A Low Energy Rally for Stocks
We got the rally, but it was less than exciting. When that happens, we should look to the indicators! Plus, NTR, SQ, DHR, JBL, and JBHT.
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The Market
Apparently, my Overbought/Oversold Oscillator is only good for small caps because that’s what moves when it moves. That’s how top-heavy the market has become.
But I digress. We got the rally, as low energy as it was. Volume was pathetic, and the QQQs, which carried the day on Friday, sat around and shuffled their feet all day today. It sometimes feels more like a market with no direction than one that is actually oscillating or trending.
There are a few indicators to note, though. The number of stocks making new highs barely lifted, which is unusual for a day when the small caps led (and breadth was quite good. Volume was pathetic if you use the SPY or the QQQs, but, overall, volume on the exchanges was pretty much where it has been
In fact the NYSE saw its highest volume since October 15th. Nasdaq did not see an uptick in volume but volume today was a smidge lower than last Thursday and I didn’t see anyone complaining about that. Both exchanges had 72% of their volume on the upside.
Then there is sentiment. The put/call ratio zipped up to .99. That is the highest reading since October 4th. Are folks hedging for the election? Are they hedging for this week’s big earnings releases? I don’t know the reason but I do know that’s a shift.
Finally, the DSI for bonds fell to 19 which is the first time this reading has been a teenager in a year. It did go lower than that last year, but when I see sentiment on bonds getting this one-sided, I pay attention.
I have been wrong on the TLT since I thought it would stop at 94-ish, but a DSI in the teens tells me we’re a lot closer to a real rally there than not.
New Ideas
I was asked to follow up on two stocks I have written up positively in the last few months. One has moved quite a bit and the other, not much, if at all.
Let’s start with Nutrien NTR. They report earnings next week but the chart continues to look to me as if it is trying to bottom. It’s got a long way to go to even get to resistance (51-52) but picture that as time goes on, that action on the left will fall off the chart and make this look more bottoming. I do not want to see it gap down under 44, obviously.
The other name is Block SQ, which I believe I liked back in September. It continues to look like it’s trying to bottom. It, too, reports next week. I do not have a target on it yet but if it fell back to that downtrend line (67-68 I’d probably consider it a buy.
Today’s Indicator
The 30-day moving average of the advance/decline line is not yet oversold, but it has finally come down quite a bit.
Q&A/Reader’s Feedback
Danaher DHR has collapsed in the last week or so. It is getting oversold and there is support around 240 as well as a measured target. I’d look for a bounce from there but I’m not sure it is going to be able to get over 250-255 easily. That collapse is likely to need some time to repair itself.
I liked JB Hunt JBHT a few weeks back when I said I thought the Transports should rally. Sadly, I decided to ride with the rails, using CSX, instead of the Truckers. The measured target is 190-195. Just north of that spike high.
Jabil JBL is trying to build a base. I would like it better if it came down and filled that gap at 115. It would make it more symmetrical.
