Despite the Rally, It's a Tale of Two Markets
The Others woke up today, but one day does not make a trend. We also look at BG, AMZN, AAPL, GOOGL, and DECK.
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The Market
Finally! I have been looking for a rally in the others for nearly two weeks now and we finally got one worthy of calling it a rally.
Breadth was good, not great. New highs continue to lag though. But let’s answer the question of the day: when will we get back to an overbought condition? My notes say it’s clear as mud.
It’s always much clearer when we’ve had a string of positive breadth days but we know that has not been the case. I can make the case that we get a little short term overbought Friday.
On an intermediate term basis, having just gotten oversold two weeks ago I can’t yet call the market overbought . I can call the big cap indexes over-extended, especially after seven straight up days and ten of the last eleven on the upside.
I can also tell you that if we draw an uptrend line connecting highs for the S&P we are tagging it now. I have a line on the QQQ’s that comes in around 508. I can also tell you that if you do the math, the S&P has a measured target right around this 5650 area.
I can also tell you that the DSI for the S&P is at 86. So is Nasdaq’s. The VIX is at 10. So another day or two and those ought to crest 90. Will the VIX go under 10? Well the VIX was up quite a bit today. And curiously it hasn’t made a new low since late May.
We continue to have the tale of two markets. The big cap/mega cap names are overbought while the others are not yet there.
New Ideas
I was asked to follow up on Bunge BG which I recommended a few weeks ago and it has lumbered upward, with lumber being the key phrase. I thought the breakout would look like one and it hasn’t. I am still a fan but I will give up on it should it head back under 107-108 because that would make it look like a false breakout.
Today’s Indicator
The Volume Indicator has moved up to 48%. Thus why the others are not yet overbought.
Q&A/Reader’s Feedback
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I was asked to follow up on a target for Amazon AMZN. Right now that breakout we got in late June measures to around 205-ish. I am surprised the stock has flatlined in July though. I suppose if you are trading it then you might want to take a few profits and let the rest run. I suspect I would be a buyer back around 190.
Apple AAPL is into its target zone now with a measured target around 225-235. It’s done nothing wrong. The worst thing I can say is it is over-extended.
A follow up for Alphabet’s GOOGL target from the recent breakout is right around 190-ish. There is a rule that 90% of the stocks that make it to 90 will make it to 100 and I have never seen anything about 190 to 200. I think in the case of Google I would just use a trailing stop, starting around 188 at the moment.
Deckers DECK has finally lost the momentum it had. I stopped watching it because no one seemed to care about it anymore. Yet now I have been asked. There is modest support here from the gap fill and the trendlnes but all I see right now is a bounce at best.
