. So let’s see some of the stocks that served as leadership in Q1.

The Top-Ranked SCTRs: Super Micro Computer (SMCI) & MicroStrategy (MSTR)

Here, we have two names that were less well-known until they experienced exponential gains earlier this year. And while they certainly appeared overextended in March, they have now both come right down to earth.

From the end of 2023 to their peaks in March 2024, SMCI and MSTR gained 350% and 175%, respectively. They both were a far distance from moving average support, giving clear signs of overbought conditions. So far in April, both stocks have traded much lower, and they each finished this week below their 50-day moving averages.

It’s normal for stocks in strong uptrends to pull back and test moving average support. Indeed, the 50-day moving average often serves as a potential entry point for a “buy on the dips” strategy. But when top performers fail to hold this crucial short-term support level, I have found that it often implies a broader move to more risk-off positioning.

What about the best of the biggest–in other words, the most magnificent of the Magnificent 7?

The Fantastic Four Breakdowns: Netflix (NFLX) & Amazon (AMZN)

That brings us to perhaps the most concerning development this week. As I recently posted on my social media accounts, “As long as $AMZN and $NFLX remain above the 50-day moving average, you can make an argument for ‘short-term pullback’ as opposed to ‘protracted and painful decline.'” Unfortunately, this week, we finally observed this breakdown of breakdowns.

Mega-cap growth stocks wield an outsized influence on our top-heavy growth-dominated equity benchmarks. In recent weeks, bearish momentum divergences, weakening breadth conditions, and breaks of “line in the sand” support levels had us thinking market weakness over market strength. But the resilience of the Fantastic Four stocks gave us just a glimmer of hope that a pullback may be limited.

Given this week’s breakdown in the charts of previous top performers, we feel this just may be the beginning of the great bear phase of Q2 2024.

RR#6,

Dave

P.S. Ready to upgrade your investment process? Check out my free behavioral investing course!


David Keller, CMT

Chief Market Strategist

StockCharts.com


Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

The author does not have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not in any way represent the views or opinions of any other person or entity.

David Keller

About the author:
David Keller, CMT is Chief Market Strategist at StockCharts.com, where he helps investors minimize behavioral biases through technical analysis. He is a frequent host on StockCharts TV, and he relates mindfulness techniques to investor decision making in his blog, The Mindful Investor.

David is also President and Chief Strategist at Sierra Alpha Research LLC, a boutique investment research firm focused on managing risk through market awareness. He combines the strengths of technical analysis, behavioral finance, and data visualization to identify investment opportunities and enrich relationships between advisors and clients.
Learn More

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#Breakdown #MegaCap #Growth #Confirms #Bear #Phase

Here’s everything coming to Amazon’s Prime Video in September 2023

Amazon’s Prime Video has high hopes for its September lineup, which includes the return of “The Wheel of Time” and a spinoff of “The Boys.”

After a two-year layoff, Season 2 of the sprawling fantasy epic “The Wheel of Time” (Sept. 1) picks up with Moraine (Rosamund Pike) and Rand (Josha Stradowski) now scattered and forced to regroup as the Dark One turns out to be far from defeated. Season 1 was one of Prime’s most-watched series ever, and Season 2 will reportedly be darker and more action-packed, spanning the second and third books of Robert Jordan’s series.

The end of the month will bring the premiere of “Gen V” (Sept. 27), set in “The Boys” universe and following a group of students with extraordinary abilities at a prestigious — and extremely competitive — college for superheroes-to-be. It looks every bit as depraved and violent as the massively popular “The Boys,” for better or worse.

Also see: What’s coming in September to Netflix | Hulu

Amazon’s
AMZN,
+1.08%

streaming service also has “Kelce” (Sept. 12), a feature documentary about Philadelphia Eagles All-Pro center Jason Kelce’s 2022-’23 season, which will serve as a prelude to the return of NFL Thursday Night Football (Sept. 14), which kicks off with the Eagles against the Minnesota Vikings.

