Down Day Brings Nvidia Bulls Out of the Woodwork
There was a lot of slipping in many stocks Wednesday. Here's what has changed, what hasn't, and what may be about to.
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The Market
Did folks get bearish Wednesday? If I had to categorize it I would say there was a small nudge toward bearishness from the rampant bullishness we saw. Wednesday’s action wasn’t really panicky although at one point we did see 89% of the volume on the downside (we ended the day with 82% down volume).
What Wednesday did was deteriorate some more charts. Last week (and the week before) we looked at stocks such as Visa V, McDonald's MCD, Home Depot HD, CSX CSX, and Adobe ADBE and none of those charts improved. In fact, the best I can say is that Visa did not make a lower low Wednesday and McDonald’s feels like it finally had an up day and is oversold enough to rally.
What Wednesday did was bring the Nvidia NVDA bulls out of the woodwork. They had been pretty quiet in the last few weeks but once it had that oversold bounce (see Tuesday's night’s missive) the bulls were out in force.
So the reality is that very little changed Wednesday. For example, the S&P 500 did not break the line. It’s *this* close to doing so but I still believe that until we break it with some vigor folks will continue the complacency.
In addition, the Nasdaq Composite did not break 16,000
However, the DJIA, having broken last week continued its break this week. The QQQs did not continue breaking but they have still not recaptured the line they broke last week. And now the IWM has broken.
Oh sure, there is support at $200 but if there is a rally to $205-ish I’d sell it.
The SOX continues to hover at that 4800 and therefore has not broken the line yet either.
There is just a lot of slipping in many stocks, but I continue to think unless/until that S&P and/or Nasdaq line is broken the complacency will be with us.
A word on bonds. I have a measured target now on TLT around $88. That line comes in around $89 so we should bounce from it but the breakdown measures to around $88-ish.
Finally, not much was made of it Wednesday, but the USD JPY broke over that 152 area I highlighted a week or so ago. I suspect some time in the next few weeks there will be non-stop chatter about this, especially since the DSI for the yen slipped to 8 Wednesday.
New Ideas
Add Uber UBER to the list of stocks that have broken an uptrend line and just sit there (see the list above). Any further slippage and we should see this stock fill the gap to $68-70.
Today’s Indicator
The Volume Indicator is at 53% so it’s come off the boil but it is still overbought.
Q&A/Reader’s Feedback
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Baidu BIDU hasn’t made a higher high since last summer. Look how each rally is to a lower high. Unless/until that changes, that appears to be the trend.
I am not a big fan of anything consumer related these days but if Etsy ETSY can hold here and then cross that downtrend line, that would be bullish. I would definitely use a stop under that $65 area. It’s a decent risk/reward here.
On Holding ONON is a consumer-related stock but it hasn’t broken $31 yet. If it does, then that line down below near $28-29 is what I’d look for.
Lululemon Athletica LULU has broken down badly. If it fills the gap around $330-335 it would be worth a buy as a trade.
Zscaler ZS has a measured target on the downside around $170-ish, which is also where there is support. It should bounce from there.
