Lots of Selling in The Others, While Sentiment Sinks

The Market

I want to tell you I saw panic today, but I did not. How can we call it panic when the volume in the QQQs is 35 million shares?

Nasdaq’s new lows did not exceed the prior peak but rather came right to it. I’ll call that a draw in a short-term oversold market.

Nasdaq, by certain measures, will be oversold next week. Using the Nasdaq Momentum Indicator, the dates are July 28^th (Tuesday) to August 3^rd (the following Monday). Being that Nasdaq has now been red for five of the last six trading days, I would expect some sort of a bounce early next week, if not tomorrow. Keep in mind this is not meant to pick the exact day, but a general time frame.

But is that the setup I desired? It is not. The VIX did not get jumpy (there is still time). The volume in the QQQs did not surge. Heck, the put/call ratio did not even get over 1.0.

But now let’s talk about the others because the number of stocks making new lows on the NYSE surged. They are now more than they have been since March, nearly tripling this week. I maintain that while so many were so pleased to see a variety of stocks up on the day (so many folks cited banks, which I think are not great here), the stocks that have held up are vulnerable to selling in August, and the expanding number of new lows is a sign there is selling taking place in the others.

There was a bit of good news on the sentiment front, though. The AAII bulls sunk to 29%. That is the fewest bulls since last year. Now I know these folks jump around like day traders, and I prefer when we have another sentiment indicator that confirms it, but this is a step in the right direction.

Finally, just as an update, the DSI for the bonds is now 15. Crude oil is at 88. That’s a bit frothy on the energy front for me. And the bonds are getting interesting, especially with the Fed meeting next week.

New Ideas

Wynn Resorts (WYNN) has been a terrible chart. But that reversal in it today really caught my eye. Earnings are out on August 4^th, but maybe it can rally before then. Under 92 and I am wrong.

Today’s Indicator

The 21-day moving average of the ETF put/call ratio is finally climbing but not yet showing an extreme.

Q&A/Reader’s Feedback

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Note: Several of the charts below have earnings to be released in the next several trading days. As a reminder, I view ‘playing earnings’ similar to gambling.

MSOS (MSOS), an ETF to be long the pot stocks, looks vulnerable to me. A break of 4.20 would be problematic. Sure, there is support all the way down, but the stock has held 4.20 since April.

IBM (IBM) is getting oversold down here. If it can get back up and over that line (208-ish) then I think it can have a short-term oversold rally. Failure to get over the line would be bearish.

Rocket Companies (RKT) was a darling a few months ago. If it gets down to that line (around 11-ish), I would look for it to bounce from there, but that’s the best I can offer right now. If bonds can make a low (we’ll watch that DSI), then this gets more interesting as a short-term trade.

For the time being, SoFi (SOFI) looks like it sits in a trading range (15-20). I look at charts like this and think if this range continues as we head into the fourth quarter, then stocks like this become great candidates for year-end tax loss selling candidates as we head into 2027

Bloom Energy (BE) has decent resistance at 240, so if it cannot get up and over, then I think 180 will be the next stop on the downside.

Lineage (LINE) looks vulnerable to that support line at 38-39.

After liking the Utes in late May, I thought it was time to take profits last week. Naturally, stocks like Duke (DUK) came down one more day and then rallied right back! I’m still eyeing that 130-132 area as resistance.