And Now You Know Why I’ve Been Bearish On the Banks Since August
It’s hard to be either bullish or bearish on the entire market right now, but selectively, there are some great trades to be made.
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The Market
It’s difficult for me to be bearish when the market is still oversold. And it is still oversold, or at least not overbought.
It is also difficult for me to be bullish when the market is so narrow. And it is narrow. In the last four trading days, since we started rallying, net breadth up 150. In that same period of time, the S&P has tacked on just over 200 points.
Something’s gotta give. Sure, we can keep on rallying like this, but we all know how these sorts of divergences ended in 1999-2000. And we know how these sorts of divergences ended in 2021-2022.
As someone who has been bullish on the semis and tech since the July low, I want to show you the SOX relative to Nasdaq because it’s a bit bothersome. The SOX has had five straight green days, the most since it rallied into its early June high. It has also only had three green days in the entire month of September. But look at the SOX relative to Nasdaq: it’s lagging, not leading.
I know that the prevailing narrative is the SOX is leading, but it really isn’t.
And today the Banks finally showed us why I have been negative on them since August. Well, let me rephrase that: they showed everyone else why I have been negative on the banks. There is a bit of good news, though: There is some light support here (blue line), although I would allow that it could come down a bit more; banks are getting short-term oversold.
Some other things that bother me include oil coming down (and oil stocks following), and yet the Transports can’t rally. Also, bonds have stabilized just under 5%, and the Utes can’t rally. Utes used to be part of the AI trade, and the AI trade is sort of back on track, and still, Utes can’t rally. It’s just very unusual for these relationships to not be in sync.
I’d like to see the others rally since they are oversold. But now we’re back on VIX watch because the DSI has fallen to 17. The Either/Or Market remains intact.
New Ideas
I still think this pullback in GLD is shaping up. My propensity to prefer a few touches at support means I would love to see another trip down to that line that also tests last week’s low around 390, because that makes the risk/reward better, but put GLD back on your radar.
Today’s Indicator
The McClellan Summation Index has not turned up yet. It needs a breadth reading of +1000 (advancers minus decliners on the NYSE) to halt the decline and a bit more to turn it up.
Q&A/Reader’s Feedback
Helene welcomes your questions about Top Stocks and her charting strategy and techniques. Please send an email directly to Helene with your questions. However, please remember that TheStreet.com Top Stocks is not intended to provide personalized investment advice. Email Helene here.
Applied Materials (AMAT) has had a nice bounce, but if it can’t get up and over 500 in the next week or so, I’d have to give up on my view that it should rally.
It seems I waited for Amgen (AMGN) to carve out a bottom, and it opted to act like a semiconductor stock and jump. Now it’s caught between filling the gap around 430 or filling the gap left from today. I would like it to form a W as it usually does.
I don’t love the chart of Microsoft (MSFT) here, but it hasn’t done anything wrong. It just looks like it got to resistance and is churning. If it breaks the lower line (490-ish) then I think the next level is around 465, filling that gap from late July.
