The SPDR S&P 500 ETF (SPY) stock continued rising and is sitting at a record high as the strength of the equities market accelerates. The fund was trading at $605 on Monday, bringing the year-to-date gains to about 27%.

Other related funds like the Vanguard S&P 500 (VOO) and the iShares S&P 500 (IVV) have also soared this year. 

Technical analysis points to a future SPY ETF reversal

The SPDR S&P 500 ETF has been in a spectacular rally for decades, which explains why it has become one of the most popular funds in Wall Street.

As a result, the fund has constantly remained above the 50-day and 200-day Exponential Moving Averages (EMA), meaning that bulls are in control.

However, historically, the ETF has seen periods of bear markets, as we experienced in 2022, when it crashed by over 20%. 

There is a risk that the fund will have a strong bearish breakout, possibly in 2025. That’s because, as shown below, the fund has been forming a rising wedge chart pattern, which is a popular bearish reversal sign.

This pattern is made up of two ascending trendlines that seem to be converging. The lower line connects all lower lows since August, while the upper one connects the higher highs.

In most periods, a rising wedge pattern results in a strong bearish breakdown, especially when the two lines near their confluence level.

There are other signs that the SPDR S&P 500 ETF will suffer a harsh reversal. For example, the MACD indicator has remained above the zero line but it is moving sideways, a sign of a bearish divergence.

The Relative Strength Index (RSI) indicator has also moved sideways below the overbought level. Also, the stock was trading at the strong pivot release of the Murrey Math Lines indicator.

Therefore, there is a likelihood that the S&P 500 index will suffer a harsh reversal, probably in 2025. If this happens, it will likely drop to the bottom of the trading range at $545.

On the flip side, a move above the key resistance level at $640 will point to more gains, possibly to the extreme overshoot level of $656.

Catalysts for an S&P 500 index reversal 

There are a few potential catalysts for a bearish reversal of the SPDR S&P 500 ETF.

First, Donald Trump has vowed to be tough on trade and has already threatened to impose tariffs on imports to the United States from its key trading partners like China, Mexico, and Canada. If he goes ahead with these plans, there are rising odds that he will trigger a trade war that will impact most companies in the S&P 500 index like NVIDIA and Walmart.

Second, Trump has also vowed to be tough in China, the second biggest economy in the world. He could do that by imposing tariffs and trade restrictions as he did in the last term. These actions could hurt more American companies that do a lot of business in the country.

Third, there are concerns about the valuation of American companies, which could trigger a reset. The forward one-year PE ratio for the S&P 500 index is 22, higher than the five-year moving average of 19 and higher than the ten-year average of 18.

Additionally, the fiscal state of the US economy is major risk as public debt has now surged to over $36 trillion. Analysts expect that the figure will be over $40 trillion in the next few years. Worse, Trump has vowed to cut more taxes, a move that will lead to more deficits over time.

To be clear: a drop in the SPY ETF stock will be brief as it has done in the past decades. Historically, the index drops and then bounces back. We saw that during the COVID-19 years, the Global Financial Crisis, and the dot com bubble.

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Dollar Tree (DLTR) stock price has collapsed and is hovering at its lowest level since May 2020. It has plunged by about 60% from its highest level in 2022, bringing its market cap from over $47 billion to about $16 billion. 

Dollar stores are in trouble

The Dollar Tree stock collapse happened in sync with other discount stores like Dollar General and Five Below. Dollar General shares have crashed by about 70% from its all-time high, while Five Below is down by 58% from its record high.

These companies have crashed because of the ongoing rotation from discount stores to larger names like Amazon and Walmart. A key benefit that these firms have is their subscription services like Amazon Prime and Walmart+.

The two subscriptions give customers more value. For example, Walmart+ offers users free delivery, video streaming access to Paramount+ and Pluto TV, and Burger King savings. Amazon Prime also offers fast and free delivery and access to Amazon Prime.

