One of many key themes, if not THE theme, of 2023 was the dominance of the mega-cap progress commerce. The Magnificent 7 shares handily outperformed our fairness benchmarks by way of the course of 2023, and, to date in 2024, it has been extra of the identical.

With Netflix (NFLX) gapping increased on earnings this week, the inventory has actually appeared to earn a spot among the many main shares of the day. However how will we deal with names which have already had unimaginable runs and now seem overextended?

As we speak, we’ll break down eight main progress names, which I’ve loosely referred to as “Magnificent 7 and Mates”, and use the technical evaluation toolkit to gauge the energy of tendencies and prospects for continued uptrends. We’ll additionally see what an outlier Tesla (TSLA) has develop into after disappointing earnings and a worth breakdown of epic parts.

The Better of the Finest Persevering with Larger

Over the past 12 months, the NYSE Fang Plus Index (NYSE+) has gained 76%, dwarfing the QQQ’s +45% and SPY’s +22%. Whereas this index contains another names exterior the Magnificent 7, it stays an honest proxy for the energy of the mega-cap progress commerce.

The primary 5 charts on this group are comparable in that they’ve damaged out of clear basing patterns, and still have proven a transparent sample of upper highs and better lows. Observe what number of of those names broke out above resistance, then pulled again to the earlier resistance stage earlier than accelerating to a brand new swing excessive in January.

Energy tends to beget additional energy, and Charles Dow clarified the significance of this idea by declaring that an uptrend consisted of a sample of upper highs and better lows. So long as these charts make a better swing low on subsequent pullbacks, the first development stays bullish.

Netflix is a little bit of an outlier, in that it was rangebound (much like Apple, beneath) till gapping increased this week on earnings.

This week’s upside hole pushed NFLX above key resistance round $500, and in addition created a brand new space of anticipated help between $500-530. So long as NFLX holds this vary on a pullback, I might contemplate the overarching sentiment to stay bullish.

One Identify Nonetheless With One thing to Show

This is the place the charts will begin to look slightly completely different than the others we have shared so far. Whereas the primary six names have already damaged to new highs, Apple (AAPL) continues to languish beneath an well-established resistance stage.

Apple hit a brand new 52-week excessive round $197 in July 2023. This stage was briefly damaged in December, however was unable to maintain these positive factors because the inventory pushed decrease to check its 200-day shifting common. This week, AAPL as soon as once more examined the $197 stage however could not energy above this upside threshold. If and when AAPL will get above $197, and particularly if it is in a position to energy above the “huge spherical quantity” of $200, I might contemplate this a bullish breakout in keeping with the earlier charts we have offered right here.

The Worst of the Worst Has Damaged Down

And now we have reached the title which I might contemplate now not worthy of membership within the elite Magnificent 7 membership. After reviewing the chart beneath, and evaluating it to all different charts we have shared, you may see what an outlier Tesla has develop into.

A primary look on the chart exhibits the same construction to AAPL by way of summer season 2023, as TSLA was in a position to attain the $300 market in July. From that time on, nonetheless, you may discover a transparent sample of decrease highs and decrease lows. This can be a Dow Principle downtrend, indicating a main bearish development and a basic risk-off sentiment.

This week, TSLA gapped decrease on an earnings miss, dropping the inventory virtually 14% for the week and pushing the value beneath the October 2023 low round $190. Until TSLA is ready to reclaim this stage on a swing increased, after which set up a better low, the first development stays down and I might be very blissful in search of higher alternatives elsewhere!

Which of the Magnificent 7 (or 8?) shares do you see as the most effective alternative right here, and why? Through the use of a easy development evaluation of those names, it may be pretty simple to trim the outliers, deal with actionable strikes, and higher outline potential reward vs. threat.

RR#6,

Dave

P.S. Able to improve your funding course of? Try my free behavioral investing course!

David Keller, CMT

Chief Market Strategist

StockCharts.com

Disclaimer: This weblog is for instructional functions solely and shouldn’t be construed as monetary recommendation. The concepts and techniques ought to by no means be used with out first assessing your personal private and monetary scenario, or with out consulting a monetary skilled.

The creator doesn’t have a place in talked about securities on the time of publication. Any opinions expressed herein are solely these of the creator and don’t in any method signify the views or opinions of another individual or entity.