Image source: Pixabay

Although it has been a while since I posted on my personal blog, you can keep up with my analysis at @annacoull on X (formerly Twitter) and two Facebook pages. One is dedicated to all things Forex, while the other focuses on stocks and general market analysis. Finally, there is my YouTube channel (acoull), where you will find videos and recordings of our latest webinars.

Turning to today’s market action, there are two major stories. The first is Apple and the sell-off following reports that China plans to ban state employees from using iPhones for government work and from being brought into the office.

The second major story concerns Nvidia and suggestions circulating online that the recent blow-out earnings resulting in the stock price achieving a high of $502.66 may have been boosted by some very creative accounting to allow certain parties to cash out at this high. Whether that is true remains to be seen. However, what is not in doubt at the moment is that the Nvidia H100 chip is at the center of the current AI euphoria, with demand outstripping supply.

When these narratives surrounding stocks continue to take hold and prices reverse sharply, it’s useful to look at the slower time charts -- not just for any signals of potential weakness possibly waiting to be triggered (a bad piece of news is always helpful), but also for clues as to whether the current reversals are simply corrections in stocks that have been dominating their sector and index since the beginning of this year.

In this case, the relevant tech sector may be worth considering, and if you have seen any of my commentary on Nvidia, I first highlighted the stock back in January and the tech sector in general as one that would likely recover in 2023.

Moving to the charts, let’s start with the XLK (the ETF for technology), where tech company allocation is over 94.13%. At present, Apple is the top holding at 23.18%, and Nvidia claims a more modest 5.04%.

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For Apple (see below), the monthly chart is also interesting; particularly with the July candle, which is clearly anomalous from the perspective of Wyckoff’s third law of effort and result, suggesting we should expect weakness ahead.

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In summary, what are we to make of this shaky start for September, which, for many commentators, has simply confirmed that September is likely to live up to its reputation of being the worst month for the S&P 500?

The macro background is certainly not supportive, as bond yields continue to rise and are now joined by rising oil prices, which will feed into inflation. However, we may have some clarity next week, with the CPI and Retail Sales data along with the FOMC the week after. Whatever happens, it’s not going to be a quiet month for either traders or investors.

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