Are You Annoyed by the Grind? I Am.
Not much changed while I was away. The bulls have led in Nasdaq volume and options trading, but the others refuse to rally. We'll also look at XBI, DIS, HON, BBY, and GIS.
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This grind is annoying. Sure, I said I thought we’d rally in early July (along with all those seasonality traders), but I thought we’d rally in the others, and the others have been very sporadic in their rallying—that is, if they have bothered to rally.
There were a few changes in today’s market. The Russell joined the party, but it closed at/near the low of the day. We already know that the others cannot seem to coexist with the mega caps, so once the mega caps found some friends, that was it for the others. Some day this will change. I hope it is in my lifetime.
Nasdaq’s up volume as a percentage of total volume had its best day (at 70%) since mid-June. I don’t know if that is important considering net volume on Nasdaq has been positive for nine straight days. And that makes it overbought in the short term.
The other big change was that folks got quite bullish in options land. The put/call ratio sunk to .79. That is the lowest reading since June 13th. The ISE call/put ratio for equities was 2.52 which is the highest reading since late December 2020. So we can add these to the sentiment is too bullish camp.
Nasdaq and the S&P have now been up for five straight days. Chair Powell chats with Congress this week so maybe we can get a little shake out midweek.
The one thing I know is that if we don’t see an increase in stocks making new highs by the end of the week, then we’ll be talking about the window for a rally in the others to start closing.
New Ideas
Biotech XBI has been one of those groups that has spent the last few months treading water. That’s why I am focused on this 95 area. If it can get through there, then that’s a positive. If it fails to do so and cracks back under 90, then we will have changed the pattern of higher lows since April.
Today’s Indicator
The 30 day moving average of the advance/decline line is oversold.
Q&A/Reader’s Feedback
I want to like Disney DIS but unfortunately that island top (circle) continues to work (meaning it was bearish when it broke and hasn’t had a rally since, so the pattern continues to work). There is a decent amount of support in the low 90s, let’s start with it at 92-95 but I would prefer to see a pattern shaping up before trying to bottom fish this one. Or at least signs that it doesn’t want to go down on bad news.
Honeywell HON should have kept going after the breakout but it hasn’t. Yet it’s done nothing wrong in terms of violating any levels. Should it collapse back under that 207 area I would get concerned.
Best Buy BBY should eventually make it to 100 (the 90/100 rule applies here) but if it cracks back under 80 I would consider myself wrong. Or I would say it is one of the 10% of the stocks that didn’t oblige the 90/100 rule (90% of the stocks that make it to 90 will make it to 100)
I was very wrong on General Mills GIS because I thought at 69 it had a chance to breakout. Instead it collapsed back to support. 62 is decent support and where it has rallied from in the past year but for the time being I would say let the stock show us it wants to hold before diving in again.
