Wall Street Charm
We're seeing a little less hostility toward the market of late, Nasdaq looks curious and utilities are closing in on resistance.
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NOTE: My mother is coming for a visit this weekend, so I am taking Thursday off. The next edition will be Sunday night or Monday morning.
The Market
You probably don’t need me to tell you that today’s rally was not widespread, as breadth lagged. But that is to be expected, since the Russell 2000 had been leading up until now. What I find interesting is that Nasdaq has now been up for nine of the last 11 trading days, which normally would make it short-term overbought, but my work suggests a day or two of pullback should lead to another rally.
So, why should we pull back? We don’t have to, but the Daily Sentiment Index for the Volatility Index fell to 9 today. Typically, a DSI in single digits for the VIX is negative, but in this case it is not accompanied by extremes anywhere else, so I would say a pullback would be helpful just to lift it a bit.
The utilities, which are now up 7% from last week’s low, are closing in on resistance, so they too could use a rest. I’d be in favor of selling some of the position just to lock something in as it nears resistance.
But the big news was on the sentiment front. I can feel folks slowly turning if not more positive at least less hostile toward the market and this week’s Investors Intelligence bulls confirms it. They jumped six points to 48.6%. Recall my big fear is that the bulls will get to the mid-50s too quickly and they are on their way.
The International Securities Exchange call/put ratio went over 1.0 for the second day in a row, after going nearly 21-trading days with readings under 1.0, so we can see the change in sentiment there. But take a look at the 21-day moving average and you can see it has finally turned up (bullish).
Finally I want to note that the transports, which I liked a week or so ago, have now rallied four-straight days, which is not a big deal since almost everything else has, too. But it is the first such move for this group since June.
I would still love to see a pullback in the next few days followed by some more upside.
New Ideas
If Pfizer PFE can stay around this $33 area and then cross that downtrend line, I’d consider that a big positive for the stock.
Today’s Indicator
The Volume Indicator remains oversold. It has hardly budged in this rally.
Q&A/Reader’s Feedback
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Losing Its Charge: Once ChargePoint CHPT broke under $7 and could not recapture that gap I could no longer support the stock. There is a measured target around $3, but that’s the best I can say. My guess is there will be quite a bit of tax-loss selling in the name.
Euronet Trade: That was a nice little reversal off the low for Euronet Services EEFT so if you want to speculate in it then you use the stop just below that low from the other day (around $74) and you need to see it cross over that downtrend line within the next week. It would be just a trade though.
Not Following the CRWD: The one-year chart of CrowdStrike CRWD looks OK, but I can’t chase it. There is a short-term measured target around $190, so it’s getting close to that level.
I did then go look at a two-year chart. What I discovered was some resistance at $200. So let’s call short-term target $190-$200. I would consider this stock a hold unless/until it does something wrong. I just can’t chase stocks that are up.
