A $60 Million Meme Coin Explains Why Breadth Stinks
The money that is going into stocks is being very selective.
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I will start with an update on the Utes because that seemed to be a topic folks were curious about yesterday. Despite being red for another day, the Utes have not yet broken 1000. For now, they hold on, like a person hanging on the ledge of a building.
That is the same with the Industrials XLI, the Transports, and the banks. But the chart that drew my attention the most was that of PulteGroup PHM. In fact almost all the homebuilders took a real hit on Wednesday.
While the volume was not excessive, it was the highest volume in five weeks. Was someone finally tired of the drip, drip, drip and said, get me out? Or is this just a pick-up in tax loss selling? I don’t have the answer, but I can tell you that despite the move in interest rates (up) this week, the Homies have acted pretty poorly for nearly six months now. There is support at 120 on PHM, but you probably don’t need me to point out that this looks like a head-and-shoulders top.
Maybe this is why all those economically sensitive groups noted above are leaking since December. Something is shifting.
It’s been a few weeks since I have railed on about all the speculation in Bitcoin and crypto so allow me to do so again today. I saw where the man who allegedly killed the UnitedHealth executive, Luigi Mangione, has a meme coin named after him (I think that’s the proper terminology) and it hit $60 million in market cap on Wednesday morning.
If you are wondering why the breadth of the market is so poor, I have a theory. All the money that would typically be going into stocks to lift breadth, even if it is speculative money, looks like it is going into crypto garbage. Yes, it is still speculation, but it is not in stocks.
The money that is going into stocks is being very selective again as it plows into the index movers and little else. That is why on a day the S&P tacks on 50 points net breadth on the NYSE is +180. Of course, that is the best breadth day since last Wednesday when breadth was +50. And upside volume was 48% of the total volume on the NYSE Wednesday. Not exactly the type of statistics you want to see if you are looking for broadening.
I still think the others can rally as we get closer to Christmas, but the more I see of this underlying weakness, the more I think the market is going to need a much bigger correction in early 2025.
