The Market
I could talk about any variety of indicators from today's action because for the first time in quite a while the S&P was up and breadth was negative. Oh, it wasn't negative by that much, but that is a change.
I could note that the small-caps have lagged, so much so that any decline in the next few days will actually take the Nasdaq Overbought/Oversold Oscillator back to oversold. Nasdaq breadth has been red for five of the last seven trading days.
I might even note that the peak reading for the number of stocks making new highs on both the NYSE and Nasdaq arrived on Oct. 3. So it's been two weeks with declining new highs. I might even note that all the various moving averages of the various put/call ratios are rising (bearish).
But what I want to address because I am so astonished by it is the put/call ratio for ETFs. You might recall that two weeks ago we saw several readings of this indicator under 100%. Today's reading was an unbelievable 310%. Wow.
This is only the eighth time since the 2009 lows that the reading has gone over 300%. In fact, it really is only the seventh time but I've taken the liberty to count a reading at 291% in with the "over 300%" because it was so darn close. What's up with all that put buying?
What's surprising to start with is that, almost every other time, these readings arrived on a down day in the market. Sometimes down a lot, sometimes marginally, but I can't find an instance when they arrived on an up day. There is actually no conclusion because sometimes it was very bullish for stocks and sometimes it was bearish.
The time that struck me, though, was in early August 2013 because that year was pretty much straight up, but it turns out there was more than one correction that year. Just look at the four-day 5% correction in June of that year on the chart below.
Now look at early August, where I have placed a red circle. That's when we saw the put/call ratio for ETFs crank up to 322%. What's interesting is that it came at/near a high, not in the middle of a decline (which is more typical). Here the correction was 5% but took almost a month to play out.
I can't make much more out of it because it is so odd to see such a high reading at the highs in a market. I still think we should see some volatility, but thus far I am wrong, since I thought we'd see some when the calendar turned to October and all we've seen is the Russell underperform.
New Ideas
I was asked to revisit Apple (AAPL:Nasdaq), which I recommended here a few weeks ago when it was near $150 with a target near $158. I was keying off that black resistance line, but today it blew right through it. As you can see, it is into resistance and that red downtrend line would be the next resistance (about $161). My inclination is to take some profits and put a stop in just below $156 on the remainder.
I am not terribly fond of oil or oil stocks right now, but if EOG (EOG) can get over $98 it would be a mini-breakout.
Today's Indicator
The 30-day moving average of the advance/decline line is working off the overbought reading. But it is far from oversold.
Q&A
Helene welcomes your questions about Top Stocks and her charting strategy and techniques. Please send an email directly to Helene with your questions. However, please remember that TheStreet.com Top Stocks is not intended to provide personalized investment advice. Email Helene here.
We haven't looked at Altria (MO) in quite some time, but when we last looked I was looking for a rally from $62. You can see I missed by a buck because it came down to $61 before rallying. I do think the stock can get over $66 at some point in the coming weeks and make it to the $69-$70 area, where it runs into a lot of resistance and there is a measured target. If it can't get over and instead falls back down, then I'd be a buyer at about $61 on a retest.
PG&E (PCG) has collapsed due to its exposure to the California wildfires. It is always difficult when a stock collapses and breaks all support that quickly. But a measured target is in the low $50s and today is the third day down, so I would expect to see some stabilization in the next few days. But it will take quite some time before a pattern has developed enough to have confidence to buy. See the MO chart above and how it took six-plus weeks before a retest and pattern had formed.
Nike's (NKE) problem is that island overhead (circled), but it also has some support in the $49-$50 area. I think we could/should see a rally from here. But as of yet, there is no pattern to sink our teeth into, which means a buy here is for a trade until we see a pattern develop that feels more stable. But $49-$50 is enough support for me to think we should see a bounce from here.
