One group of stocks I am watching closely right now is biotechs.

Despite the industry's lackluster performance over the previous three months, I think biotechs are brewing up something big.

Here’s the equally-weighted SPDR Biotech ETF $XBI.

XBI has been consolidating in a narrow range, and holding just above the breakout level from a multi-year base. 

Given all the price memory around this area, it’s an ideal spot for buyers to step in and spark a rebound rally.

If it happens, we'll be looking for XBI to break out of this triangle pattern, which would confirm a reversal of the primary trend. This would also position the entire biotech space to attract some bullish rotation. 

Maybe its getting underway now. Biotechs were on fire today with XBI closing higher by 2.30%.

Strazza likes the setup here a lot as well. He just got long calls in the...

Consumer Discretionary stocks are a reliable gauge of risk appetite and market health.

Consider these as automobiles, retail, and homebuilding—industries that offer products and services consumers purchase with their discretionary income.

When investors favor these stocks, it indicates a higher level of risk-seeking behavior.

One simple way to assess them is by comparing their performance to the broader market.

The chart below illustrates Large Cap Consumer Discretionary Sector relative to the S&P 500, potentially forming a major 10-year top.

Notice how this ratio has been holding near its lower bounds for quite some time.

If you believe the bull market still has legs, the expectation would be for discretionary stocks to start outperforming.

On the other hand, if you bet this top completes, you expect risk assets to come under pressure.

So, what do you think?

I would love to hear your thoughts on this!

Alfonso

Bitcoin is flirting with a historic breakout, sitting just a few bucks shy of fresh all-time highs.

Everywhere I look, I’m seeing the perfect setup for a new leg higher from crypto.

Risk appetite is heating up across the board, and the strongest tokens are leaving the station. 

We have a wide-variety of vehicles to choose from to play this bullish thesis.

Whether you look at Bitcoin, Dogecoin, or the crypto miners, they are all offering asymmetrical risk vs reward opportunities.

And if we're talking about catch-up trades, Marathon Digital Holdings $MARA is the one to watch.

Just look how clean this chart is.

Bitcoin is on the verge of resolving higher from a massive consolidation phase.

This isn’t just a short-term consolidation; it’s one of those bases that typically marks the beginning or onset of a fresh bull market. 

These are the periods where we see altcoins multiplying, meme coins surging, and laser eyes all over the internet.

We’ve witnessed this before, and I believe we’re on the cusp of experiencing it again.

It’s also worth noting that these bullish instances have clustered around the holiday season in the past. We’re there now.

It’s all set up so perfectly for another crypto Christmas.

Take a moment to review previous cycles, and you will see just what I mean.

Here’s a zoomed out look at Bitcoin, effectively absorbing all the overhead supply at the upper bounds of the range.

If...

Health Care stocks were under pressure again this week with the large cap SPDR $XLV falling about 3%.

XLV is now the worst performing sector SPDR over the trailing 1-month and 3-month timeframe.

When we look at Health Care on an equal weight basis, the group looks even more vulnerable.

Here's a chart of the Invesco Equal Weight Health Care ETF $RSPH: 

As you can see, RSPH tried to break out from a base last month, but was immediately rejected and is now back below those prior cycle highs.

To make matters worse, price is also violating an upward trendline and the VWAP anchored from the year-to-date lows.

As long as price remains stuck in the current range the bias is sideways for longer for this groups of stocks.

In the event the broader market turns, however, these laggards are likely to lead lower.

Let me know what you think!

Alfonso

The US Dollar Index $DXY has been on a tear since the turn of the month, bouncing hard off support. 

Typically, a strong dollar would suggest a defensive tone for risk assets. But not this time.

Despite the dollar's impressive run, equities are holding their ground and showing serious resilience. Just last week, the S&P 500 closed at all-time highs.

And when you dig into the chart, DXY is still stuck in the middle of a range

...

The precious metals complex is ripping higher like never before.

Gold continues to stair-step higher, achieving new all-time highs, and now silver is joining the party.