Walmart and Amazon also offer fairly cheap products, which explains why their retail sales have done well in the past few months. 

Dollar Tree, which also owns Family Dollar, is also seeing a substantial increase in business costs. The firm has been forced to increase wages to meet the minimum wage. 

Therefore, while its top-line growth has been strong, its bottom line has struggled. Its annual revenue has jumped from over $23 billion in 2019 to over $30.5 billion in the last financial year. 

However, the net profit has moved from over $1.6 billion in 2022 to a loss of $998 million in 2023. Its net loss rose to over $1 billion in the trailing twelve months. 

Read more: Why are Dollar Tree and Dollar General stocks falling apart?

DLTR earnings ahead

The Dollar Tree stock price will be in the spotlight this week as it delivers its earnings on Wednesday. These results will provide more information about its progress and whether the management was still considering separating the two businesses.

The most recent results showed that the Dollar Tree business remained under intense pressure as customer traffic continued falling. Its same-store net sales at Dollar Tree was 1.3%, while in Family Dollar it dropped to 0.1%.

Its sales rose by 0.7% to $7.3 billion, while its gross profit rose 3.7% to $2.2 billion. Altogether, its operating income fell by almost 30%, while the net income fell to $132 million.

Analysts expect Dollar Tree’s results to show that its revenue rose by 1.75% to $7.4 billion. The guidance for the next quarter will be $8.2 billion, a 4.6% annual decline. For the year, Dollar Tree is expected to make $30.7 billion.

To a large extent, Dollar Tree’s main problem is not its top-line, but its costs. Also, there are concerns that Family Dollar, which it acquired for over $9 billion, is not living up to expectations. 

Analysts have largely turned bearish on the Dollar Tree stock. Keybanc recently downgraded the stock from overweight to sector weight, while Telsey Advisory Group slashed it from outperform to market perform.

The average Dollar Tree stock price forecast is $82.25, higher than the current $72.81, implying a 15% increase from the current level.

Dollar Tree stock price analysis

DLTR chart by TradingView

The weekly chart shows that the DLTR share price has been in a strong downtrend in the past few months. It has retreated from $176.63 in April 2022 to below $80 today. 

The stock moved slightly below the key resistance level at $102.85, its lowest swing on September 25. It has moved below the 50-week and 200-week moving averages, which formed a bearish crossover pattern. 

The MACD and the Relative Strength Index (RSI) have all continued falling. Therefore, the stock may continue falling as sellers target the next key support at $60. However, a move above the key resistance at $80 will invalidate the bearish view.

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Microchip stock price remains in a strong bear market after falling by almost 30% from its highest level this year. MCHP share was trading at $70.3, up by about 13% above the lowest point this year.

Microchip stock price is at risk

The weekly chart shows that the MCHP share price has been in a strong bearish trend in the past few months. This happened as the company went through a rough patch as sales growth faded. 

The stock’s bearish breakout happened after it formed a rising and broadening wedge chart pattern. In most periods, this is one of the most bearish signs in the market.

MCHP has moved below the lower sides of the wedge pattern. It has also dropped below the 50-day and 200-day Exponential Moving Averages (EMA), meaning that bears are in control for now. 

The Relative Strength Index (RSI) and the MACD indicators have continued falling, a sign that bears are in control for now. Therefore, there are odds that the Microchip share price will continue falling as sellers target the key support at $52.2, its lowest level since July 2022 and about 26% below the current level.

Read more: Microchip stock rises ahead of earnings: inventories will be key

The stop-loss of this trade is at $80, which also coincides with the 50-week moving average. If this happens, the MCHP stock will jump to the next key resistance point at $100.

MCHP chart by TradingView

Microchip’s business is facing major headwinds

The recent Microchip share price retreat happened as the company continued to face major headwinds as its business slows. 

Its results released on Monday showed that revenue in the second quarter dropped by 6.2%  to $1.16 billion. It dropped by a whopping 48.4% from the same period last year, a sign that demand has evaporated. 