Here’s the complete list of what else is coming to Prime Video in September (release dates are subject to change):

What’s coming to Prime Video in September 2023

Sept. 1

Spin City S1-6 (1997)
The Wheel of Time Season 2
10 Things I Hate About You (1999)
2001: A Space Odyssey (1970)
21 Grams (2004)
23:59 (2011)
A Bullet for Pretty Boy (1970)
A Force of One (1979)
A Man Called Sarge (1990)
A Matter of Time (1976)
A Rage to Live (1965)
Abbott and Costello Meet Frankenstein (1948)
After Midnight (1989)
Alakazam the Great (1961)
Alex Cross (2012)
All About My Mother (2000)
Amazons of Rome (1963)
American Ninja (1985)
American Ninja 2: The Confrontation (1987)
American Ninja 3: Blood Hunt (1989)
American Ninja 4: The Annihilation (1991)
Anaconda (1997)
And Your Name Is Jonah (1979)
Angel Eyes (2001)
Apartment 143 (2012)
April Morning (1988)
Arabian Nights (2000)
Are You in the House Alone? (2022)
Army of Darkness (1993)
As Above, So Below (2014)
Back to School (1986)
Bad Education (2020)
Bad News Bears (2005)
Bailout at 43,000 (1957)
Balls Out (2015)
Beer (1985)
Behind the Mask (1999)
Belly of an Architect (1990)
Berlin Tunnel 21 (1981)
Bewitched (2005)
Billion Dollar Brain (1967)
Blow (2001)
Body Slam (1987)
Born to Race (2011)
Bowling for Columbine (2002)
Boy of the Streets (1937)
Breakdown (1997)
Brides of Dracula (1960)
Brigadoon (1954)
Broken Embraces (2010)
Buster (1988)
Calendar Girl Murders (1984)
California Dreaming (1979)
Campus Rhythm (1943)
Captain Kidd and the Slave Girl (1954)
Carpool (1996)
Carry on Columbus (1992)
Carve Her Name With Pride (1958)
Chasing Papi (2003)
Cheerleaders Beach Party (1978)
Children of Men (2007)
Child’s Play (2019)
China Doll (1958)
Chrome and Hot Leather (1971)
Cocaine: One Man’s Seduction (1983)
Committed (2000)
Conan the Barbarian (2011)
Condor (1986)
Confidence Girl (1952)
Courage Mountain (1990)
Crossplot (1969)
Curse of the Swamp Creature (1966)
Curse of the Undead (1959)
Cycle Savages (1969)
Dagmar’s Hot Pants, Inc. (1971)
Damned River (1989)
Dancers (1987)
Danger in Paradise (1977)
Dangerous Love (1988)
Deep Blue Sea (1999)
Defiance (2009)
Deja Vu (2006)
Desert Sands (1955)
Desperado (1995)
Detective Kitty O’Day (1944)
Detective School Dropouts (1986)
Devil (2010)
Devil’s Eight (1969)
Diary of a Bachelor (1964)
Dogs (1977)
Don’t Worry, We’ll Think of a Title (1966)
Double Trouble (1992)
Down the Drain (1990)
Dr. Heckyl and Mr. Hype (1980)
Dracula (1931)
Drag Me to Hell (2009)
Driving Miss Daisy (1990)
Dust 2 Glory (2017)
Edge of Darkness (2010)
Eight Men Out (1988)
Eight on the Lam (1967)
Electra Glide in Blue (1973)
Elephant Tales (2006)
Europa Report (2013)
Evil Dead (2013)
Explosive Generation (1961)
Extraction (2015)
Face/Off (1997)
Fanboys (2009)
Fashion Model (1945)
Fatal Charm (1978)
Fearless Frank (1969)
Finders Keepers (2014)
Flight That Disappeared (1961)
Flight to Hong Kong (1956)
Fools Rush In (1997)
For the Love of Aaron (1994)
For the Love of It (1980)
For Those Who Think Young (1964)
Four Weddings and a Funeral (1994)
From Hollywood to Deadwood (1989)
Frontera (2014)
Fury on Wheels (1971)
Gambit (1967)
Ghost Story (1981)
Gigli (2003)
Grace Quigley (1985)
Grievous Bodily Harm (1988)
Hangfire (1991)
Haunted House (2023)
Hawks (1989)
Hell Drivers (1958)
Here Comes the Devil (2012)
Hollywood Harry (1986)
Honeymoon Limited (1935)
Hostile Witness (1969)
Hot Under the Collar (1991)
Hotel Rwanda (2005)
Hugo (2011)
I Am Durán (2019)
I Saw the Devil (2010)
I’m So Excited! (2013)
Inconceivable (2017)
Innocent Lies (1995)
Intimate Strangers (2006)
Invisible Invaders (1959)
It Rains in My Village (1968)
Jarhead (2005)
Jeff, Who Lives at Home (2011)
Joyride (2022)
Juan of the Dead (2012)
Kalifornia (1993)
Khyber Patrol (1954)
La Bamba (1987)
Labou (2009)
Lady in a Corner (1989)
Ladybird, Ladybird (1995)
Legally Blonde 2: Red, White and Blonde (2003)
Legend of Johnny Lingo (2003)
Little Dorrit (Part 1) (1988)
