How Would You 'Rate' Today?
The Market
So we got some volatility. For now, the selloff seems to be pretty standard fare and not terribly concerning.
For example, the breadth was not even negative by 200 issues on the New York Stock Exchange. Nasdaq saw more upside than downside volume. But keep in mind that it takes more than one poor day to reverse the indicators. It takes several days of poor market internals to roll the indicators over. Therefore, there is still no change in the indicators.
I would note that the McClellan Summation Index is shown below and it would still need a net differential of net negative 1,100 issues (advancers minus decliners on the NYSE) to halt the rise. That means we need to see some poor breadth readings for that to happen.
We are still overbought and sentiment is still too complacent, although today helped tame some of the complacency.
The group I want to focus on now is the transports. I noted a few days ago that they had achieved their upside target and I did not like that spike up that was so concentrated in Avis (CAR:Nasdaq). Today they started down. I’d probably warm up to them again around 16000, but that is quite far away right now.
But today was about the move in bonds. To me it was a bit of a Realization Day. Everyone finally realized that rates had stopped going up and were heading down. That $152 area on iShares 20 Plus Year Treasury Bond exchange-traded fund (TLT:Nasdaq) is some decent resistance, with the gap at $154 looming overhead should $152 be breached. But the Daily Sentiment Index for bonds has moved up to 75 now, so while that means there is some room for TLT to rally a bit more, I’m not sure the runway is that long anymore. It’s a far cry from when TLT was $141 and everyone thought rates could only go up.
New Ideas
Gold has had a decent move this week as has silver (which we looked at with a positive eye again on the weekend). But what about Freeport-McMoRan (FCX) ? I am still waiting for it to get itself up and over that $40 area. If it turns south and breaks $37, I’ll give up on it.
Today’s Indicator
The McClellan Summation Index is discussed above.
Q&A/Reader’s Feedback
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Stanley Black & Decker (SWK) is an interesting chart, because it is so down and out. Crossing $190 changes the chart, because it gets rid of the downtrend it has been in since the spring. It doesn’t make it "clear," though, because there is resistance all the way up. So I would say you can wait to see if it crosses the line or anticipate it with a stop under last week’s lows.
At some point in the last few months, I wrote up Marriott (MAR) with a positive view and it has done well. There is a (next) upside measured target in the mid-$170s, so I would say if the stock can mill around and stay over $155-$160 for a few days or so it should then get going again.
Best Buy (BBY) has been on a tear. There is a measured target around $135-$140 and since it hasn’t had a correction or even a breather in more than a month I would expect there to be one. I would remind you that retailers tend to top out around Thanksgiving so even if it hasn’t reached that target by then I’d lean toward taking something off the table.
