Either/Or Market Remains in Tact as New Lows Expand

I know the hullaballoo on Thursday was about (NVDA) (which closed on the high of the day), but the majority of the selling was not in tech stocks. The selling was in the others. 

I have thought for a while that the others would have a dip around now and then reach an overbought condition around Thanksgiving. Getting overbought is not a negative. Getting overbought with the indicators rolling over is a negative. And on Thursday, the McClellan Summation Index stopped going up for the first time in about seven weeks. 

It would still need to roll over to be negative but for me it solidifies my view that they are headed for an overbought reading and we’ve probably seen the best of them for now.

Not only that: For two months the number of stocks making new lows on the NYSE has not expanded. On Thursday they expanded, by quite a bit.

And tech? Well it hung in there relatively well. Thus, the either/or market remains in effect. The question is when the tech stocks, which got oversold earlier this week, push back to an overbought reading (early next week), can we finally get the market to come down together?

We’ve finally got sentiment that is no longer complacent. It’s not quite panicky, but with the Investors Intelligence bulls at 37% and the bears at 24% it won’t take much to push those into panic. The AAII readings which now show 30% bulls and 51% bears could also be pushed into panic.

The NAAIM folks have reduced their exposure down to 72. And the 10-day moving average of the put/call ratio has edged up to .91. Here, too, that means it wouldn’t take a lot to get this to panic. The chart is shown below. 

Of course, next week we have NVDA’s earnings (won’t that earnings call be interesting?), as well as Anthropic’s IPO and it’s an expiration week. Perhaps we had better strap in!

New Ideas

Let’s do some followups. 

First NVDA. We finally got some serious volume, with over 700 million shares traded. The stock closed at the high of the day. Can it get up and over that line? I’m going to call it 170. If it can, then I still think this is an oversold rally but at least it’s a trade. If it fails under 170 then I would expect more downside.

Dell (DELL) closed that gap from Wednesday so there is no island (an island would have made the chart quite bullish). Now it’s just an oversold rally. My targets on the rally were 375 (achieved Wednesday) with a shot at 400 to 425. A break of Thursday’s low and I’d say the oversold rally is done.

(SMH) has that resistance 520 to 540. If it can’t get up and over 520 in the next two trading days the window starts to close. It has rallied 15% in a week.

(GLD), which I thought was OK to buy, turned out to be very wrong. The DSI is 12 so we’ll have a chance again because I suspect if it falls much more that DSI will get to single digits.

Today’s Indicator

The 10-day moving average of the put/call ratio is discussed in full above.

Q&A/Reader’s Feedback

I’ll call Bristol Myers (BMY) a hold for now because it hasn’t broken the uptrend line, but the fact that so many other drugs have done so well and BMY couldn’t even get back to the summer high has me thinking take some profits.

Coreweave (CRWV) is enjoying an oversold rally. If it can get to 65 I’d part ways with it.

I want to like the chart of McCormick (MKC) because it has been down and out for so long but I’m inclined to think the best it can do for now is stay in that trading range. I do not like that action about a week ago, where it gapped up and gapped back down, leaving a potential island up there (49-51). Maybe it settles down in the next few weeks and I’ll feel better about it but right now that action makes me suspicious.

Unusual Machines (UMAC) had better hold this 11 area because if it doesn’t, I see a new leg down. If it can hold then I’d be a seller near that blue line (16-ish).