Stuck in The Big Chop

The Market

We should just call the last two weeks in the market "The Big Chop." The S&P 500 is literally where it was the day after the Fed meeting. So we lowered rates by 50 basis points and all we got was a flat S&P.

In fact, the only place we’ve really gotten any movement is from Chinese stocks. I have been bullish on KraneShares CSI China Internet ETF KWEB and while I think the Chinese stocks are ahead of themselves in the near term we cannot ignore the big breakout on big volume. The only thing I wonder about is that it is National Week (Golden Week) in China. They come back to work on Monday (our time), so what will the reaction be from the local side?

Today’s flat S&P didn’t bring us a big change in any of the indicators. They continue to back off. You can see the Hi-Lo Indicator has finally moved down enough that you can see it without a microscope.

The bottom line is that the charts mostly look droopy and we need them to get back to an oversold condition.

On the sentiment side of things, I would just note that the Investors Intelligence bulls are back over 55%. Recall at the mid-September low they were at 43%. So they have come a long way. Think of it like this: Since the Fed meeting bulls have moved up six points and the market indexes have gone nowhere. That still feels like complacency to me.

For those who observe Rosh Hashanah, Happy New Year!

New Ideas

Exxon Mobil XOM finally made it over $120. It has a bit of resistance up here from that April high. The stock might have a pullback in the near term but It ought to make its way toward $130 over time.

Today’s Indicator

The Volume Indicator has inched down to 53%. It gets oversold in the mid-to-upper 40s.

Q&A/Reader’s Feedback

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Let me start with a comment on the semis/tech stocks here since there are many requested. I am not negative on them. I thought they were buyable a few weeks ago when we got oversold. My sense is that they tend to do better when we are at an oversold condition so I prefer to wait for that setup.

Leonardo DRS DRS has a measured target around $32-33 from this summer's consolidation. I’m not very good at chasing stocks that are up, though.

I’m struggling with the chart of Waste Management WM because if we forget about July’s pop and drop the stock has gone nowhere for most of the year. My inclination is that you want to see it stay over $200 so if you have patience you can just hold it. I don’t love that gap down in July that was unable to fill the gap, which is what has me hesitant on the stock.

I suspect CrowdStrike CRWD has another rally left in it but there is just so much resistance overhead that I’d be cautious if it can’t get over $300 or if it breaks under $270. The stock has the feeling that just says be cautious if it can’t get over $300.

Broadcom AVGO feels as if it can/should rally again but it also feels like it is too soon for it to get over $180. If it can’t get up and over $180 be cautious.

To me Nvidia NVDA seems to rally well when everyone is concerned about it and now I sense folks are just unsure whether to love it or not right now. My inclination is to think it eventually breaks out to the upside of this triangle. I’m just not sure it does it in the next few weeks. Maybe once the market gets oversold again.

AbbVie ABBV has had a nice consolidation up here. If it can get over $200 should run to $210-ish.