Stock Bulls Bark While Dollar Bulls Break
Stocks make it eight in a row while the dollar sits on the verge of a breakdown. Let's also look at URI, HUBB, TERN, CYTK, and FSLR
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The Market
Eight straight days of green. That doesn’t happen very often. It’s been years since we went to nine straight.
In my work, that makes us short-term overbought. As I explained yesterday, the math makes us short-term overbought now. You can now see it on the chart.
But boy, did today turn folks bullish. I mentioned we were now short-term overbought on Twitter and you would have thought I had insulted these folks. The barking back at me and telling me that we were not overbought or that overbought can stay overbought or showing me their RSI charts. Stuff like that. What a difference from a mere two weeks ago.
And it shows in the put/call ratio which slipped to .75 today, which is the first such reading under .80 since mid-July. Again, I think we pull back and rally again but a little shake up would be helpful at this point. It would wring some of this newfound bullishness out of the market.
Finally, I want to address the US Dollar. It is on the verge of breaking down. I would like to see it crack because the DSI is 21. I think if it cracks, we’ll see some short-term hysteria and that would make the Dollar a buy.
As a reminder, the dollar tends to go hand and hand with interest rates and I think at best we have one more push down in rates but they are about done going down for now. So watch the buck.
New Ideas
For the person who asked about First Solar FSLR last week. See how it popped and now has sat there for 3-4 days? A few more days of not giving up the rally and I think it goes through on the upside.
Today’s Indicator
The 30 day moving average of the advance/decline line is overbought.
Q&A/Reader’s Feedback
I am immediately suspicious of a stock that has barely budged in the last week and Cytokinetics CYTK is such a stock. That having been said it does look like a stock that is trying to bottom in some fashion. I’d like to see how it handles the upcoming overbought condition and then I’d start fretting over tax loss selling so if it can hold 50-ish for the next few weeks I would give it some credit for holding.
I am inclined to look at Tern Pharmaceuticals TERN with a positive eye because it has been going sideways the entire year. There should be some resistance 8.50-9 but as long as it holds over 6.50 I’d give this stock a chance.
Hubbell HUBB is trying to bottom but it’s slow going. My inclination is to think it continues sideways for now since it seems in no rush to rally hard. For now I will call it a trading range from 350-400. If it is still milling around the next time we get oversold I’d get more interested.
United Rentals URI has been in this trading range almost the entire year. I’d love to see it spend a few more days hovering just under 720 before it opts to rally again. I lean positive toward the chart but would like it to spend a bit more time consolidating that rally it just had.
