Oversold Wasn't Built in a Day
The Market
Finally we saw a little bit of selling in the market Wednesday. But it still wasn’t much. That means we continue to do a lot of sloshing.
The Nasdaq had its first negative volume (up minus down) reading in nearly two weeks. As we discussed yesterday, I would say that is the speculation being pared back for the day. But it’s going to take more than one day of negative volume readings to get the Nasdaq toward an oversold condition.
I would point out that the Russell 2000 is now down five straight days and found its 50-day moving average line Wednesday (not shown on the chart). My uptrend line clocks in at $215, that same level we bounced off in early October. It would not surprise me one bit if the Russell tried to show green Thursday.
Let me note that while my Oscillator is not yet oversold (recall it only got overbought a week ago) the McClellan Summation Index is still heading down, as it has been since early October. However, it now needs a net differential of +3,000 advancers minus decliners on the NYSE to halt the decline. That is the most it has needed since mid-April.
Notice that it did not mark the low in mid-April but rather just gave us a one-day bounce. For now that is all I would look for.
Aside from that there was no change in any of the other indicators except the Bond DSI ticked down a smidge to 24.
New Ideas
A while back I was asked about Salesforce (CRM) so I want to follow up on it. The stock did fill that gap above (blue line) and now does not have much support until it gets into that $270-ish area.
For those who keep asking about the QQQs, do you realize the Invesco QQQ Trust (QQQ) is flat for the month of October? There is a support line just a little bit lower ($482-ish) but I sense the support everyone will be watching is those twin lows around $478.
Today’s Indicator
The Volume Indicator is at 54% so it is not oversold.
Q&A/Reader’s Feedback
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Toll Brothers (TOL) finally broke the uptrend line. It has support here so it should bounce (and if bonds ever bounce it should bounce). But my initial thought is that I would sell a bounce in the $153-155 area.
Marathon Digital (MARA) has done nothing all year. It’s not enough of a base for me to like it yet but I am intrigued. Should the stock hold in the next week (over $14) or two I would be inclined to buy it for a trade.
I still think Bank of America (BAC) has another rally left in it but I don’t think it will surpass that $44 area in the near future. For now I’ll call it a trading range between $40-44.
If iShares MSCI Mexico Capped (EWW) , an ETF to be long Mexico, can hold above $50 through year-end or get over that downtrend line it changes the picture from a downtrend since May to a potential bottom. I’d prefer if it tests $50 one more time.
iShares iBoxx $ High Yield Corporate Bond ETF (HYG) has some support at that line around $78.50-79. I don’t like that it has a lower high. I would like to see it mill around sideways to see if I trust it, similar to the way it went sideways in May and June before it had another push upward. A break from here would make the chart negative.
