A Market With Pockets of Health and Pockets of Sickness
There’s lots to love about the stock market right now. And many things to be concerned about.
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The Market
It was another day where not much changed in the market. Well, the Russell 2000 made a new high, and everyone is so excited about the broadening out again. None of them mentioned that breadth was red with the Russell up nearly one percent.
None of them mentioned the Small Cap 600 has not made a higher high. None of them mentioned that the Mid Caps have not made a higher high. Perhaps it has to do more with the upcoming rebalancing of the Russell than it does anything else.
This would be a good time for me to note that when I perform a ‘what if’ exercise on the Russell 2000 Momentum Indicator, the Russell gets overbought on June 24th (Wednesday) and again on the following Wednesday, July 1st. As a reminder, this is not meant to capture the exact date. I had noted yesterday that I expect us to get back to a short-term overbought condition mid to late this week. So it’s all in the same time frame. And wouldn’t it make sense that it would occur somewhere near the rebalancing and the end of the quarter?
Keep in mind, when this was oversold two weeks ago, no one cared because they were so focused on the big caps. Now they don’t even bother to look at the calendar; they just see that it is up, so they like it.
While the readings on the DSI did not change, I want to point out that the energy stocks closed flat to green. It remains my view that oil is due an oversold bounce.
Finally, a word on Nasdaq’s volume. It was positive, by not quite two to one. At first glance, that is pretty impressive. It is. However, nearly 25% of the volume on Nasdaq was in three penny stocks (one traded two billion shares on its own!).
So if we took out those penny stocks, the up/down volume would not be nearly as impressive, but it would still have been about 52% of the volume on the upside. That’s not a bad showing considering the fall in Nasdaq itself.
To offset that, the number of stocks making new lows on Nasdaq rose once again and are now in the 235 area. My rule of thumb: over 200 new lows is not good. That number needs to contract.
The NYSE saw over 100 new lows, which is a poor showing as well. It is the most new lows in a month. In fact, it’s more new lows than we saw two weeks ago when the market made that low.
Mostly the market has pockets of health and pockets of sickness.
New Ideas
Marriott (MAR) has begun a correction. I would not be surprised to see it come down and tag that uptrend line in the next few weeks.
Today’s Indicator
The 30-day moving average of the advance/decline line remains hovering around the zero line. I think it gets one more pop later this week.
Q&A/Reader’s Feedback
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Sandisk (SNDK) doesn’t have that mini-parabolic look to it that WDC had coming into Monday’s trading. It’s up a lot, but again, the month of June has seen a few dips before heading up again. It’s just not my type of chart to get involved with. Unless/until it either goes parabolic as WDC did or breaks to a lower low or has a lower high, it’s a stock in an uptrend.
Ryder (R)is a stock in an uptrend, so unless or until it breaks that uptrend line (250 now, 255 next week), it seems to me that the chart should bounce again. Break that line or rally to a lower high, and then I’d get concerned.
Super Micro (SMCI) bounced off a gap fill and ought to run into some short-term resistance on this next gap fill around 38. We have seen a lot of these types of charts that have done exactly this and then turned south, so just be careful if it decides to turn down, keep in mind support levels haven’t been, well, great support lately.
Palantir (PLTR) had a fresh breakdown today. Oh, it’s got some support at 120 from those twin lows in May and June last year, but unless it can rally hard and get back over 130 in a hurry, I would not bottom fish here.
Innovative Industrial Properties (IIPR) should bounce off that uptrend line since it has been doing so since early April. There is an unfulfilled measured target around 64-65, so unless it breaks the uptrend line, it ought to get there. One word of caution: the stock trades very thinly.
