Has Anything Changed in the Last 2 Weeks? Yes and No, But Here's What's Key Now
Let's review what's been happening while I've been gone, including with breadth, tech, sentiment and bonds -- and where we stand now. Plus, a bunch of follow-ups.
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The Market
I have been away for nearly two weeks and not much has changed! Oh I suppose the S&P 500 is up just shy of 1% since I left, which is a change, but as best I can tell we had a few big down days that had no follow through because we rallied immediately back. It’s a bit like the last scene in the movie Carrie where just when you think she is dead, her hand comes out from the grave to grab you.
But now we’ve had reversal on Friday that has captured some attention. The bulls think it will be another replay of that last scene from Carrie while the bears think it’s a bit like Caesar and we should beware of the Ides of March.
The biggest change I see is that bonds rallied (finally!) and so the non-big cap stocks were able to rally. And gold was able to soar while energy chugged upward with banks following along. The only place there was anything dynamic was of course AI and even that has gotten quite selective.
Notice I did not say "tech" because there have been plenty of hazards in tech-land. Software can’t get out of its own way. Palo Alto Networks PANW, which collapsed a month ago, rallied and came back down (what it is supposed to do).
Breadth is fine but not dynamic. The number of stocks making new highs continues to lag. In fact, down below you will see the Nasdaq’s new highs are once again contracting. That leaves the indicators about where they have been. The one big change is that the Volume Indicator, which was at 47% in mid-to-late February is now at 54% so it is no longer oversold.
Sentiment is a wee bit more bullish. The Investors Intelligence bulls are at 59.4%, which is the highest we have seen since 2021. The Citi Panic/Euphoria Model is at 0.34. They consider it "Euphoria" when we get to 0.41.
The key is if we can get any follow-through selling and if support holds on such a selloff. The QQQs had the highest volume since the October lows. My view has often been that high-volume declines in the QQQs typically mean another rally. But I honestly don’t know what it means when we get such high volume on a reversal where the selling was concentrated in the index movers (breadth was flat on Friday).
I think the key now is if support areas hold on any selloff. We’ll call the Invesco QQQ Trust QQQ area $430-432 for now.
New Ideas
I’m going to do a few follow-ups here today.
Advanced Micro Devices AMD, which I recommended at $160-ish and complained hadn’t budged, finally did something while I was gone. That reversal on Friday looks precarious but my guess is we see some corrective action and then another rally. However, that spike high is going to be trouble on any re-rally so I'd be inclined to take some profits here and then hang on to the rest.
iShares 20+ Year Treasury Bond ETF TLT had a nice rally while I was gone. I also think there is a bit more to go here but I had said the initial target was $96 so I’d sell just a little here. I’d be a buyer near $94 again.
Pfizer PFE had a down-and-back-up move in my absence but that down came on volume and looks like an island. The stock still needs to push over $28 to get any traction and now I’d probably want to stop myself out under $25.50-ish.
It took almost a month for SPDR S&P Metals and Mining ETF XME to move. Friday’s reversal is a bit concerning but I still think XME should move higher so I’m not ready to give up on it.
Today’s Indicator
The new highs are discussed above.
Q&A/Reader’s Feedback
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SPDR Gold Shares GLD had a massive move and breakout. It measures to the $210 area. The DSI is 83 so it is getting stretched. I will report if/when it gets to 90.
Dover Corp. DOV has a measured target in the mid-$170s so it is getting close to the target. It could use a correction from the huge move it has had but for now that’s the worst I can say about it.
L3Harris Technologies LHX has a next measured target around $220 and a longer-term one around $240. I would prefer to see it stay over $208-ish so it doesn’t give back what it has gained in March.
