‘Sell in May’ Might Have Been the Right Move This Year
The S&P is where it was six months ago as we wait for a big move. Plus, a look at the mighty Utes, gold miners, Warby Parker and much more. </p> <p>A Market Frozen at 7,500 Leaves One Big Question Unanswered
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The Market
You do realize this was one of those years that “sell in May and go away” would have worked, don’t you? I mean the S&P 500 first tagged 7500 in mid-May and here we are with a mere seven weeks to go in the year and it sits at 7520.
In fact, often in the last six months I have wondered if we’ll ever see a significant move off of this level. Yet in that time we have seen the QQQs down quite a bit from their mid-May high and the Russell 2000, like the S&P, at the mid-May level. So it’s not as though this was a market where we saw one area significantly outperform the other.
Sure we’ve seen staples and drugs do well but that’s two groups that, as I am told incessantly, are bearish if they lead!
This brings me to the Utes. They act great. They held up remarkably well during Tuesday’s bond rout. They are even eating through resistance admirably. But they are now overbought. If the Utilities Select Sector SPDR Fund (XLU) cannot get up and over $43.50 soon (a few days) I fear we will see this group retreat. I am in favor of taking some profits and using a stop under $42.
Elsewhere, there was no change in any of the indicators. The NYSE McClellan Summation Index is still trudging upward. The chart is shown below. The Nasdaq’s Summation Index is still slipping lower. At least the put/call ratio was 0.95 Tuesday. A week or two ago a reading in the 90s was hard to come by. The 10-day moving average is now fractionally over 0.90.
New Ideas
I have been jotting down J.B. Hunt Transport (JBHT) for days now as a possible trade. And yes, I mean just a trade. It just feels as if it is tired of going down and one little bit of good news could get it over that line around $230. The problem is for a trade the stop seems far away (under $215).
Today’s Indicator
The McClellan Summation Index is discussed above. It needs a net differential of -1,200 advancers minus decliners on the NYSE to halt the rise.
Q&A/Reader’s Feedback
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I think the VanEck Gold Miners ETF (GDX) will rally again. I don’t have a specific level I would add to it, though. I will admit I don’t love the fact that Monday’s action looks like an island, so if it cannot hold over $82 and then cannot get back over Monday’s high I would get out of the trade.
Cal-Maine Foods (CALM) will run into resistance in the $72-74 area. It ought to try and get there but that is a lot of resistance to chew through.
I want to love that base that is building in ConAgra (CAG) but that high at $16.50 from August probably gets in the way on the first trip up. Let’s call the stock okay as long as it stays over that little uptrend line around $14-ish.
Tyson Foods (TSN) trades very thinly and has run 20% in the last few weeks. Then it has earnings next week! I’m inclined to think as long as it holds over $57 it ought to be okay even if it is a wild ride.
I was asked about Warby Parker (WRBY) about a month or so ago and I recall thinking those old highs at $31 would be a problem. They seem to still be. However, if the stock can pull back gently toward that blue line and then enjoy another run up it might be able to break out. So I would use a stop under that $27-28 area.