Little Dorrit (Part 2) (1988)
Little Sweetheart (1989)
Lost Battalion (1960)
Mama (2013)
Mandrill (2009)
Masters of the Universe (1987)
Matchless (1967)
Meeting at Midnight (1944)
Men’s Club (1986)
Mfkz (2018)
Midnight in the Switchgrass (2021)
Miss All American Beauty (1982)
Mission of the Shark (1991)
Mixed Company (1974)
Mystery Liner (1934)
National Lampoon’s Movie Madness (1983)
New York Minute (2004)
Nicholas Nickleby (2002)
Night Creatures (1962)
No (2012)
Observe and Report (2009)
Octavia (1984)
October Sky (1999)
Of Mice and Men (1992)
One Man’s Way (1964)
One Summer Love (1976)
Operation Atlantis (1965)
Overkill (1996)
Panga (1990)
Passport to Terror (1989)
Phaedra (1962)
Play Misty for Me (1971)
Portrait of a Stripper (1979)
Powaqqatsi (1988)
Predator: The Quietus (1988)
Private Investigations (1987)
Prophecy (1979)
Pulse (2006)
Quinceanera (1960)
Raiders of the Seven Seas (1953)
Red Dawn (1984)
Red Eye (2005)
Red Riding Hood (1988)
Red River (1948)
Reform School Girls (1969)
Riddick (2013)
Riot in Juvenile Prison (1959)
River of Death (1989)
Rocky (1976)
Rocky II (1979)
Rose Garden (1989)
Roxanne (1987)
Rumble Fish (1983)
Runaway Train (1985)
Running Scared (2006)
Safari 3000 (1982)
Season of Fear (1989)
Secret Window (2004)
Sense and Sensibility (1996)
Sergeant Deadhead (1965)
Seven Hours to Judgment (1988)
Sharks’ Treasure (1975)
She’s Out of My League (2010)
She’s the One (1996)
Sin Nombre (2009)
Sinister (2012)
Slamdance (1987)
Snitch (2013)
Son of Dracula (1943)
Space Probe Taurus (1965)
Spanglish (2004)
Spell (1977)
Stardust (2007)
Step Up (2006)
Sticky Fingers (1988)
Stigmata (1999)
Sugar (2009)
Summer Rental (1985)
Surrender (1987)
Sword of the Valiant (1984)
Tangerine (2015)
Tenth Man (1988)
The Adventures of Gerard (1978)
The Adventures of the American Rabbit (1986)
The Assisi Underground (1986)
The Bad News Bears (1976)
The Beast with a Million Eyes (1955)
The Birdcage (1996)
The Black Dahlia (2006)
The Black Tent (1957)
The Bourne Identity (2002)
The Bourne Legacy (2012)
The Bourne Supremacy (2004)
The Break-Up (2006)
The Cat Burglar (1961)
The Chronicles of Riddick (2004)
The Clown and the Kid (1961)
The Diary of a High School Bride (1959)
The Dictator (2012)
The Evictors (1979)
The Fake (1953)
The Family Stone (2005)
The Final Alliance (1990)
The Finest Hour (1991)
The Frog Prince (1988)
The Ghost in the Invisible Bikini (1966)
The Incredible 2-Headed Transplant (1971)
The Invisible Man (1933)
The Jewel of the Nile (1985)
The Late Great Planet Earth (1979)
The Legend of Zorro (2005)
The Little Vampire (2017)
The Living Ghost (1942)
The Locusts (1997)
The Machinist (2004)
The Manchu Eagle Murder Caper Mystery (1975)
The Manchurian Candidate (1962)
The Mask of Zorro (1998)
The Mighty Quinn (1989)
The Misfits (1961)
The Motorcycle Diaries (2004)
The Mouse on the Moon (1963)
The Mummy (1932)
The Naked Cage (1986)
The Night They Raided Minsky’s (1968)
The Possession (2012)
The Prince (2014)
The Program (1993)
The Ring (2002)
The Sacrament (2014)
The Savage Wild (1970)
The Secret in Their Eyes (2010)
The Sharkfighters (1956)
The Sisterhood of the Traveling Pants (2005)
The Spiderwick Chronicles (2008)
The Sum of All Fears (2002)
The Winds of Kitty Hawk (1978)
The Wolf Man (1941)
The Young Savages (1961)
Three Came To Kill (1960)
Three Kinds of Heat (1987)
Through Naked Eyes (1983)
Time Limit (1957)
To Catch a Thief (1955)
Tough Guys Don’t Dance (1987)
Track of Thunder (1967)
Transformations (1991)
Transporter 3 (2008)
Trollhunter (2011)
True Heart (1996)
Underground (1970)
Unholy Rollers (1972)
Unsettled Land (1989)
V/H/S (2012)
War, Italian Style (1967)
Warriors Five (1962)
We Still Kill the Old Way (1968)
When a Stranger Calls (2006)
Where the Buffalo Roam (1980)
Where the River Runs Black (1986)
Wild Bill (1995)
Wild Racers (1968)
Wild Things (1998)
Windows (1980)
Woman of Straw (1964)
Young Racers (1963)
Zack and Miri Make a Porno (2008)

