The Market
We got a relatively quiet day in that we backed and filled. So it surprised me that, for the second day in a row, the put/call ratio for ETFs was under 100%. Folks were leaning bearishly on Monday, but Tuesday and Wednesday they threw in the towel and decided to be bullish.
Recall that back in mid-March we saw three straight days with this put/call ratio under 100% before the market fell. So let me point out that we are not yet maximum overbought, but we will be by the middle of next week.
Much of the action in the market will obviously hinge on what comes out of the earnings for big technology stocks tomorrow evening after the close. The timing is curious because Friday is the final day of the month.
Away from that, breadth held steady again today so there was very little change in the breadth indicators. The chart to focus on now is that of the transports. They have been red for two days. Today's decline was quite steep and very few seemed to care. For my part, I see a gap to be filled on the iShares Transportation Average ETF (IYT) near $165, so if the IYT cannot bounce from that level there will be a strong message in that (not a bullish one).
New Ideas
One of the key charts to watch in the transports is Kansas City Southern (KSU) , which got whacked today on news that President Trump would love to repeal NAFTA. If KSU holds $85, then the transports should hold as well.
Down below, you will see I was asked about Charles Schwab (SCHW) and I then commented on TD Ameritrade (AMTD:Nasdaq). But I would also highlight in that group Interactive Brokers (IBKR:Nasdaq), which we looked at in early April noting that the price was right but timing might be early. Take a look at it now, as it kisses the downtrend line and looks over at that short-term resistance at $35.50. I still think it's a decent price down here, but it might still take a while for it to develop.
Today's Indicator
The Volume Indicator never got as oversold as I would like. It sits at 49%, back to neutral.
Q&A
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I don't love the chart of Charles Schwab (SCHW:Nasdaq) here because of the resistance right overhead around $41. But the stock did meet the downside target (we looked at it near the highs and were unimpressed at the time) so perhaps pullbacks toward $39- ish would make the chart more interesting.
In the discount broker group, TD Ameritrade (AMTD:Nasdaq) looks a bit more interesting because it is down and should find support at $37 to $38, but it is bottom-fishing.
Cheesecake Factory (CAKE:Nasdaq) broke out to a new high (barely) and has a measured target near $68. I believe earnings are next week so be on the lookout.
When we last looked at iShares China Large-Cap ETF (FXI), I wanted to buy a pullback in the $37 to $38 area, and it did come down there a week ago. I realize the chart looks like a small head-and-shoulders top, but as long as $37.50 to $38 holds, I think the chart should be OK, it just might take a while for it to work.
