200+ Nasdaq Stocks Say This Market Isn’t So Great
Between new lows and an increase in downside volume it’s safe to say selling picked up quite a bit Wednesday.
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The Market
Don’t fret, the semis kept on going. Perhaps the news from Broadcom (AVGO) will finally give us a down day for that over-loved and over-bought group.
As for Wednesday, not much changed indicator-wise. There are some interesting statistics, though. Let’s start with new lows because here we are with the S&P 500 pennies off the high and there were more stocks making new lows than highs. I simply cannot spin that as bullish or even slightly okay. It isn’t.
The Nasdaq’s new lows, where I noted Tuesday they were creeping up toward 200, did in fact top 200 Wednesday. Again, in a market that is at the highs having more than 200 stocks make new lows is not great. Remember, there are two sides to this equation: contracting new highs (have had that for weeks now) and now we have the other side, increasing new lows.
It’s worth noting that the NYSE saw 77% of the volume on the downside. So there was selling, but it wasn’t panicky. However, that is the highest percentage of downside volume since late April. So that includes the pullback we had in mid-May. Between the new lows and the increase in downside volume I think we can say selling picked up quite a bit Wednesday.
I saw no sense of panic in the VIX, which was up—barely. I saw no sense of fear in the put/call ratios. Oh, they backed off from the extreme call buying but at 0.80, but I would not call that anywhere near anything called fear.
One final point I want to make is that one of my conditions for a stock doing something wrong is that it makes a lower high and then a lower low. We already know there are many lower highs. Wednesday there were lower lows in some stocks.
In this case I am referring to lower than the May low, but some stocks are flirting with the March lows so we’ll keep an eye on that.
The good news is that the Volume Indicator (shown below) is already at 49%. It gets oversold at 47% in bull markets (in bear markets it’s closer to the low 40s). So the majority of stocks are already down quite a bit. I wouldn’t even be surprised if the “others” rally Thursday while the tech stocks take a break.
New Ideas
We finally got an oversold bounce in Walmart (WMT). My thinking is that it ought to run out of steam in that $118-120 area. If it keeps on going, then there is a possibility that this was a false breakdown.
Today’s Indicator
The Volume Indicator is discussed above. You can see how weak the overall market has been when this is where it typically is after the S&P has gone down at least 10%.
Q&A/Reader’s Feedback
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My issue with SPDR Biotech ETF (XBI) is that it went sideways for months, broke out and then gave it up and can’t get any traction, so it’s essentially the same price it was in January. Consider me lukewarm on it as long as it stays over $123-125.
I would, however, remind you I still think Amgen (AMGN) is okay in this area. It really needs to cross that downtrend line now. But the stop is still just under $320.
I don’t love that Blackstone (BX) broke support on a gap. And did so on the same news it went down on a few months ago. It is into support in this $105-108 area but unless it can get back up over $115 in a hurry I’m inclined to stay away.
For the longest time whenever I was asked about GE Vernova (GEV) I would say the stock hasn’t done anything wrong yet. Now it has done one thing wrong: It’s had a failing rally (see how the late May rally could not get over the prior rally and now made a lower low?).
If it breaks that uptrend line I would look for it to fill that gap around $915. It would probably get oversold down there anyway but I’d be more interested if the oversold rally can’t get up and over the broken uptrend line. The stock is on a watch list now for doing a second thing wrong. If it can hold the uptrend line then maybe it saves itself.
