The Magnificent Seven ETF is teetering. What the charts say will happen next
What are the odds that the Roundhill Magnificent Seven ETF (MAGS) ETF can reclaim its leadership status? While its holdings certainly haven’t been forgotten about over the last few weeks, the majority of them haven’t made much headway. Like most areas, MAGS had a huge response around the election: from Tuesday, Nov. 5 through Monday, Nov. 6, it ripped higher by 9.8%. That was the best 5-day move of its entire, albeit young, history. While the sample size is understandably small, we’ve seen a handful of big five-day runs before. Specifically, there have been five prior five-day moves of at least seven percent since the ETF’s inception in April’23. Three times, this led to additional near-term gains (November ’23, February ’24 and late-September ’24). Twice, it marked a short-term trading top (July ’24 and August ’24). Needless to say, buy interest eventually returned after both of those periods, but the immediate risk-reward wasn’t the best. This also was the third time that MAGS has gained at least 7% over five days while making a new all-time high. It last happened in February and July’24. As just discussed, the ensuing price action was completely different after those two occasions. Testing a key chart pattern Fast forward to the current trading environment, and MAGS has yet to prove it can leverage the last (and biggest) 5-day burst. Since Nov. 11, the ETF is down 10 of 12 days (including Wednesday’s action), and it has endured four declines of at least 1%. Again, that’s not bullish price action, and while MAGS has yet to break below any key support levels, it’s close. A hold soon would keep the ETF within the pictured potential bullish pennant formation. This is important, given that MAGS has proven it can take advantage of short-term bullish trade set ups recently. It did so twice prior in September and October. The components So, how can MAGS right the ship and potentially break out to new highs again? Well, we have seven places to look for guidance – its seven monstrous holdings. Below are daily relative charts vs. MAGS for each component. As we can tell, the charts have been all over the map lately. First, the leaders: TSLA’s recent spike prompted a parabolic move vs. MAGS, too. It’s destined to slow down. In fact, NVDA’s relative burst this past June looks very similar to what TSLA just did. NVDA/MAGS has been wildly zigzagging since then and now it is testing a key uptrend line from the April lows. Seeing TSLA/MAGS undergo something like that in the near term wouldn’t be too surprising. AAPL, MSFT, META and GOOGL have been clear underperformers vs. MAGS for months now. AAPL/MAGS has done the best recently and is up a good amount from its relative lows. MSFT/MAGS really stands out (for the wrong reasons) given its persistent downtrend since last spring. The only one that has matched MAGS since the summer has been AMZN, as the flat relative line depicts. The bottom line is that MAGS needs the support of most of its components to maintain its buoyant nature. With NVDA teetering and TSLA still short-term extended, the other five will need to do a better job going forward. If we see the necessary rotation among the behemoths play out, then MAGS’s latest potential bullish pattern can work. If not, well, the space will need to regroup once more. DISCLOSURES: (Long MAGS ETF) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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