A major catch-up trade is currently underway as silver breaks out of a multi-year base to its highest level in over a decade.

The chart below shows the correlation between these two metals over the past 15 years.

As you can see, gold has already laid out a clear path for silver’s next move.

Considering silver's higher beta, I see plenty of room for further upside from here.

Buying the miners has worked out well this quarter, and the weight of the evidence suggests momentum will carry on for longer.

Breakout Multiplier members just scored a 100% return on two silver miner trades this week! If you’re interested to become a member, click here to...

When I think about the strongest stocks, I’m not just looking for outperformance across different timeframes. The strongest stocks should be back to our through their old bull market highs.

Let’s discuss the materials sector in this light.

The bubble chart below shows the change from the 2021-2022 highs on the Y axis and the 3-month relative change on the X axis. I'm graphing all the materials industry groups to see how they stack up.

The areas that really catch my attention are those enclosed in the oval at the top of the chart, as they show the groups returning to their previous highs and potentially breaking out of multi-year bases.

What sets uranium apart, however, is its position on the far right of the chart. This speaks to the strong outperformance from these stocks over the trailing quarter.

The uranium theme becomes increasingly compelling when we look at the price chart…

Check out this decade-long base for the Uranium ETF $URA:

When I think about bonds, credit spreads are always at the top of my mind because they provide an excellent gauge of market health.

We simply measure the yield difference between a Treasury bond and a High-yield bond with the same maturity.

Another way to do it is by looking at the prices of the High-Yield Bond ETF $HYG compared to the Treasury Bond ETF $IEI:

When bond market investors are confident and willing to take on more risk, they drive up the value of High-yield bonds, causing this ratio to increase or credit spreads to narrow.

Conversely, when investors seek safety, credit spreads widen, which doesn't not bode well for risk assets.

As you can see in the chart, this ratio is pushing up against its highest level of the year.

This action suggests that there's no systemic risk upon us.

As long as that remains true, we can feel comfortable that equities and risk assets, in general, will stay in good shape.

Hope you enjoyed this post!

Technology stocks have been underperforming for the last three months.

However, when I dive beneath the surface looking for relative strength, software stocks catch my attention.

Here you have the Software ETF $IGV on the cusp of breaking out of a massive base.

IGV soared higher, tacking on 2.14% today as it pierced through the upper bounds of this range.

If and when we get some upside follow-through, the breakout will be valid and the path of least resistance will be higher. We think this happens in the coming days and weeks.

Under this scenario, we should anticipate upside resolutions from individual software names. A lot of them look very similar to IGV right now.

Palantir Technologies $PLTR is one of my favorites setups in the space.

How could it not be? It's been the best one.

The notorious government contractor is just breaking out above its IPO high from 2021.

It has a lot of room to run.

Today, I joined my friend Patrick on Chart Request Live, discussing all the ticker symbols from the chat.

Click here to watch the replay.

One major topic we discussed at the end of the show was crypto and some equity vehicles to gain exposure to it.

One that stood out was MicroStrategy $MSTR, which continues to show impressive relative strength.

As you can see, MSTR is consolidating above its prior cycle peak as it flirts with new all-time highs.

Meanwhile, Bitcoin continues...

Chinese equities are surging like never before in history.

The iShares China Large-Cap ETF $FXI rallied over 18%, marking its best week ever.

We call this a "momentum thrust". Such extreme readings often precede rallies and tend to occur at the beginning of new bull cycles.

Here's the FXI chart with the 1-week rate of change in the lower pane:

As you can see, this is happening after a test of a critical support level, right at a shelf of former lows.

In addition, price is reclaiming the VWAP from the 2021 highs, which means bulls are back in control for the first time since then.

One thing we know for sure is that seeing the most beaten-down areas of the market spring back to life with such vigor is not a bearish development.

In fact, I think it’s time to embrace these high beta stocks.

They are on the rise.

And as technicians, we want to take advantage of these new uptrends.

Just look at what Sean McLaughlin,...