Will We See Nasdaq 5000?

The Market

I get that the market does not want to go down. I get that a company with horrific earnings -- like Caterpillar (CAT) -- barely goes down. I get that companies that beat sales targets surge upward -- as did Amazon (AMZN:Nasdaq) after hours.

But I also look at statistics, and here's a statistic from Thursday. The Nasdaq was up 21 points, and net volume (that is, up minus down volume) was +150 million shares. Yesterday, when the index was down 22 points -- the inverse of today's market -- net volume lost just over one billion shares. I would like to spin this bullishly, as every other person on television is doing, but I cannot find a way to do it.

So I will simply join the parade of folks who see no issues whatsoever and call for 5000 on the Nasdaq. I have nothing to support that view, except that the Fed is behind us and the market does not want to go down. I hope the bulls like that call.

Now let us discuss the chart of the KBW Bank Index (BKX). The ratio of this index to the S&P 500 looks awful, but I think the BKX will bounce off this support area. If it cannot rally, that will send a strong message. If it rallies and cannot get over the highs of last week, that will send another message. Obviously, both scenarios are not bullish. If the BKX can rally and get through last week's highs, however, that would be bullish. Right now I am looking for it to rally, preferably without breaking 64.

Elsewhere, the American Association of Individual Investors reported that bears are now at 17.5%. That is quite low. But as we have discovered often with this group, a super low percentage of bears is often two to three weeks ahead of the market. What I find curious, though, is that in the past few years, those low levels have arrived in December and January. Are they jumping the gun this year?

On the S&P, I continue to see resistance in this 1750-1760 area and support at 1740.

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New Ideas

All the big banks should rally if the BKX is to do so. But I have my eye on Huntington Bancshares (HBAN:Nasdaq). Due to the stock's low price, it does not measure very far to the upside, perhaps around $9.40-$9.50. But as long as it stays over $8.60, it should work its way up there.

I was asked to follow up on Devon Energy (DVN: NYSE), a chart I showed here a few weeks ago. The target was/is in the $67-$68 area and it got there in a hurry. I advise taking some profits, because it did reach the target area. If it spends some time backing and filling and digesting the gains, then the next target in the low $70s. There is obvious support at $60, but I would prefer that it stay above $63, which is where the gap up began.

The chart of Alcoa (AA) has been fabulous, and after that surge, it has settled back nicely. It ought to eventually work its way up toward the $10+ area.

Today's Indicator

The 10-day moving average of the put/call ratio is going to be overbought soon. That occurs when the indicator gets to a low and turns up.

Q&A

Helene welcomes your questions about Top Stocks and her charting strategy and techniques. Please send an email directly to Helene with your questions. However, please remember that TheStreet.com Top Stocks is not intended to provide personalized investment advice.

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I can come up with two downside targets on Cameron International (CAM) . The first is $50-ish and the second is around $46. Therefore, I suspect that the stock will likely drift down toward $50 over the next few days. According to the three-day rule, if it is still above $50 and looks to be settled down, we could expect it to have an oversold rally. Here is a possible scenario: By day three (Monday), we get a rally even if the stock is not near $50 (i.e., if it is still in this $54 area) and it bounces. Then it comes back down again over the next few weeks, perhaps tagging that $50 area and gets a "better" bounce to begin building a base.

I suspect that the DB Commodities Tracking Index Fund (DBC) will bounce off that uptrend line ($26.50-$26.75). But I am not sure how far it can go. It is likely to stall out not far overhead, near $26-$26.50.

Jacobs Engineering (JEC) is an interesting chart in that it looks as though it will work its way higher, although it may not do so easily. While there is plenty of resistance all the way up, an eventual target is measured at around $64. Use a stop under $58, because as time goes on, that downtrend line goes down, not up.