The Dow's A's Tell the Story
Let's look at AAPL, AMGN, AMZN, and AXP to take the health of the broader market.
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As I put the pencil to the paper each day after the market closes to update my hand-drawn, charts it occurred to me that we often just look at what’s interesting. And when we do that, we miss all the others.
Oh sure, who wants to look at uninteresting charts? I surely don’t (but I have to since my pile of charts is the same list of stocks every day, interesting or not). But I thought of this over the weekend because if we go alphabetically in the DJIA—thus using all big-cap stocks--and take the A’s there is something interesting. 75% of them have done very little in the last 4-6 months.
The A’s in the Dow are Amgen, Apple, Amazon, and American Express. That means we get a drug stock, a financial stock, and not one but two of the Mag 7, or Index Movers. So let‘s look—and let’s understand that I know three of the four will report earnings this coming week so much could change—but sometimes, it is interesting to see where we’ve been in the market.
I complain a lot about the lack of stocks making new highs. Or lately I have been complaining about breadth. When you look at these four charts, they tell the story of why I fuss over the lack of new highs or breadth.
Amgen AMGN. It is the same price it was at the February high. Let’s call it 315. The stock has plenty of support down here but if you own it the year has mostly been a wash. It had a chance to break out in July and again in September but instead of adding to the gains it gave them back.
Surely, beloved Apple AAPL must be better. It is. It is higher than it was in the spring. It mimics the chart of the QQQs in that it peaked in July and has spent the last four months clawing back what it lost in those two weeks after the peak. That little pop two weeks ago (blue arrow) was the chance to break out and go, but all it’s done is mill around.
American Express AXP has actually been the winner of the four, having easily surpassed the July high. The last two weeks have been rough for Express. It peaked right around its earnings. It needs to hold this support area, or it will have the first lower low since June.
Then there is Amazon AMZN. It is the same price it was in April. Again, that’s a whole lot of nothing going on for most of the year. Unlike Apple, its claw-back from the August low hasn’t even made it to the July high. If the stock didn’t have the ticker AMZN and it was XYZ you’d ask me why we even care about it.
So when I tell you that Nasdaq made a new intraday high on Friday, right up there at the July high and we had approximately 20% of the number of new highs we had last time we were up there, I want you to picture these charts.
Or when I show you that the McClellan Summation Index has had a steady decline for almost a month now, I want you to understand I really just picked four random big cap stocks—sure I did it alphabetically but I didn’t say let me look for four charts like this—there has been an awful lot of sloshing around that the S&P doesn’t reflect. I could probably show you the Bs and Cs tomorrow and the result would be the same.
In the meantime, the market accommodated us and gave us negative breadth on Friday, so the Overbought/Oversold Oscillator fell under the zero line, heading back toward an oversold condition.
