Where’s the Oomph?
The Market
There was very little enthusiasm for the rally today. I don’t know why. Maybe it’s a holiday week. Maybe folks had so firmly planted themselves back into the “down” camp, but in a highly usual manner the put/call ratio was high for an up day.
Last Wednesday’s decline netted us essentially the same put/call ratio as we got Thursday with a big up day. Oh, maybe it’s the end of the quarter playing with the markets, too.
But we did manage to bounce off that uptrend line I have been drawing in on the chart of the Invesco QQQ (QQQ:Nasdaq) for the last few weeks. By my count, this makes the sixth touch of that line, and in my book that makes it a very good line. Therefore, should this line break at some point, it would be bearish.
Another pattern I noticed was the June decline in the S&P looks similar to the pattern from August 2019 (arrow on the chart). We have a gap down (although in this case we have an island that we didn’t have in August 2019) that basically had no follow-through. Then we rallied, went nowhere, came back down. Then we rallied and came back down, rallied more, came back down some more.
In any event, for now, we’re getting some sort of rally off support, but none of the indicators have changed from Monday’s rally. I do want to point out that the high-yield bond fund HYG (HYG) was down, which is unusual for an up day in stocks. What’s more, it made a lower low than June 11. It looks like it is getting oversold to me, so I would expect it to rally before the week is out, but this needs to be watched, especially if it cannot get over that downtrend line next week.
New Ideas
If I liked the market more right now, I would be keen to think that General Electric (GE) is making a head-and-shoulders bottom. For now, I’ll just say that if it can hold this $6.50-ish area then the potential is there.
Today’s Indicator
The 30-day moving average of the advance/decline line is overbought.
Q&A/Reader’s Feedback
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I am not a big fan of stocks that are up already and Sturm Ruger (RGR) would be one of them. There is a measured target right around this $70-$75 area, but it has gone sideways for a month. If it breaks out to the upside, the next target would be near $80.
Uber (UBER) filled the gap from early May so it ought to have some sort of a bounce from here. I’d be surprised if it doesn’t bounce from here. But I’d look to sell at the red line, which comes in around $32.
I am interested in the chart of Sogou (SOGO) , but I think I’d like it a lot more on a pullback to the lower line ($3.60-$3.70). Alternatively, a sideways move for a few weeks here to digest that very large move it had in June. It’s one to keep on my radar.
