Not So Hot
The Market
Yes, it was another day with the either/or market and that means breadth was not good. But outside of the selling in energy and travel and leisure stocks, the selling was relatively mild. The one thing we know is that the love for technology and growth stocks is a total about-face from what it was in mid-May.
Perhaps I am being a stickler on sentiment for waiting. Or perhaps it is because my own Overbought/Oversold Oscillator is not yet overbought. Or perhaps it is because we’re at the end of the quarter. Whatever it is, I still have my eyes on early July as the time this rally runs out of steam.
The Daily Sentiment Index (DSI) for the S&P stayed steady at 85. Nasdaq nudged up to 87 (it was at 88 after Thursday’s rally) and the Volatility Index held at 14 on the DSI. I want to note that the five-day moving average for the VIX DSI is at 15 and Nasdaq is at 86. I point this out, because sometimes they don’t quite get to 90 or above, but the five- day moving average gets close to the zone. Because we are not yet short-term overbought on my own Oscillator, I’d like to give it a bit more time.
In the meantime, the number of stocks making new highs remains pathetic with Nasdaq at 208, where we saw it Friday and the New York Stock Exchange back down to $150. I think we already know how bad the new highs are and so it is time to watch the new lows. They have been steady, not expanding. Should the new lows expand, that would be a negative.
It wouldn’t surprise me at all if we see the stocks that sat today out rally again before the week is out.
New Ideas
Cyber-Ark Software (CYBR:Nasdaq) seems like a good risk/reward here since under that $135- area and I am wrong.
I was asked to follow up on Coinbase (COIN:Nasdaq), which we looked at recently with a positive eye. It has a lot of resistance here and needs to get through. I think it gets through but if you bought it well last week selling a bit here isn’t a bad idea.
Today’s Indicator
The 30-day moving average of the advance/decline line is now overbought.
Q&A/Reader’s Feedback
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All things being equal, 3D Systems (DDD) should measure to the upper $40s from the breakout of the head-and-shoulders bottom. Coincidentally, that’s where it runs into the next resistance if it is able to get though this $40 resistance zone.
NuSkin (NUS) is not my kind of chart, because it is not down enough and it has a lot of resistance overhead. However, as long as it stays over around $56, it gets the benefit of the doubt. Earnings are due in early August, but from the looks of the chart it seems to me earnings can be a mover for this stock — both ways.
If Plug Power (PLUG:Nasaq) can get through $35, it would be a minor breakout. The issue is there is literally resistance the whole way up, so nothing is terribly clear cut on the chart. There is a minor measured target in the low $40s, should it get through $35.
