Monday Market Momentum
RLT Newsletter
We saw a major rotation come into the market on Friday. Many of the names that had been out of favor finally caught a bid, and I know a lot of us who have been waiting for that rotation into names like MSFT, PLTR, NOW, HOOD, and the software space through IGV had a great day.
SPY once again closed at a new all-time high, and we finished the month with another quite bullish candle on the monthly chart. After posting two strong bullish candles in a row, if this market continues to track the 2024 and 2025 analogs, we should see another positive month ahead, although likely not as strong as April and May.
In the 2025 run, SPY’s third bullish monthly candle gained roughly 2.5%, while in the 2024 run the third bullish candle gained about 1.5%. More importantly, the 2025 rally produced six consecutive bullish monthly candles, while the 2024 rally produced five before finally seeing a bearish month. Based on those analogs, there is no reason to assume this run has to end here.
With money beginning to rotate into software, I can easily see a scenario where capital rotates out of semiconductors and memory names for a few weeks before eventually rotating back in. That kind of rotation would create an environment where the market continues grinding higher throughout the summer, even if leadership changes beneath the surface.
My SPY targets remain $810 and $825, which would imply another 7% to 10% upside move from current levels. Those targets continue to fit very closely with both the 2024 and 2025 analogs.
SPY Monthly Chart
AVGO will be the biggest earnings reports of the week when it reports after the bell on Wednesday. The stock has spent roughly the last 30 trading days consolidating within a large parallel channel and should easily break out of that pattern on any decent gap in either direction.
Friday’s candle was particularly bullish. AVGO printed a large bullish candle on strong volume and closed at a fresh all-time high. If the stock were to reverse and lose Friday’s candle, that would be pretty bearish. A move below $404 would increase the odds that this lengthy consolidation at the highs was actually distribution rather than accumulation.
For now, however, everything about this chart suggests it wants to move higher. Earnings will ultimately be the deciding factor.
AVGO Daily Chart
I think names like MSFT could easily continue straight toward their targets this week. Now that MSFT has reclaimed the 100-week SMA, any retest of Friday’s candle could present an opportunity to add to positions with a stop placed below Friday’s low for a trade targeting the gap fill overhead.
As I have been saying for months, I continue to believe there is a high probability that MSFT eventually pushes into the $480 area. Most investors who want exposure should already be long, but for those feeling some FOMO, there may still be an opportunity. It is certainly not as attractive as when I first highlighted the setup on May 7, but there could still be room left in the move for an aggressive trader.
MSFT Daily Chart
As you know, I love trading gaps, and I especially love trading gaps out of consolidation patterns. ONDS gave us a great example on Thursday of just how powerful a gap out of a consolidation range can be.
For that reason, I am watching CRWV very closely this week. Ideally, I would like to see another week or so of consolidation beneath the $110 level before the stock finally gaps higher. That would create a very clean setup.
That said, even if CRWV gaps above $110.50 on Monday, I will still be looking at it as a potential bullish trade targeting the $125 gap fill with a tight stop. The chart is setting up nicely, and I will continue monitoring it closely. For now, $110.50 remains the key resistance level that I want to see cleared.
CRWV Daily Chart
Many charts across this market have already reached their targets and completed massive moves, and what incredible moves they have been. Because of that, I will likely be doing a fair amount of profit-taking this week and tightening trailing stops on existing positions. I also plan to be much more selective when it comes to initiating new trades.
There are still some names that have my attention. CRWV remains high on the list. FLY is potentially setting up yet again. RGTI looks like it may be preparing for another move higher. KTOS and RCAT both look interesting at current levels, and SMR is starting to catch my attention as well despite being a total dumpster fire of a chart.
I will cover all of those charts and more in this week’s swing trading videos.