Technical traders live by the chart. Fundamental investors live by the numbers. But when both tell the same story, when technical structures mirror improving business reality it is a signal that’s more than just promising. It’s a high conviction trade.
When fundamentals and technicals align, it points to setups with real commitment behind them. It usually signals that institutions and big commercial players are on board with the trade. In this article, I will walk through a few real-world examples of such trades that led to outsized moves in the market.
Microsoft (MSFT) – The Covid and cloud-fueled Expansion (2020–2021)
Like it or hate it. Microsoft gained enormously during and after the pandemic. The company was of course already a giant, but its Azure business hit escape velocity during and after COVID. Cloud adoption accelerated, and enterprise customers deepened integration with the MSFT ecosystem.
Technicals
Microsoft broke out of a multi-month base, in mid-2020. It had a strong uptrend before the breakout, with higher highs and lower lows. RSI remained bullish before the breakout. The weekly RSI held above 37 during the entire base formation, which is quite rare.
The image below shows how Microsoft kept exploding upwards after the breakout for an extended time period. This is quite typical when the RSI has held above the 35 level on the weekly during the base leading up to the breakout.
In the image above, the first arrow points to the breakout, and the second arrow points to the first major high, which was followed by a pullback. Notice how this first high is followed by a sloping 10-week moving average and then followed by a crossover down of the 30-week moving average over the 10-week moving average a few weeks later. A classic sell signal.
The third arrow points to a second breakout, which comes at the end of 2023, after a classic cup and handle pattern. Notice how the breakout happens above a rising 10- and 30-week moving average.
Stage analysis
The charts above display classical technical trade signals based on Stage analysis, popularised by renowned technical trader Stan Weinstein which I have written about here. An interesting takeaway from the charts is that the 30-week moving average never started to slope during the base formation in 2020. This is a very bullish sign. Instead, the first sell signal came first toward the end of 2021, when the 30-week moving average started to slope and the 10-week moving average made a crossover downward.
Fundamentals
Microsoft’s business model is built on recurring revenue from Office 365, Azure, LinkedIn, Teams, Dynamics and XBox. As digital transformation accelerated in the beginning of COVID, enterprise demand for cloud, video games, and collaboration tools surged, and so did Microsoft’s free cash flow. It rose from 39 billion in 2019 to over 56 billion in 2021. This was not hype, it was cash in the bank.
Why It Worked:
The story matched the structure. Fundamentals showed that Microsoft was compounding its free cash flow and increasing its profitability rapidly. Return on invested capital was close to 20 percent, often exceeding it during the last years before the breakout, signaling high capital efficiency, and the operating margins expanded significantly. The chart showed enormous relative strength, classical buy signals, and a beautiful setup. That dual confirmation preceded a near +50% run in less than over a year.
2. Nvidia (NVDA) – From AI Narrative to Revenue (Early 2023)
AI mania has not been all hype, but has had real earnings impact for a few companies. Nvidia is one of them. Nvidia posted record data center revenue as demand for GPUs exploded in 2023. The pivot to AI infrastructure (data centers, model training, LLM inference) went mainstream in 2023. Companies like Microsoft, Meta, Amazon, and Tesla were no longer exploring AI. They were investing billions.
Fundamentals
Even though Meta and Amazon were developing in-house chips they still bought most of them from Nvidia. A near monopoly in the GPU market and increased demand, especially for new data centers and AI infrastructure like Chat GPT, made Nvidia’s Free Cash Flow (FCF) explode, from 27 billion in 2023 to over 61 billion by 2024. A 125% increase.
Most of Nvidia’s fixed cost base was already in place, so each dollar of new GPU sales had a high marginal profit. As a result, net margins exceeded 50% in some quarters, which made it one of the most profitable hardware businesses in history.
Nvidia’s ROIC went ballistic
Margins improved even as R&D spending rose, because the volume of business was overwhelming the costs. Return on invested capital went from a quite acceptable level at around 15% per year to soaring above 50% in 2024, and above 70% for the first quarter of 2025. This is extremely rare even for capital-light businesses. When I write this, in the first half of 2025, NVIDIA is generating 0.75 of profit for every one dollar invested into its operations. An ROIC of 75%.
