Expect the Market to Get Much More Tricky
Although the Russell ripped higher today, most stocks were a bit more mixed. Let's see what else is going on. Plus, XLU, MRNA, TLT, ROKU.
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The Market
The beat goes on. But despite the big point move in the Russell, the move in individual stocks was much more mixed. For example, the upside volume on the NYSE was only 55% which is more of a coin toss than an upside move.
Or the fact that the number of stocks making new highs on the NYSE did not increase today. I still think that is just the short-term overboughtness at work.
For me, now the market gets much more tricky. First of all, we have earnings season. Pepsi last week got everyone hysterical over their earnings (or lack thereof) and their comments but the stock held and rallied hard for two days. Then today it gives some of it back.
To put that in perspective, last October it would have just kept on rallying. Also, last fall the Mega Caps didn’t play along, which is the same as now. Only in the fall we were coming out of the entire market being down for a few months so now it just feels like it’s still part of the big unwind.
The VIX continues to make higher lows and bonds are still mixed. In any event, not much changed today.
New Ideas
Two groups I want to highlight today is the banks and the semis. I have been positive on the banks since the lows last year. I am still positive on them. However I want to reiterate –now that everyone is bullish on banks—that my measured target has been in the 115 area. The Bank Index tagged 111 today. In other words, this is not the time to jump in with both feet.
I think I am early on this comment about the SOX but I expect sometime in the next month this uptrend line will break and the stocks will correct. My sense is there will be one more rally here but be aware after that if there is a break in this line.
We had some success with the SQ trade last week so now I want to look at another down and out and long forgotten tech name: Roku (ROKU:Nasdaq). That is starting to look as if it is basing, or trying to. And it hasn’t really done anything in July.
Today's Indicator
The 30 day moving average of the advance/decline line is still not overbought.
Q&A/Reader’s Feedback
I would prefer XLU not come all the way back to that uptrend line but if it does, that is where I would take another look at it.
Moderna MRNA has come down to support so if you are looking to buy it, this seems like the right place using a stop under those recent lows. Sure there is support under there but how far down into support would it go? That is what we don’t know.
I don’t have a strong view on TLT right now. I would definitely respect a breakout over 95 but I don’t have a strong view as to whether or not this is dipping back toward 91 first. So, just respect a move over 95.