MicroChip expects that its business will continue weakening in the next few quarters. It expects that its revenue will be about $1.02 billion, lower than the average estimate of $1.06 billion. If these numbers are accurate, they will be about 40% lower than what it made in the same period a year ago. 

MicroChip’s gross margins are expected to come in at 57%, lower than the previous 59.5%. Also, the operating expenses are expected to move up to 33.2%.

Analysts believe that its profitability will be much lower. The average estimate of its earnings per share is $0.3, lower than the previous quarter’s $1.08. For the year, the EPS will drop to $1.63 from the previous $4.92.

The management is taking action to deal with the ongoing slump. In one of the most important measures, the company announced that it was closing its Arizona plant, a move that will affect about 500 workers. 

The company cited the weak demand for its products and the fact that it had substantial inventories. It now expects to start reducing these orders in the next few months. 

Still, analysts are relatively bullish on the MCHP stock price. Some of the most bullish analysts are from companies like Citigroup, Jefferies, TD Cowen, Evercore ISI, and Susquehanna. Some of these companies could start to downgrade the stock after the new developments. 

The average estimate for the Microchip Technologies share price is $84.98, up by about 20% above the current level. 

Still, MicroChip has done fairly well in the past few years. It has generated over $12.6 billion adjusted free cash flow since 2019. It has paid over $6.4 billion in debt, reducing its debt in 21 of the last 25 quarters. The company has also paid dividends worth $3.7 billion and repurchased shares worth $2.4 billion. 

Still, there is a risk that Microchip’s dividend could be at risk after it grew it for 22 years and has a dividend yield of 2.67%. 

Read more: Microchip (MCHP) stock: rating downgrade as a double top forms

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Stellar Lumens (XLM) price rally has stalled recently as it took a breather following a near 500% short squeeze. The XLM token was trading at $0.5290 on Tuesday morning, a few points below the year-to-date high of $0.6370. It has surged by 630% from its lowest point this year.

Why did Stellar Lumens price short squeeze?

Stellar and Ripple are often grouped together in the crypto industry since they were all formed to disrupt the payments industry.

Ripple’s goal was to have companies like banks and money transfer firms embrace its RippleNet technology. In this, these firms would use its infrastructure, including the XRP token to facilitate trade. 

Stellar, on the other hand, created technology that can be used by these firms to power their payment networks. Its most important partnership has been with Circle, the creator of USD Coin, the second-biggest stablecoin in the industry.

It has also inked a deal with MoneyGram, a leading player in the payment industry. That partnership ensures that users can send and receive USDC in thousands of locations globally. This is a big partnership that will drive growth over time because it is at the intersection of blockchain and fiat.

The Stellar Lumens price has also had a short squeeze because of the rising amount of money in its blockchain. Data shows that the network’s total value locked (TVL) has jumped to over $60 million.

A $60 million TVL is much lower than that found in other newer chains like Sui and Base. However, it is worth noting that Stellar’s layer-1 network known as Soroban was launched a few months ago. 

The biggest players in Stellar’s network are players like LumenSwap, Blend, Aquarius Stellar, and FxDAO. 

Notably, Stellar has become a big name in the Real World Asset (RWA) tokenization industry. Its biggest partnership has been with Franklin Templeton, a large asset manager with over $1.5 trillion in assets.

Franklin now uses Stellar’s blockchain to power the Franklin OnChain US Government Money Fund (FOBXX) which has attracted over $400 million in assets. There are signs that assets in this money market fund are increasing even with US interest rates falling. 

Stellar Lumens has also soared as hopes that institutional investors will buy it soon jumped. Canary, a top financial services company, has already filed for a spot Stellar ETF.

Meanwhile, the recent Donald Trump victory has made Stellar and Ripple more attractive to investors. That’s primarily because Ripple has gone through a rough patch with the SEC in the past few years.

