AI Correction or Reversal? 🧠📈📉

AI theme 

The hottest theme in the market since early 2024 is AI without doubt. The rally is mainly led by the leader, Nvidia! The power of this surge exceeds far beyond my expectation. Well, the market is often crazy but this might be justifiable as the share price is showing the projection of a company forward earnings. For the past 3 months, the leaders in AI like Nvidia, AMD, SMCI, etc have been rallied for over 60-100%, giving their investors a big profit over this short period.

AI AI AI 

Time for correction?

As we can observe last Friday, most of these AI stocks opened high and closed low, forming a bearish shooting star or bearish engulfing pattern in most of the chart. This might signify the beginning of pullback or correction after these stocks are being overbought for some time. However, at this moment, any pullback seems to be normal and pretty healthy given that these stocks increased for so much already. 

Technical reviews

Let's look into a few AI stocks technically through their technical charts. We will start with the leader Nvidia. 

Nvidia daily chart

A very big bearish engulfing candle formed last Friday, followed by a massive volume. This is not a good sign in short term as the stock might peak here and undergo a consolidation phase. The EMA lines are still far away from current price, so I guess the pullback might not be too minor. Therefore, I am short term bearish for Nvidia $NVIDIA Corp(NVDA)$  .

Next, let's look at Nvidia competitor, AMD. 

AMD daily chart

Pretty similar chart like AMD, with a massive rally since December 2023. Friday's candle showed a long upper shadow, which represented a heavy profit taking action with significant seller at current price. I believe AMD will continue to pullback like Nvidia next week $Advanced Micro Devices(AMD)$  .

Similar to the semiconductor index, SOXL, mainly represented by the AI stocks, was facing the same bearish pattern last Friday. 

SOXL daily chart

A big long red bearish engulfing candle was observed, with a massive volume which was almost doubled than the previous weeks daily average. $Semiconductor Bull 3X Shares(SOXL)$  a short term correct is unavoidable! 

However, for next week, I continue to be optimistic for $Palantir Technologies Inc.(PLTR)$  . As we can see from the chart below, Palantir is challenging it's near term support at around 25.70 USD. The pullback should not be too much as long as the stock can stay above this support line. It might consolidate next week before engaging for the next rally. The good news flwith Palantir is the company keeps on getting new contracts from its clients. 

PLTR daily chart

On the other hand, the story is quite different for $C3.ai, Inc.(AI)$  . The recent earnings was great and beat market expectation, causing the stock to skyrocketed. However, the gap up rally was unable to sustain and the gain after its earnings was almost fully erased. Currently, the share price stays very close to the blue support line. I believe the good earnings released last week should be able to act as a factor to hold the share price above this support. Let's see!

AI stock price

Summary & How about you? 

It is pretty normal for these AI stocks to pullback after a big rally. Will you consider it as an opportunity to add more positions or you will see it as a peak sign and beginning of trend reversal? 

@TigerStars  @CaptainTiger  @MillionaireTiger  @Daily_Discussion  @Tiger_comments