It’s Time to Take Notice
As the market nears oversold, one Wall Street strategist has cut his year-end target on the S&P 500 by more than a little.
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The Market
Well, hey, we saw a little change in sentiment today. It was nothing drastic, but it’s enough to note.
We had a well-known strategist take his year-end S&P target down from 8400 to 7900. That might not sound like a lot to you, but my mentor in this business used to say when they cut their earnings estimates by a nickel or a dime, we yawn, when they start chopping it by a buck, we take notice. This was just over five percent, so it’s more than a nickel or a dime.
The Investors’ Intelligence bulls dipped marginally to 48%. But the bears dipped marginally, too, so the bull/bear ratio remains at an elevated 2.88. But the put/call ratio zipped right up to .96. Believe it or not, that is the highest reading since we had just over 1.0 at the late July low. The ten-day moving average remains low, but you’ve got to start somewhere.
Finally, the VIX tried desperately to get up and over its 200 DMA, and the late-day rally took it right back under. It tried!
I would call what we saw today a whoosh. I would also note that there were far fewer stocks making new lows on that whoosh. Tuesday, the NYSE saw 374 new lows, and Wednesday, we saw 204 new lows.
Nasdaq was not nearly as dramatic, nor did Nasdaq take out the recent lows, but the new lows contracted marginally from 422 to 395 today. That puts the NYSE Hi-Lo Indicator at .21 and Nasdaq’s at 22. There was precious little movement in those indicators today.
Down below, you will see the Volume Indicator. It now resides just under 47%. That is oversold. It can get more oversold, and probably will (the math does that), but it tells us if we can get sentiment lined up, we can have a good rally. If sentiment refuses to get bearish, then the rally would be more like what we saw in late 2024-early 2025.
Finally, the Bank Index finally broke like it meant it. That top measures to the 175 area, which also filled that little gap from June. Let’s see if they can settle down now.
New Ideas
I want to follow up on a few stocks. First Meta (META), which I recommended a week or so ago at 580, has rallied up to resistance. I think it probably backs off and tries the upside again, but this was my initial target, so I would be inclined to take a little off the table.
First Solar (FSLR), which I liked a week or so ago around 205, had a nice pop and now it has collapsed to prove me wrong. There is support down here, but that’s the best I can say. If it can rally to 200, I’d get out.
Finally, JB Hunt (JBHT), which at 260 I thought would go lower. Then it rallied to 275, and I second-guessed myself, has collapsed. It has a measured target in the 225-230 area, but that now looks like a big top.
Today’s Indicator
The Volume Indicator is discussed above.
Q&A/Reader’s Feedback
I was wrong about Broadcom (AVGO) because I thought that spike low just over 340 would hold on this trip down, and it hasn’t. Now it has support in that 330 area from the line and a gap fill. But the resistance at 355-370 will be difficult to overcome in my view.
Revvity (RVTY) has had quite a run. There is a measured target in the 145-150 area, so if you wanted to book some profits, I wouldn’t argue. But I would say it hasn’t done anything wrong. It’s hard to pick a spot to think it has done something wrong, but under 132 would give me caution.
Pulte (PHM) has been in a wide trading range for at least a year. That is impressive considering what interest rates have done, but for now I’ll call support 110-112 and first resistance 122.