Sept. 5
One Shot: Overtime Elite

Sept. 7
Single Moms Club (2014)

Sept. 8
Sitting in Bars with Cake

Sept. 12
Inside (2023)
Kelce

Sept. 14
Thursday Night Football

Sept. 15
A Million Miles Away

Wilderness

Written in the Stars

Sept. 19
A Thousand and One (2023)

Sept. 22
Cassandro (2023)

Guy Ritchie’s The Covenant (2023)

Sept. 26
The Fake Sheikh

Sept. 29
Gen V

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#Heres #coming #Amazons #Prime #Video #September

Hershey Stock Pulls Back: Now’s Your Second Chance

Hershey’s stock has pulled back. If you missed a previous opportunity to own the stock, this may be your second chance. Explore a few simple technical analysis tools that can help determine if the stock presents a buying opportunity.

Are you bummed out that you missed a stock trading opportunity? Upward-trending stocks don’t always go up. They’re known to pull back, and sometimes the price action at the pullback could give you a second chance.

As an example, Hershey Foods Corp. (HSY) rallied from January 2023 to May 2023. The StockCharts Technical Ranking (SCTR) for HSY has, for the most part, been above 70 for a few months. It’s important to note that, since the SCTR crossed above 70 in April, it has managed to stay above the 70 level even after the stock price pulled back. The stock is also performing well relative to the S&P 500 index ($SPX).

CHART 1: DAILY CHART OF HERSHEY STOCK. The stock price is bouncing off its 50-day moving average. If the support level holds, the stock could reach a high of around $276.Chart source: StockCharts.com (click on chart for live version). For illustrative purposes only.

Hershey’s stock has had an interesting ride, reaching a high of $275.81 on May 1. Consumer demand for chocolates and other sweet and salty snacks has increased, as indicated in the company’s recent earnings calls. Plus, the company pays dividends to its shareholders. Check out the Symbol Summary tool in the StockCharts charting platform for dividend info.

Zeroing In: Daily Price Action in HSY Stock

Since reaching its May high, the stock has traded sideways in a narrow range for a couple of weeks until it sold off, bringing its price close to its 50-day moving average (MA).

