Is the Day of Realization at Hand?
Investors warm up to the other stocks. And we also examine WYNN, NKE, SBUX, and PFE.
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The Market
We are short-term overbought, but we are not yet intermediate-term overbought. Could the market use a down day? Sure.
I see that today, even though the S&P was up, we are starting to have a bit of a Realization Day. By that I mean they realize that the Mag 7 are perhaps not going to be the place to be in the near term. They realize that the others aren’t so terrible. I still believe this is all just one great unwind from the trades that were put on over the last two months. The key will be if, once the unwind is done, it can sustain itself.
The small caps have zoomed up. The Transports have revved up. The industrials have jumped up. Even small-cap tech has lifted. Biotech has caught fire—where is the love??? Nope, all the love is directed at the banks. We discussed the banks last night so I won’t hammer any more about them. Just know that the Bank Index closed two cents shy of 114.
All of this rallying has finally helped the stocks at new highs. We have yet to surpass the spring reading but at least we have finally pushed upward enough that we can see it.
Bonds rallied today, so the yield on the Ten-Year is very close to breaking that trend line I have drawn in. Let’s watch that closely in the coming days. I do expect it will be broken at some point but I am surprised it has not yet done so.
Lastly, let’s not forget the VIX. It has not made a lower low in nearly two months. It might not matter right now but I suspect once we get intermediate term overbought it will. I expect us to be intermediate term overbought late this month.
New Ideas
Now it’s hard to find down and out stocks but if there is one stock that hasn’t rallied, it is Wynn Resorts (WYNN:Nasdaq). It’s a terrible chart, but isn’t that what has been catching a bid lately?
Today’s Indicator
The McClellan Summation Index is heading upward.
The Summation Index needs a net differential of -4000 advancers minus decliners on the NYSE to halt the rise. That makes us overbought in the short term.
Q&A/Reader’s Feedback
If every down and outer is rallying, can Nike NKE rally too? Sure why not? But that top it broke down from measures to 60-ish so I would say NKE rallies and comes back down. So a short term trade.
I am inclined to think Starbucks SBUX rallies because it has given us a W pattern and we know we are dead wrong should it break 72 like it means it. It has also achieved its measured target from that breakdown.
I was asked if there is a measured target on Pfizer PFE. I do not have one yet. The stock would need to first breakout over 30. Then we’d have a measured target (over the longer term) around 35-ish.
