A Step in the Right Direction
Let's look at breadth, sentiment, and volume to see how investors are feeling. Plus, JPM, JBIL, ETSY, PYPL, and UA.
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The Market
In terms of sentiment today was a step in the right direction but not by much.
For example, the put/call ratio moved up to .98. If there was real fear we would see it well over 1.0 by now. The Investors Intelligence bulls, which do not take Tuesday into account were at 52%, so they are still leaning on the high side.
Yet breadth was flat and the number of stocks making new lows was only marginally higher. The market itself is not oversold, not on a short-term basis nor on an intermediate-term basis. Yesterday I noted the 30 dma of the advance/decline line is still overbought.
Down below, you will see the Volume Indicator is still over 50%. Even the Hi-Lo Indicator has rolled over and as of yet has not come down enough to say it is close to oversold.
The biggest change I saw today was that a stock like JP Morgan, until this week, has had one red day since the August low. Now it has two consecutive days. That’s a minor change but a change in the pattern that is noteworthy considering the Bank Index once again was halted at 115 and everyone seemingly loves the banks.
The other change is that Coca Cola which has been on a tear turned red early in the morning. I still think some of those staples and drug names are good (we just looked at PG a few days ago) but I’ll watch to see if Coke is in danger of rolling over or just taking a breather.
At least the SOX was green today. The funny thing is no one seemed to care. I still think we can rally, but overall we’re not oversold enough and sentiment is not bearish enough for more than a bounce.
New Ideas
JP Morgan JPM should bounce off that line (currently 213 but heading down).
Today’s Indicator
The Volume Indicator is discussed above.
Q&A/Reader’s Feedback
I opted to use a two-year chart of Jabil JBL because if we step back we can see that the break of 110 was pretty serious and that the bounce off 100 was just a layer of support. If we take a longer-term view, then over the next several months this should make its way to the 70 area. But that spike low near 100 should give it a bounce first. Thus, failure to get over 110 on a bounce is a sign this stock should be sold.
I can find no reason to bottom fish in Etsy ETSY. I think it can rally to 60-ish where I would be a seller. Keep in mind this is a stock ripe for tax loss selling as we head into that season. Therefore as the pressure subsides later this year it could be a great pick for a rally.
I can’t tell you how many times over the last year I have thought PayPal PYPL was going to break out of this base and run. As you can see it didn’t until August. And what did it do? Ran and stopped. I do think it can make a try for that resistance at 75 but I have my doubts if it can go much more than that.
Under Armor UA should rally toward that 8.50-9 area. Call me uncertain that it can do more than that right now. If we were intermediate term oversold I would think it could, but we’re not.
