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Oversold Is Over With in a Hurry

Everything bounced late Friday, but it's notable that the Russell did not lead the move. There's only so much the 'others' can do in that kind of situation. Here's what to expect in the aftermath.
Comments

The Market

Well that was quite a bounce we got in the final hour of trading on Friday. And while everything bounced — and did so with wild abandon (I can’t say whether it was related to the Morgan Stanley rebalancing or the end-of-the-month positioning that takes place) — I can report that the Russell 2000, which was leading all day, and breadth, did not lead that rebound.

The Russell made its high of the day right after the open. The afternoon surge did not even get back there. Meanwhile, the S&P 500 surged a full 25 points over its morning high. The same is true for breadth, the high of the day was made in the morning, not the afternoon.

This is not to discount the afternoon rally — heck we were oversold enough for a bounce as I had noted the last two days. But it is to point out that the "others" can only do so well while the mega-caps are rallying.

In any event, we took away that very short-term oversold condition in a hurry. We are not back to overbought but I can no longer say we are short-term oversold. And with all that breadth the last two days, the McClellan Summation Index is still heading down.

I suspect we have a bit more upside left this week and then we either come back down or chop.

New Ideas

I continue to be drawn on the chart of VanEck Oil Services ETF  (OIH) . It made a higher low in this last move down, but to me that means it is very obvious where I am wrong: a solid break under $310-ish and it is wrong to bottom fish here.

6-2-24-TS-oih (9)

Today’s Indicator

The Hi-Lo Indicator is heading down, but as noted Thursday evening, the new lows have stopped expanding.

6-2-24-TS-hilo (46)

Q&A/Reader’s Feedback

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Wheaton Precious Metals  (WPM)  should measure to the low $60s but I don’t currently have a positive view on the precious metals. With the DSI on silver having gotten to 90 twice I believe they need a correction. With WPM there is a lot of support all the way down so a correction back to that breakout at $50 might be too much to ask but I’m in the correction camp on this stock.

6-2-24-TS-wpm (1)

It’s been a while since someone asked about AT&T  (T)  but I still have that gap fill around $18.50 as a target. As an aside, if we account for the very large dividend the gap is closer to $19.50 so let’s couch the target in the $18.50-19.50 area. When we first looked at it last summer I said it would take a long time to get there and it’s been nearly a year.

6-2-24-TS-att (3)

I want to follow up on Jabil  (JBL) , a stock I was asked about recently and did a lot of waffling on because it looked like it could go either way. It still can but it has now had a chance to break and hasn’t so it gets the benefit of the doubt. A stop under $115-ish with a possible gap fill at $130.

And yes I realize the real stop is under $110 but if it breaks Friday’s low, who wants to wait around?

6-2-24-TS-jbl (2)

I was asked if I have a target on Bunge  (BG)  which I liked a few weeks ago. I do not. Not yet. It needs to break out and hold that breakout first. And it still has that resistance from last summer’s high to contend with. I am still looking for a breakout but we need to get it first before we measure.

6-2-24-TS-bg (2)