I’m Looking Forward to the Day that the Market Plays Well With Others
The either/or market continues to be in charge. Is it tech’s turn to rally?
You've reached your free article limit
You've read 0 of 1 free Pro articles.
The Market
I would love the Either/Or Market to go away. I would love it to just go poof and disappear. The only way I know that we can get there is if everything sells off together and we get that big spike in the VIX and massive change in sentiment.
But I don’t think you can get a massive change in sentiment when there is always somewhere to hide. And currently the Either/Or market always has somewhere to hide.
So, is it tech’s turn to rally? The SOX is sitting at its 200-day moving average. As I said yesterday, the ‘what if’ I performed on the Nasdaq Momentum Indicator showed we should rally Wednesday/Thursday and then come back down again next week. I will stick with that for now.
Not only that, the others have had a terrific run. I think the Utes are vulnerable to a pullback. I think bonds are vulnerable to a pullback. And I think drugs are vulnerable to a pullback. So the setup is there for a pullback there, but can tech join them?
One reason I think the others are due for a pullback is the number of stocks making new highs. In the last few months, as the market was falling, I had nonstop chatter about the new lows, but since they seemingly have peaked (a few weeks ago) and begun contracting, I am focusing more on the new highs.
I praised them two weeks ago when we saw the NYSE chime in with 110 new highs, the most we’ve seen since August. But notice that this last push up in the others (RSP, IWM) has not seen an expansion in stocks making new highs but rather a minor contraction.
I really just want a market that can check the box, works, and plays well with others. But we can’t seem to achieve that.
New Ideas
Recently someone asked about Oracle (ORCL), and I was unimpressed. However, it has since rallied and collapsed. But look how the collapse did not make a lower low. It’s only a trade, but could be worth a shot.
Today’s Indicator
The McClellan Summation Index is still heading up. It will take a net differential of -1000 advancers minus decliners on the NYSE to halt the rise. If I am correct and the others pull back here, the Summation Index is in danger of rolling back over.
Q&A/Reader’s Feedback
Helene welcomes your questions about Top Stocks and her charting strategy and techniques. Please send an email directly to Helene with your questions. However, please remember that TheStreet.com Top Stocks is not intended to provide personalized investment advice. Email Helene here.
I recommended Visa (V) back in June when it was forming the right shoulder of that head-and-shoulders bottom. Last week I noted that it had tagged my first target of 415, so I said I would take some profits. I also noted there was a secondary target at 435. The stock hasn’t done anything wrong, but since it is up 30% from my recommendation, I thought it was prudent to take something off. For it to do something wrong now, it would need to sell off to a lower high and a lower low.
Mastercard (MA) has a measured target around 690, but like Visa, it has had a terrific run (I did not recommend this stock), so I would be inclined to take a little something off the table, but to do something wrong it would need to make a lower high and/or a lower low.
I recommended Pulte (PHM), a member of XHB, an ETF to be long the homebuilders, several weeks ago when it made that island bottom. I called it a tax-loss rally candidate. Last week I said I thought it had had a good run and we should take a little something off the table. I still feel that way. I’d like to take another look at it on a pullback into that 99-100 area. If it can hold there, it gets me interested again.
In late September, I said we had to watch Caterpillar (CAT) to see if it broke or held. It rallied and died. There is a downside measured target in the 630 area and another one near 550. The stock is getting oversold, so it ought to rally. But if it gets into that 675-700 area, I’d sell it.
I also highlighted Cummins (CMI) in that late September call on industrials to focus on. CMI has actually done better than CAT in that while it hasn’t rallied, it hasn’t died. I fret over the fact that it broke down last week, but if it can recapture 520 in a hurry, I would consider this a good tax loss rally candidate, but it has to recapture that 520 area quickly (like another week or so).
Marvel (MRVL) has some support in this 160-170 area, so if it can hold for another few days then I’d look for an oversold rally, but that’s it for now. A break of 160 would complete the double top, so if it does rally and does so in a crummy fashion, beware.
