You've Probably Heard This Line Before
One area of the market has been like a magnet, and Tuesday was no different. Plus, a look at how Nvidia's red day unlocked green for others, and a chip stock no one ever talks about.
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The Market
As if we needed more proof that when Nvidia NVDA backs off everything else can rally and vice versa. Tuesday was the perfect example since the Nasdaq saw 68% of its volume on the upside and the NYSE saw 65%. I’ll hazard a guess that if Nvidia had been green there would not be so much love to spread around. I do review the Nvidia chart below.
It will not surprise you to learn that the lines continue to hold. But more than that, the S&P 500 took a trip down to 5160 Tuesday, thus reaffirming that line. The closing prices for the S&P, with the exception of last Thursday’s big whoosh, have been:
5205, 5211, 5204, 5202, 5209
I am going to note that this area has been like a magnet, not just in the last two weeks but we even hovered here during the last week of March. That makes that line even more important, because it has been reaffirmed and the S&P has been flat for so many weeks.
The good news about Tuesday was that we’re starting to get some movement in stocks that are not energy, metals and mining. For example, Palo Alto Networks PANW, which I thought was okay for a rally last week, finally got itself off the mat and rallied. Now I’m concerned that it has to eat through that resistance that starts at $280, but at least we’re finally getting movement in non-commodity stocks.
I have no real feel for the CPI Wednesday nor do I have a view on what the market will do. Breadth has been green three straight days so that’s the short-term oversold condition at work. Now it gets more murky.
New Ideas
I missed that iShares MSCI Brazil Capped ETF EWZ, an ETF to be long Brazil, filled that gap from November last week. Now it threatens to cross over that downtrend line. I’d like to see it map out as I have drawn in blue.
There is a semiconductor stock that no one ever talks about. Analog Devices ADI had a poor earnings report in February but it broke out today — on volume too (not shown). As long as it doesn’t slip back under $200 this measures into the $215 area.
Today’s Indicator
The McClellan Summation Index is still heading down.
Q&A/Reader’s Feedback
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I had thought Nvidia NVDA should bounce off this $850-ish area and it ought to, but it doesn’t yet have the feel (or the hysteria) associated with what I imagine will be a decent rally. I would love to see some panic and hysteria and I don’t see it yet.
Wheaton Precious Metals WPM is a bit overbought up here and it has some resistance. If it can spend a little sideways time in this $49-51 area then I think it can make another run upward. If it were me I’d be inclined to sell just a little and then sit with the rest but I would not add to it.
GEO Group GEO in the short term is way overextended and vulnerable to a correction. There is a measured target around $17-18 so after a pullback it should have another rally attempt. But the key takeaway is that is short-term overbought and overextended.
VanEck Vectors Gold Miners ETF GDX is also overextended and overbought and with the DSI for gold so high I would be inclined to book a few profits up here. A pullback toward $32 that was gradual would give the chart a better look.
Bristol-Myers Squibb BMY continues to plod along in an attempt to form a base. The key word there is plod. It went sideways for four months between $47 and $51. Now it may take a few months of sideways between that downtrend line and the recent highs around $53. That long slow trip down is going to take a lot of time to eat through.
I would like to see UnitedHealth Group UNH try and hold here, at least in the near term. But the big picture, denoted by the blue line, says this stock should eventually make its way under $400.
