Investors Aren't Becoming More Bullish, but They Are Becoming Less Bearish
It's a choppy market with bad breadth. We'll also look at OIH, LIT, BKSY, PFE, CRH, AVGO, and NOW.
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The Market
You do realize how much better this market would be if it would get itself to a good oversold instead of this non-stop chopping we’ve done. We had yet another day where the indicators did not change much.
Breadth was negative but once again, the number of stocks making new lows did not increase much. What that means is we keep knocking on the lower end (call it 5860) of the S&P and unlike last week or even the week prior, when stocks making new lows increased almost daily, now we are not seeing that vast expansion.
And the Utes were green again, although they are kissing resistance.
Elsewhere, the Investors Intelligence survey saw almost no change in the bulls (still at 60%), but the bears finally dropped—to 18.3%. This is the lowest reading since September so while folks did not necessarily get more bullish, they got less bearish.
I am still watching the bull/bear spread which has climbed quite a bit in the last few months. It was just under 2.0 and is now 3.3. In July and in the spring it got to 4.2, meaning there were four bulls to every bear. It doesn’t need to get back there, but should it do so, it would be considered extreme.
Finally, the DSI for Bitcoin is now 88. I realize it has a life of its own now, and everyone thinks it is going to $100k, but when the DSI gets this high, it’s a yellow flag; over 90 would be a red one.
New Ideas
OIH has had a nice pullback since that gap-up post-election. It still has quite a bit of resistance all the way up, but it’s shaping up. I’d say a run to 305-310 looks doable.
Consider this another reminder that the chart of LIT continues to look like a base to me.
Today’s Indicator
The Volume Indicator sits at 50%
Q&A/Reader’s Feedback
Black Sky Technology BKSY is knocking on resistance but I do like the way it filled the gap at 8.50, had a small breather and kept going. That having been said I would take a little off the table here and hang on to the rest. I would give it a few weeks to see if it can chew through some of that resistance at 10-ish.
I noted the other day that the biotech/healthcare area saw some panic on Friday. I highlighted Pfizer PFE, saying it should bounce, but XBI would be in the same category. Look at that volume on Friday. It runs into resistance around 96.
CRH CRH has a measured target off that breakout in September of 102.50. Yet the stock hasn’t done anything wrong yet. If it were me, I would take a little something off the table here and use a stop under that uptrend line for the remainder.
Broadcom AVGO is starting to look quite toppy. It’s a little short-term oversold (down from 185 to 161 in a straight line will do that) but I suspect it sees the lower line before the correction is finally done.
ServiceNow NOW hasn’t done anything wrong, but it has reached a measured target. That means I would err on taking some profits here and hanging on to the rest with a stop under that uptrend line. I am mostly still favorable to software but they have had quite a run and need a ‘time out’.
