Walmart Tumbles While Investors’ Attention Is Laser-Focused on Tech
Is this a market of stocks or a market of tech stocks? People have stopped paying attention to anything but tech.
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The charts I post by hand are on semi-logarithmic paper. When I first started doing this over four decades ago, I’m not even sure I knew what a log scale was. I had to do a lot of calculating to get the scales correct. But I have learned to do it in my head, and mostly I can do these charts and calculate the scales in my sleep now.
Yet over the last few days, I have found myself reaching for the calculator to work out the scales on my charts. When stocks gap down and then keep falling, it’s easy to lose count of the scale. There are times (think the COVID decline in March and April 2020) where I have to reach for the calculator so I don’t mess up the scales as stocks are moving so far so fast.
In the past few days, I have stocks gapping up and continuing upward that I find I must calculate the scales over again, because when stocks move 30% in a day, they often jump from one scale to another. In times like COVID, we would call it panic selling, and we would look for capitulation.
I don’t think buying works the same as selling, but there are rhymes. When we get whooshes to the downside, I am looking for what might not be whooshing down anymore. I am looking for what folks are no longer focused on, something that might be telling a different story.
For example, everyone is now so focused on stocks like Dell moving 30% in a day that no one seems to have noticed that Walmart (WMT) (I discussed the chart in full here last week) has been red for the last eight or nine days. There was a time this would be something folks chattered about.
Everyone is so focused on these single stock moves in technology that I did not see anyone even note that the S&P has been green for eight straight days (while WMT fell for those eight days). Can you ever remember a time that we didn’t hear the day count from a number of folks? Yet here we are.
And then there are the number of stocks making new highs. The NYSE’s new highs are hovering just over 100. There are over 3000 stocks that trade on the NYSE, and yet only 100 stocks are keeping up with the index.
The new lows are on the rise as well, but nothing too consequential yet. The breadth of the market has been lagging. Now, instead of hearing how folks expect a broadening out, they just discuss how great tech is. The McClellan Summation Index—again, please keep in mind the S&P has been green for eight straight days—barely turned back up late last week. And it won’t take much to turn it right back down.
I have highlighted that action in the red box on the chart of the Overbought/Oversold Oscillator to show how I expect the Oscillator to move, and so I will report it will be overbought midweek this week.
Will it matter to tech? Tech has taken on a life of its own, but my pencil would appreciate it if I did not have to reach for the calculator to do my charts. At least for a few days!
