Little Change in the Indicators, Except for This One Asset Class
Let's take a look at the key indicators and see which one might be bottoming. Plus XLU, TLT, W, SQ, APA, GD, and AMD.
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The Market
The indicators did not change today. I wish they did but they did not.
You know what changed though? The DSI for bonds is now 14. Now we’re finally getting somewhere.
In addition to that, have you noticed the Utes? I discussed the staples yesterday (more on that below), but we did not discuss the Utes, which have rallied quite a bit. The Dow Jones Utility Index is now up for November. And I even heard some guy on tv say he wants to sell the Utes. So, sentiment has changed, too.
I warmed up to the Utes again a couple of weeks ago. I’m not certain they are poised to run and make new highs, but they have gone from ‘too many bulls’ at the highs to ‘no one even cared about them’ two weeks ago. As long as XLU stays over 76 I give them a chance to improve.
Yesterday we looked at Proctor and Gamble improving. Today let me note that Kimberly Clark has been up for a few days now. Colgate is enjoying its best rally since the peak in September as well. And Clorox, Philip Morris and Altria are all at the top of their range.
Are folks buying them for dividends? I don’t know, but they peaked around the same time bonds did. I still think bonds should rally. I have been dead wrong on that but I can’t shake that this is the area they should bottom. And with the DSI at 14, I feel more confident because if they crap out in the next few days, that reading will be single digits which will make bonds a screaming buy.
New Ideas
Wayfair W held nicely down there and has (just barely) recaptured 40. It continues to improve but I’d use a stop under 37 now, hoping to move it up as time goes on.
Block SQ reached my target of the March high (87-ish) last week, backed off and has come on again through that level. The key is that it is now over 90 (just barely) so the 90/100 rule goes into effect. That rule states that 90% of the stocks that trade to 90 will trade to 100. However, remember 10% of the time it doesn’t work so I would use a stop under 87-ish.
Today’s Indicator
The 30-day moving average of the advance/decline line is not oversold but it is getting closer to being that way.
Q&A/Reader’s Feedback
As we head into year-end, stocks that have been down are often candidates for tax loss selling. But they are also candidates for the ‘new year’ as slates are wiped clean. APA APA has not been able to find a bottom all year, as it has been in a downtrend. That lower line has kept the declines contained, or at least it has been a level the stock has bounced from. I’d be a buyer if it got down there. The key to liking the stock for more than a bounce to the upper line, though, is getting it up and over that line. Right now, that level is 25.
General Dynamics GD has some light support in this 285 area but much better in the 275-280 area.
The question is if Advanced Micro Devices AMD is buyable now that it has broken and snapped back. While I suspect the selling is not over, and there is much work to be done to chew through any of that resistance, this 130 area has held for now, so if it backs up near Friday’s low, the risk/reward for a trade is decent.