  • If the support of this moving average holds, the stock could bounce back and revisit its highs.
  • If the SCTR stays above 70 and the stock’s relative performance against the S&P 500 continues to be strong, there’s a chance HSY could move higher. So, if you missed out on the earlier rally, this could be another opportunity.

The downside: The stock could move lower to its 100-day MA. If the SCTR and relative strength drop, any reversal of the downward trend would be void for a while. Things can always change.

A Weekly Perspective of HSY Stock

The weekly chart of HSY shows that the upward trend is still in play. It helps to look at the last two occasions when the SCTR experienced sharp dips below the 70 level. In both those instances—November 2022 and January 2023—the stock fell to its 50-week MA and rebounded. But the price is quite a ways from the 50-week MA, so, in this case, it would be helpful to add a shorter period MA to the chart. In the chart below, you see a 25-week, which was added because price hugged it pretty closely during the rally from 2020.

CHART 2: WEEKLY CHART OF HERSHEY STOCK. The weekly chart shows the long-term upward trend is still moving higher.Chart source: StockCharts.com (click on chart for live version). For illustrative purposes only.

  • The SCTR is above the 70 level, which is a positive indication for the stock price to move higher. If price stays at or above the 25-week MA and the SCTR remains above 70, there’s a pretty good chance the stock will continue to rally.
  • The 50-, 100-, and 200-week moving averages are trending lower.
  • The 50-period moving average overlay on the relative performance, with respect to the $SPX, is trending upward, which is another positive indication for an upward trend.

How to Trade HSY Stock

  • Going back to the daily chart, if the stock stays above its 50-day MA, look for an up day with higher-than-average volume. If there’s a follow-through of at least one more price bar, it could present a buying opportunity.
  • The upside target on the daily chart could be its high of just below $276.
  • As long as the SCTR and relative strength against the S&P 500 index stay where they are or go higher, your long trade can remain in play. Consumer demand for Hershey’s products is critical, so it’s important to follow the company’s earnings calls. In an inflationary environment, consumers may decide not to forgo the chocolates and candy. Any signs of slowdown could result in a selloff in the stock.

If you open a long position in HSY, you may not need to place too tight of a stop loss. There are a few months before Hershey’s next earnings call. It depends on your risk tolerance level. If the stock trends higher, set trailing stops, and if you have a significant position size, take profits incrementally if conditions warrant such a strategy.

Other Stocks From the Scan

Here are some other stocks that showed up on the large-cap SCTR scan.

  • Las Vegas Sands Corp. (LVS)
  • Noble Corp. (NE)
  • O’Reilly Automotive, Inc. (ORLY)
  • Palo Alto Networks Inc. (PANW)
  • Restaurant Brands International Inc. (QSR)
  • Twilio Inc. (TWLO) 
  • VeriSign, Inc. (VRSN)

Looking Back at AMZN

On May 16, Amazon.com, Inc. (AMZN) was the featured SCTR scan candidate. Let’s look at how that stock is performing.

CHART 3: DAILY CHART OF AMZN. If you had opened a long trade when price broke above $113.84, you’re probably still holding your positions. A break below the dashed green horizontal line could alter the picture.Chart source: StockCharts.com (click on chart for live version). For illustrative purposes only.

AMZN broke above the $113.84 level (dashed horizontal green line). Since then, it has pulled back and bounced off the green dashed line. If you had opened a long position slightly above $113.84, you’re probably holding on to that stock. The SCTR is well above the 70 level, and the stock’s performance against the benchmark S&P 500 is rising.

A change in any of the above criteria could be a reason to take at least some positions off the table.


SCTR Crossing Scan

[country is US] and [sma(20,volume) > 100000] and [[SCTR.large x 76] or [SCTR.large x 78] or [SCTR.large x80]] 

Credit goes to Greg Schnell, CMT, MFTA.



Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

Jayanthi Gopalakrishnan

About the author:
Jayanthi Gopalakrishnan is Director of Site Content at StockCharts.com. She spends her time coming up with content strategies, delivering content to educate traders and investors, and finding ways to make technical analysis fun. Jayanthi was Managing Editor at T3 Custom, a content marketing agency for financial brands. Prior to that, she was Managing Editor of Technical Analysis of Stocks & Commodities magazine for 15+ years.
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