XLM price forecast

Stellar price chart | source: TradingView

The weekly chart shows that the XLM token bottomed at $0.0760, where it formed a double-bottom pattern. It has moved above the key resistance point at $0.1945, its highest swing in July 2023. That was an important level since it happened after Ripple won a major lawsuit against the SEC.

Stellar Lumens price has now jumped to the strong pivot reverse point at $0.5860. It has also rallied to the 38.2% Fibonacci Retracement level.

Also, the Stellar price has moved above the 50-week and 100-week Exponential Moving Average (EMA). Also, the coin is showing signs of forming a bullish pennant pattern. This pattern is made up of a long vertical line and a triangle pattern.

Stellar’s Relative Strength Index (RSI) and the MACD indicators have pointed upward. Therefore, there is a likelihood that the Stellar lumens will have a strong bullish breakout in the coming days. If this happens, the next point to watch will be at $0.9765, the extreme overshoot point. This price is about 85% above the current level. 

On the flip side, a drop below the key support at $0.4400, its highest point in November 2021 will point to more downside.

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Nio stock HK stock price has been under intense pressure in the past few months as concerns about its business and the EV industry remained. It initially surged to H$74.15 in January this year and then plunged to $29.15 in April and August, forming a double-bottom chart pattern. 

Nio shares then bounced back to $60 in September and has now imploded by about 42% to the current $35.50. The same trend has happened in Singapore and the United States, where Nio shares are traded.

Nio stock price analysis: the contrarian case

Turning to the daily chart, we see that the Nio share price has been in a strong bearish trend in the past few months. 

This decline is mostly because of the general weakness of most Chinese EV companies as growth slows.

Nio stock HK has also dropped below the 50-day and 100-day Exponential Moving Averages (EMA). The two lines have formed a bearish crossover pattern.

Notably, it has formed a falling wedge pattern shown in green. This pattern is made up of a series of higher lows and lower lows. In this case, the stock has formed two downward trendlines that are converging. A falling wedge is one of the most bullish reversal patterns in the market.

Nio share price HK is forming a triple-bottom chart pattern, a popular bullish sign. This pattern happens when an asset fails to drop below a key level three times. In most periods, it often leads to more gains. 

Therefore, the stock will likely stage a strong comeback in the next few months. If this happens, the next point to watch will be at $60.60, the neckline of the triple-bottom pattern. This implies a 70% above the current level. 

A break above that level will point to more gains, with the next level to watch being at $76.30, the 50% retracement point, which is 115% above the current level. This price is also a few points above $74.15, its highest swing in December last year.

On the flip side, a drop below the key support at $29.15, the triple-bottom point, will signal more downside. 

NIO chart by TradingView

Nio’s business is showing signs of resilience

There are signs that Nio’s business is doing well even as China’s EV business goes through major headwinds. 

Its numbers released on Sunday showed that Nio delivered 20,575 vehicles in November, a 28% increase from the same period last year. These deliveries included 15,493 Nio vehicles and 5,082 ONVO. 

These numbers are notable since the ONVO brand was launched a few months ago. Nio hopes to deliver between 72k and 75k units this year.

The financial results showed that Nio’s total revenue came in at RMB 18.67 billion in the last quarter, a 2.1% YoY decline. These numbers were a bit higher than the RMB 17.4 billion it made in the second quarter. 

Nio’s net loss rose slightly to CNY 5.0 billion. The company hopes that it will become profitable in the coming years. Most importantly, its balance sheet has improved after raising RMB 3.3 billion from Hefei Jianheng New Energy Automobile. It ended the last quarter with about $6 billion in cash and short-term investments.

In addition to its strong balance sheet, there are signs that the Nio stock price is undervalued. It has a forward EV-to-sales ratio of 1.02, lower than the sector median of 1.34. Its forward price-to-sales was 0.9, lower than other EV companies like Rivian and XPeng. 

Read more: Nio stock price could enter beast mode, thanks to these catalysts

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