Market Returns to Unhealthy Trend, But I’m Not Complaining
Traders reacted to the oversold conditions and, most likely, the Magnificent Seven.
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The Market
It was a tech-centric day, but not all tech. Yes, we’re back to that again. The market was quite mixed. I am not even sure we can call it either/or.
On Wednesday, the up volume on the NYSE came in at 66%. The S&P was up 35 on the day. Thursday’s up volume on the NYSE came in at 64% with the S&P up more than double the points it was up on Wednesday (81). Breadth statistics were no different with Wednesday net breadth at +700 and Thursday’s at +550.
Ah, but surely Nasdaq was better? Nope, over at Nasdaq, Wednesday’s up volume was 75% while Thursday’s was 67%. I would remind you that Wednesday’s Nasdaq was +118 and Thursday it was up 366 points.
So, Thursday was very index-mover, mega-cap centric. I’m not complaining because my view has been that we’d move back to this sort of market, not a broadening out one, not one where the “others” lead.
But is that overall healthy? Not really. It’s a reaction to the oversold condition I believe and the fact that so many of the Magnificent Seven names had become so ordinary, with no one even focusing on them anymore.
What surprised me the most was that bonds rallied, which should have meant everything rallied together. You know, one of those days where breadth is fabulous and upside volume knocks on the door of 80%. But you can see that was not the case.
Yes, bonds rallied. Not a lot, but they relieved some of the pressure. Obviously, Friday will be another test when we get the jobs number.
There was very little change in any of the indicators except that the DSI for the VIX dropped to 13. It was 13 on August 27, just before our three-day pullback.
New Ideas
I’ve had a lot of questions on (GLD), so let me address them. I do not have a target. I thought we’d see a pullback from the 430 area and I thought it would hold 395 to 400. So far, that’s been the case. But now I will turn bearish on GLD if it can’t get up and over 430 in the next few weeks.
Now I want to address Freeport McMoRan (FCX), which I was asked about last week. It has given up the entire gap up. If it breaks back under 70-ish, I will have to consider that a false breakout.
Today’s Indicator
The 10-day moving average of the put/call ratio remains low, which means it doesn’t confirm all of the chatter I hear about, how folks are expecting a scary September; they are not loaded up on puts.
Q&A/Reader’s Feedback
Winmark (WINA) is a stock in a downtrend so perhaps it would be a candidate for a bounce later in this year as we head out of tax loss selling season. In the near term, though, it is at some minor support and looks oversold so I would expect a bounce. If it does bounce, the big test will be to see if it can get over 335 to 340.
Tesla (TSLA) has had a nice bounce but it is coming into resistance as it gets into the 390 to 400 area so I would expect some resistance up there.
Nokia (NOK) was the first phone I had. It was a flip phone and I loved it! The chart has filled a gap at 9.50 and has some support from that uptrend line around 9 so, if you wanted to trade it from the long, I wouldn’t argue against it since the risk/reward is decent. Conservative folks can use a stop under 9, less conservative would use one under 8.50. I’m just not sure it has a lot of life in it.
