At Least Readers Are Buoyant

The Market

The market seems as though it is on a one-way trip higher with no pullbacks, no dips, nothing to ever stop its upward path. And that is simply not the kind of market in which I do well. We did well off the lows five weeks ago where there were stocks to buy, but now I see stocks that are up too much and mostly feel like we’d be chasing.

That doesn’t mean they must reverse back down. Indeed, if you viewed my Twitter poll today, you would see that there were more than 1,000 responses and the spread was essentially 60-40 in favor of a market that closes over 2100 at year-end. That tells me the majority are now looking for us to continue romping upward into the end of 2015.

I can tell you that the McClellan Summation Index has not yet rolled over. It remains on an upward path. It now will take a net differential of -1700 advancers minus decliners to turn it back down (chart is shown below in Today's Indicator), so it is back to having a cushion once again.

The 10-day moving average of the put/call ratio has not turned back up, so that, too, is in the camp for the bulls. The one indicator that did change today is the 21-day moving average of the ISE ratio. It had its first tick down since it started upward.

Keep in mind this indicator rarely works in concert with the market; it often turns down in advance while the index keeps heading higher. But it is noteworthy that it has had its first tick lower today and has done so from a lofty level.

On the negative side, the Transports continue unable to get out of their own way. Heck, I thought FedEx (FDX) had a chance at beating the recent high when we looked at it again last week, and it too stalled out right at that level. The SOX and Bank Index are still below the recent highs. I am less concerned about the Bank Index than I am with the SOX. I really thought the SOX would lift more as the rally wore on, but it has not done so.

The real action came in the oil stocks. Last week I thought Energy Select Sector SPDR ETF (XLE) might break down. It did, but it did not go as far as I thought and instead broke and rallied and now has scurried to higher highs. There is one target here near $73 and another near $76.

I continue to think we should pullback in mid-November.

New Ideas

I was asked about buying ProShares Ultra VIX Short-Term Futures (UVXY), an ETF, to play the VIX. As you know, this is not the kind of thing I tend to like except for a very quick trade. I think these ETFs are in a long-term downtrend, so if you don’t catch them perfectly you are likely to be a loser. For UVXY, $25 has been support for quite some time now, dating back to the early August time frame. I’d use that as a stop, with the potential for a rally to $28 or maybe $30. But again, these are day trades, so the timing must be perfect

Elsewhere, if United Technologies (UTX) can get over this $101 area, it would complete a head- and-shoulders bottom of sorts that could fill the gap up near $107.

Today’s Indicator

The McClellan Summation Index is discussed in full above.

Q&A

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Chipotle Mexican Grill (CMG) broke down from an island top, which is usually quite bearish for an extended period of time, but it has reached its downside target of $620. I suspect within three days it fills the gap to $640 and then we’ll see if this turns out to be the head of a head -and-shoulders bottom. But in general, I am not a fan of catching falling knives such as this.

Kellogg (K) has been one of my picks in the defensive space, with an upside target of $73-ish. It did not have a good day today, but it also hasn’t broken that uptrend line. I don’t love the chart anymore. but until it breaks that line, the uptrend is intact.

Wendy’s (WEN) has a little base that measures to $10, so I suppose even though it wasn’t up today, as long as it stays over $9.25 it still has a chance at tagging that target area.