Tesla Just Keeps Going Up. Everything Else Slumps.
It's a Ground Hog Day kind of market, where Tesla goes up every day and the other stocks don't follow.
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The Market
It’s beginning to feel like Ground Hog Day, where every day, Tesla and maybe another one or two of the Mag 7 rally and everything else slumps. Oh yes, I know some drugs were up today and a few staples, but mostly, the market was sloppy once again.
Are we short-term oversold? Yes. Are we intermediate-term oversold? Still no.
Regarding the short-term oversold condition, the McClellan Summation Index made a lower low today—see the chart below—which means it hasn’t been this low since the fall of 2023. Not exactly great news for the breadth of the market. But it will now take a net differential of +3600 advancers minus decliners on the NYSE to halt the decline, which steps a toe into oversold territory for this indicator.
Stocks making new lows expanded on the NYSE once again, but Nasdaq held steady.
We have a lot of uptrend lines that are being tested this week. The XLI already broke its uptrend line, and so did the Homies. Now the DJIA has been red for nine straight days, something it has not done since 1978, so it, too, is oversold.
But the Utes broke, the Transports can’t seem to find a bottom, and the VIX pushed its way over 15 today. Yet, I sensed very little panic. Tomorrow we’ll see the FOMC and the market reaction. I am not sure I could even guess what the reaction would be. What I do know is that panic would be welcome. So we probably won’t get it.
I still think we get a rally near Christmas, but I also think we’re due a correction in the first quarter. I just hope that view doesn’t get too crowded.
New Ideas
Once again I do think we’ll get a Santa Rally in IWM off that line, but without a fast market it feels like it will be lethargic.
Today’s Indicator
The McClellan Summation Index is discussed above.
Q&A/Reader’s Feedback
Schlumberger SLB is at its September lows and one thing we have learned in the last month: bottom fishing hasn’t worked. Is it oversold? Definitely. But this stock acts like it’s in a bear market. If you want to catch an oversold rally in it, then this is the area but that’s the best I can say now.
Barrick Gold GOLD has support down here and it ought to bounce but my view on gold the commodity is pretty neutral (and has been for months) so I’m not sure where this can really go on the upside. If it bounces and can’t get over 17 before heading back down I’d be very cautious because that would imply a break of 16 on the next trip down.
Advanced Micro Devices AMD has become like an energy stock: no one wants it. And it’s not as though it has been a fast plunge down like it was in August, but rather a slow drip. It should bounce but again, where is it going on the upside? I just don’t see a base, I see the possibility for a trade. But I also thought we could get a trade out of it in early December. It couldn’t even rally ten bucks before it turned south again.
If it does rally watch 130 because failure to get over that is problematic.
