The Semis Were Up, but So Were the Number of New Lows
It’s simply not a good sign when the number of new lows breaks 200.
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Monday wasn’t even an either/or day in the market. It wasn’t even all about the semis. Shocking, I know!
Sure, the semis were up, but not all of them were up. Several were down quite a bit. Several were up quite a bit. I realize the next big move in the SOX likely depends on what Micron’s earnings are when they are released on Wednesday. Despite the massive move in this stock, and despite the fact that it is up forty percent in two weeks, the chart still does not look parabolic to me.
It looks over-extended, but once again, let me point out that in May it had a 15% pullback and in June it had another one. I don’t love stocks that are up so much, but stocks that correct along the way are not parabolic. The uptrend line is quite steep, and uptrend lines such as that are difficult to maintain for extended periods. If the stock had another 15% pullback, would anyone be surprised? If it does go parabolic, I will report back.
And while everyone was fussing over the move in the Mag 7 or Mag 10 or whatever it is now, and the banks and the biotechs, XLE, an ETF to be long energy stocks, was green and closed near the high of the day.
As a reminder, I don’t love these charts, but I do think with the Daily Sentiment Index (DSI) for Crude oil at 17, I am looking for a bounce.
As for the market as a whole, breadth was pretty poor when you consider the Russell was the hot index of the day. Yet the Overbought/Oversold Oscillator lifted. It’s just the math, and I still expect the market to be short-term overbought mid to late this week. But notice that while Nasdaq tumbled, its Oscillator finally went over the zero line. When those index movers step aside, it leaves room for other stocks to lift.
Of course, when the mega caps take a breather, the penny stock trading comes back in full force. About 25% of the volume on Nasdaq on Monday was in three penny stocks. One of those stocks traded over two billion shares!
Now, let me point out that the number of stocks making new lows for Nasdaq expanded once again, to 235. My rule of thumb is readings over 200 are not bullish. Those new lows need to contract, not expand. Even over on the NYSE, we saw an expansion. The NYSE had the most new lows since mid-May. That means there were more stocks making new lows than even two weeks ago when the S&P was 200 points lower.
All in all, it felt like a sloppy day in the market.
