Overbought, With a Chance of Volatility
A quiet day in the markets, but the overbought reading is doing its job. Let's also look at MSFT, BMY, LW, SMH, SIRI, HAIN, SMPL, CENTA, AMZN, GM, PDD, SMCI, and AMBC.
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The Market
Not much happened in the market today to even report a change in the indicators.
Breadth is still good, although I should point out that while still heading up, the McClellan Summation Index now needs a net differential of -800 advancers minus decliners on the NYSE to halt the rise. Friday’s net breadth was -850, to give you an idea.
The Russell has now come down nearly two percent since Thursday and Nasdaq is flat as a pancake. Thus far, the overbought reading is doing its job. What has not occurred yet is an increase in volatility. The VIX was down again today.
Although the VIX still hasn’t made a lower low, and it was down, the DSI remains at 16. So, it is still in the zone where I would say we should get some volatility.
Finally, I would point out that the number of stocks making new lows increased again for Nasdaq with 130 new lows. That is the most since September 11th. It’s not terribly concerning yet, but the peak reading for that early September downdraft was 230 new lows so it is something to watch.
Finally, in terms of sentiment, we have now seen the ISE Equity call/put ratio over 2.0 for two straight days, something we haven’t seen since late August. Complacency is back.
New Ideas
There are an awful lot of stocks discussed below (keep those requests coming!) so let’s answer a question I got today: why was Bristol Myers BMY up when drugs and biotechs were not? I have no idea! But I do know that the chart continues to look like it is desperately trying to form a base.
Today’s Indicator
The 30-day moving average of the advance/decline line is overbought.
Q&A/Reader’s Feedback
I don’t have a strong view on the VanEck Semiconductor ETF SMH in the near term but on a more intermediate-term basis, I think they will make a try for that resistance around 250 and then I’d like to see what it looks like. As I said a few weeks ago when the hate was strong for them, I was keep to see that early September move down as a retest. I still feel that way.
If the current rally in Sirius SIRI is going to do more than rally to that downtrend line, it is going to have to do more work. For now, I’d say resistance near 30. The stock has been in a long term downtrend so it needs some base building before I can get on board.
Hain Celestial HAIN has some support here but it’s going to need to do more sideways work to convince me that it doesn’t want to fill that gap below first. If it filled that gap below I’d be more interested in buying it.
The Simply Good Foods Co SMPL feels like a bottom in the making. It will have a hard time getting through 36-37 but I’d love to see it try. The stock has been going sideways since March (a plus)
I remember when Central Garden & Pet CENTA was a hot stock but now it looks like no one cares about it. For the time being I’d lean toward being a buyer (probably needs to wait until the new quarter) with a stop under 31-ish.
Lamb Weston LW has disappointed on earnings twice this year. If the stock gets to fill that gap at 75 I’m a seller.
Since I like IGV, and Microsoft MSFT is a decent portion of that ETF, then I ought to like MSFT. Yet the chart looks like a stock that is just okay if it stays over 430. It has spent the whole year going sideways with a low in January and a high in July. Nothing exciting but ought to stay over 430.
I liked Amazon AMZN when it filled that gap from February in early August but now it is heading into the old high. I just can’t get excited over chasing it here but the stock is still okay.
General Motors GM looks like a chart that is just slogging through it. If it backed off into that 43 area I’d probably be a buyer.
Considering I am now a fan of KWEB I think PDD PDD can rally to 110 before it runs into trouble.
Super Micro SMCI ought to fill that gap just over 500 but that’s the only thing I see in the chart so far. The good news is that it met its downside target (one of them) when it tagged 400.
Ambac Financial AMBC has been in this channel all year with the exception of the pop and drop in May. There is a bit of good news though: it has a double bottom in August and September. It ought to make another stab at the top of the channel. My only question is if it has done enough work to breakout of it. The jury is still out.
