Put Buying at the Highest Level of 2024
Investors seem to be hedging their bets in advance of the election tomorrow. Or, is something else going on? We'll also look at XLU, BABA, W, and INTC.
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The Market
At least we got some put buying today. The put/call ratio zoomed up to 1.30, the highest reading since August 5th
In fact, at 1.30, it is the highest reading all year. The five prior high readings were all between 1.27 and 1.29. I will show them to you on the chart of the S&P for this calendar year. When we step back, we can see that the reading in late March was not contrary at all, but the others were.
I don’t have the breakdown yet, so this could be similar to Friday, where the majority of the puts traded were in the VIX, thus pushing up the total reading. But I don’t like to rationalize an indicator, so now take a look at the ten-day moving average of the put/call ratio. It is now at .99. Typically, a reading up over 1.05 on this moving average signals that folks are getting a little too bearish.
Away from that, the S&P did make a lower low and the number of stocks making new lows did not increase for the first time in weeks. The Hi-Lo Indicator for Nasdaq is now at .48, so that is still not oversold but is heading in that direction. Under .19 is oversold.
There was one other thing I would like to point out. The bonds rallied, but the Utes continued to fall. If we use the Utilities Select Sector SPDR XLU, we see the Utes are at the uptrend line that has held all year. If I am correct about bonds trying to bottom here (still questionable if I am correct) then the XLU ought to start to hold in this area. I do not have a strong sense of sentiment on them now because at 82 there was a lot of love, and in the last two weeks folks have gotten awfully quiet on the Utes. Maybe that is a sign. Time will tell.
New Ideas
It’s been a long time since we’ve looked at Lithium with a positive eye, but this chart of LIT is starting to shape up again. It looks similar to the Chinese stocks we keep looking at. I would just say put this on your radar because this might be something to own for 2025.
Today’s Indicator
The 30-day moving average of the advance/decline line is not fully oversold yet.
Q&A/Reader’s Feedback
We looked at Baidu about a week or so and again last week and I indicated that I thought it was finally starting to settle down and that if it spilled again we’d probably look to buy it. I don’t feel much different about Alibaba BABA. I would love to see it push down toward 90 and shake out the last of the weak holders but my sense is that over the next few weeks this will be okay to dip a toe back into again.
With Intel INTC getting kicked out of the Dow the question is if it is buyable. Heck, I thought it was okay to start nibbling on at 19 in September so I think it will end up being okay but you are going to need a lot of patience in my view. It really ought to eventually fill that gap overhead but it may test your patience in terms of time.
Now that Wayfair W has come all the way back to 40, is it buyable? I think it gets an oversold rally from here but I am not yet willing to say this is it. There is still an unfulfilled target in the low 30s but I think this bounces first.
