Top Charts of the Week: Tech Leads the Market Higher as Inflation Eases
AInvestTuesday, Aug 13, 2024 2:49 pm ET
2min read
CVNA --
MSTR --
SMCI --

This week, the stock market is showing strong bullish momentum, with tech stocks spearheading the upward trend. A weaker-than-expected producer price index has heightened the odds that the Federal Reserve might implement a more aggressive rate cut in September, adding fuel to the market rally. With crucial economic data still on the horizon, such as tomorrow's consumer price report and Thursday's retail sales data, the coming days will provide key insights into the health of the U.S. economy.

Let's dive into the top charts of the week, where we analyze the technical setups of three prominent stocks: Super Micro Computer, Inc. ($SMCI(SMCI)), Carvana Co. ($CVNA(CVNA)), and MicroStrategy Inc. ($MSTR(MSTR)).

1. Super Micro Computer, Inc. (SMCI)

SMCI is in a delicate position, balancing between a bearish medium-term trend and a longer-term uptrend. Despite a rising 200-day moving average, indicating overall upward momentum, the MACD is currently bearish. Comparative Relative Strength (CRS) analysis reveals that SMCI is underperforming the S&P 500, signaling potential weakness.

However, momentum is starting to turn positive. The 14-period Slow Stochastic Oscillator is on the rise, reflecting increasing investor interest. Notably, the stock has seen a surge in trading volume over the last 10 days, surpassing the average daily volume for the past year. This activity suggests that while the On Balance Volume (OBV) indicator remains bearish, the recent spike in interest could be a precursor to a trend reversal.

The Bollinger Bands for SMCI are currently wider than usual, reflecting heightened volatility. This expansion could signal a pause or even a reversal in the near-term trend, making it a stock to watch closely.

2. Carvana Co. (CVNA)

Carvana is showing signs of consolidation within a strong long-term uptrend. The stock remains above both the 200-day and 10-day moving averages, both of which are on the rise. While the ADX indicates recent sideways movement with a value below 20, the CRS analysis suggests that CVNA is outperforming the broader market, a bullish sign.

Momentum is also strongly positive for CVNA. The 14-period Slow Stochastic Oscillator is increasing, which aligns with investors' willingness to pay higher prices for shares. The OBV indicator is bullish, further supporting the case that buyers are currently more active than sellers.

Interestingly, volatility as measured by the Bollinger Bands is low, often a precursor to significant price moves. While the direction of the breakout remains uncertain, the combination of bullish momentum and solid technical indicators positions CVNA as a potential breakout candidate in the coming days.

3. MicroStrategy Inc. (MSTR)

MSTR is undergoing a correction within a broader bullish trend. Despite the MACD being below its signal line, shares are still trading nearly 28% above a rising 200-day moving average, indicating that the long-term uptrend remains intact. However, like SMCI, MSTR is lagging the S&P 500 according to CRS analysis, which could be a red flag for some investors.

On the positive side, momentum for MSTR is starting to improve. The 14-period Slow Stochastic Oscillator is climbing as investor interest in the stock grows. However, today's trading volume is lighter than usual, and the OBV indicator is bearish, suggesting a lack of strong buying interest at the moment.

The Bollinger Bands for MSTR are wider than usual, a sign of recent volatility. This setup often precedes either a pause or a reversal in the current trend, making it another stock to monitor closely as it navigates its correction phase.

As we move deeper into August, the tech sector continues to be the focal point for traders. The broader market is reacting positively to weaker inflation data, with hopes for more significant rate cuts from the Federal Reserve in the coming months. However, individual stock performance varies, with some tech names like SMCI and MSTR showing signs of volatility and potential reversals, while CVNA looks poised for a breakout. Keep an eye on these top charts as the market digests the latest economic data and positions for the next move.

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.