Technicals
Notice how NVIDIA’s RSI gets support above the 40 level on the weekly RSI during the pullback in the beginning of 2023, which is typical for RSI uptrends, which I have written about earlier here. This support coincides with a bullish crossover when the wma-10 crosses above the wma-30. The breakout on the weekly chart then comes a few months later in may 2023:
The chart above shows a rising RSI leading up to the breakout. In the weeks and months preceding the breakout, RSI kept above 70. Cementing the probability of a coming breakout.
When Fundamentals and Technicals Align in a long base
A saying on Wall Street is “the longer the base the higher in space”. If the base is long, the subsequent upside move tends to be big as well. This proved to be true in Nvidia’s case, since the stock has quadrupled in price after the breakout.
Why It Worked
Fundamentals and technicals were in absolute lockstep. The chart showed that big funds were stepping in. The fundamentals showed why. That’s the kind of alignment where conviction isn’t theoretical. It’s mathematical.
3. Gold (XAU/USD) – Macro Meets Momentum: Gold’s Structural Breakout in Late 2023
Gold began to break out after consolidating for nearly three years and eventually broke out in late 2023. Furthermore, on an even bigger timescale, it had been building a gigantic base starting as early as 2011. Therefore, when it finally broke out, it did so on multiple timeframes. Leading up to the breakout, global debt loads, central bank buying, and geopolitical stress had resurfaced, and gold subsequently exploded out of its gigantic base at the end of 2023.
Fundamentals
Central banks around the world, particularly in emerging markets such as China, Russia, and Turkey, started to aggressively accumulate gold as a hedge against the declining credibility of fiat currencies and to reduce reliance on the U.S. dollar, especially after 2010. This buying has had a sharp acceleration post 2018. According to the World Gold Council, central banks have been net buyers of gold for over a decade, when I write this in 2025.
De-dollarization
De-dollarization efforts across various nations and trade blocs continued to gain momentum, starting in the early 2000s, weakening the demand for the U.S. Dollar, and amplifying the inflationary pressure on it. Furthermore, real interest rates went negative in many countries during the last two decades, which further has increased the global money supply.
The money printing bonanza of the last three decades
Since the early 2000s, there has been an unprecedented era of money printing going on at the Central banks. Historically, following the internet bubble and the 9/11 attacks, Central banks began to print money aggressively, laying the base for a debt-fueled expansion and coming inflation in asset prices for the next decades to come.
The 2008 crisis triggered the launch of the so called “QE-programs”, which in practice are basically money printing. Much of this liquidity is theoretically supposed to stay within the financial system, but it usually never does, as seen in the elevation of asset prices and inflation following Covid.
Safe haven
Through this inflation chaos, gold has once again re-emerged as the supreme safe haven and exploded in price for the last few years. Furthermore, over a very long time, it has held its purchasing value. For example, an expensive suit costs about the same today as it did back in ancient Rome, and history is full of financial storms where gold has served its purpose as a safe haven, which I have written about here.
When Fundamentals and Technicals Align
Gold broke out decisively above the long-standing resistance at the 2050 level at the end of 2023 and beginning of 2024, completing a multi-year consolidation pattern and over a decade long base. Momentum confirmed the move on the weekly chart. Furthermore, the Relative Strength Index (RSI) held above 60 leading up to the breakout. The 30-week moving average and the 10-week moving average were both pointing up during the breakout, which reflects a healthy trend. The technical structure aligned perfectly with the macro backdrop.
Why it worked
The confluence of long-term sovereign debt increases, de-dollarization, money printing, and geopolitical fragmentation created a powerful foundation for gold as a safe haven. Gold had fundamental tailwinds, which led to a textbook technical breakout of when fundamentals and technicals align.
Final Thoughts: The Alignment Filter
Conviction doesn’t just need charts or cash flows, it is in need of both. In a world where narratives can mislead and charts can lie, alignment is the edge. If there is a list of stocks with rising free cash flow, high ROIC and clean balance sheets paired with bullish charts, it is not prediction, it is confirmation. It is a high conviction trade.
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