Can Tomorrow’s CPI Release Shake Up This Dull Market?
I expect the market to get overbought this week, but it won’t happen with days like these.
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The Market
Another day of dullness. I really thought the market overall would be higher today. Maybe tomorrow. Because, in case you haven’t realized it, the S&P (and Nasdaq) have been red for four of the last five trading days.
Oh, the overall change hasn’t been much, just a chop-fest. But I thought we’d lose upside momentum (get overbought) midweek this week, and so far it’s looking as if that occurred a week ago.
Perhaps Wednesday’s CPI release will shake things up. But I want to once again highlight the Utes. They are trying to find a low. Down below, we take a look at Southern Co (SO) where you will see I highlight some statistics from Bank of America on the Utes. I still think they pop and come back down, forming a W of sorts.
Aside from that, my notes continue to point to a market that gets overbought midweek this week. And so I should also note that the number of new lows on the NYSE has now crept up to 93. Please notice I am not fussing over the Nasdaq lows because they are not expanding. In fact, Nasdaq had 104 new lows. It’s possible –and would surprise me—if we see the NYSE with more new lows than Nasdaq!
Finally, just to keep you up on the sentiment, the ten-day moving average of the put/call ratio is now .85. I expect it will be in the low 80s by the end of the week.
New Ideas
Could Gilead (GILD) finally be completing its correction that began in February? Is that a potential head and shoulders bottom?
Today’s Indicator
The McClellan Summation Index is heading down. It won’t take much to turn it back up. Keep in mind the market is at all-time highs, though!
But notice that Nasdaq’s is heading up. There is a shift taking place.
Q&A/Reader’s Feedback
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IonQ (IONQ) is trying to bottom, but it has a lot of resistance all the way up, in layers. If it can map out something akin to what I have drawn in green, I think it improves the chart and makes it buyable; otherwise, I think it looks like it is just in a giant trading range is more likely to frustrate than anything else. A pattern needs to shape up.
Builders First Source (BLDR) is trying to base. It’s been working on it since April, but there are still no higher highs (notice late June was not quite to the same level as mid-April). I think it can bounce to 80, but then it would need to get over 80 for me to have confidence it can do more.
Since I am warming up to the Utes for the first time in a few months, I was asked about my go-to utility stock: Southern Co (SO). It looks awful, doesn’t it? But somehow or another I think it is trying to hold. I would like to see a bounce and then another retreat (that W pattern I so like). I think you will need patience, and I would say I am wrong if it breaks under 89.
I would like to add one tidbit I saw from Bank Of America today. Long only funds have reduced their exposure to Utilities to 24% underweight today vs. 19% at the start of the year. That is the largest decrease of any sector.
The Utes are under-owned. I am just trying to find a good spot/time to buy them. I think we are close so if you want to nibble and leave some room, I wouldn’t argue.
I have tried to bottom fish Nike (NKE) several times, and each time I have been handed a loss. I joke, but there is some truth to this: perhaps the only thing that can help it is to get kicked out of the Dow! A break of 40 would be terrible.
