Market Minute: Three Dicey Charts Unrelated to Middle East

Geopolitical-driven volatility typically creates some of the speediest buy-the-dip turnarounds for investors, so if you believe Tuesday’s slide was all about Iran and Israel, read no further. That said, that was a lot of missiles for crude oil futures (/CL) to barely get back above $70/barrel – I’ll be following more closely if WTI gets beyond $75. 

There are three charts that are more structural in nature that pose a risk to the bull run that investors should be more attentive to: Nvidia (NVDA) and semiconductors, the Russell 2000 (RUT), and bitcoin (/BTC). 

Nvidia and the semiconductors are still the heart of this now two-year-old bull market. Since the low in Oct. ‘22, chips are up 176% to the S&P 500’s own meaty 59% gain. Nvidia’s once-in-a-lifetime rally stands at an 878% advance over the same time period. Perhaps it’s the fast maturation of these disruptors that’s causing them to move a bit more slowly now, but the sector just had a pretty big failure on the chart. The VanEck Semiconductor ETF (SMH) last week tried to rally past its August high to make the first higher-high since its July peak, but instead reverted lower. Meanwhile, Nvidia never tested its August high last month and is making lower highs on its chart. Both the leader and its group remain in sideways triangles of consolidation, meaning the near-term trend is basically a coinflip.

There’s another failed breakout in the Russell 2000. Small-caps had an extremely volatile summer, and ended it basically right where they began. Considering all the talk about how the Fed’s interest-rate cuts will engender a fresh economic cycle, the Russell keeps getting rejected at 2,200, the low end of its range from 2021. That calls into question the degree to which the economic engine is restarting.

And finally, crypto. Bitcoin also notched another nasty headfake on its chart, popping above its August highs before giving it back. The biggest crypto asset remains in a 7-month-long downtrend from its ETF-driven run-up, suggesting it’s either run out of fresh catalysts or animal spirits in general are muted.