The Highs and the Lows and the 'Not Great' in Between

The Market

Bears are so disappointed that the market came back from its down move. Bulls are so excited that it did. So where does that leave us?

I think it leaves us where we’ve been. A market that still has some weakness underneath but the selling dried right up as soon as we went down. For example, the number of stocks making new lows did not increase more than we saw Monday — oh they came close, but no cigar. Yet Tuesday was the first day since the lows that there were more new lows than highs on both the NYSE and Nasdaq.

Think about that: We are pennies off the highs and there are more stocks making new lows than new highs. That’s not great action under the surface.

The intermediate term is overbought. Short term, the 493 are a little bit oversold so we get this group rotation and in the end it’s still semis that move the indexes. I thought Tuesday’s pullback in the semis was needed (but you knew that). Now let’s see if we can get some patterns set up.

I have been keying off the Midcaps, and as you can see, it’s not clear cut. The State Street SPDR S&P Midcap 400 ETF (MDY) broke under $670 but it closed right at it ($669). So I would give it another day or so to see if it can recapture it.

Everyone is still fussing over the bonds. I too would like to fuss over them. They keep threatening to break and the DSI is at 31 so it’s not as helpful as it was a week ago. Yet (TLT) has not yet broken.

So the market is overbought and thus far it is just a choppy mess.

New Ideas

I want to follow up on Philip Morris (PM) , which I recommended in late April. It has had quite a move the last two days, almost as if it thinks it’s a semiconductor stock! It’s up near the highs and so naturally I would sell some. I would like to see it consolidate and stay over $180. Then perhaps I would consider looking for another rally in the shares.

I was asked to update my view on Costco (COST) , which we had a great trade in from that late December low, but the stock hasn’t done anything since February. Now it finds itself pushing up against a strong resistance line. A breakout over that line would be quite bullish. Have they begun selling semis?!

Today’s Indicator

The McClellan Summation Index is still hovering. I believe one more down day and we might see it roll over. But thus far seven of the last 10 trading days had poor breadth and it hasn't been able to roll over. The next few days will tell us more.

Q&A/Reader’s Feedback

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My view on Apple (AAPL) for a long time has been that it goes into these long sideways moves and just when everyone thinks it’s done (going up) it seems to emerge again. I don’t see this move as any different. This move is a bit overbought but it has a next measured target in the $305-310 area. Sure it could use a pullback but that’s the worst I can say about it.

GE Vernova (GEV) is a stock in an uptrend. To me that means unless/until it breaks that uptrend line it has done nothing wrong. I mean I’d love it if the stock split so it would make it easier for me to post the hand-drawn chart but that’s it.

I don’t love the chart of Alphabet (GOOGL) just because it is stretched and in need of a pullback. I would like it to set up a new pattern. I’m not sure if it can get that far but if it can fill that gap around $355 that would be a buy.

SAP (SAP) is one of those software names that is trying to bottom but it’s unclear if this will be a bottom worth buying. If the stock can hold over $160 and then cross $180 I would take that as a sign the bottoming process is further along than it currently looks.

If Salesforce (CRM) can hold in this $170 area then I would say that’s good. Otherwise, the stock has yet to make a higher high or a higher low, which means it is still in a downtrend.

Raytheon (RTX) is finally enjoying an oversold rally. I would think it peters out around $185-190.

American Tungsten (TUNGF) should start to hold in this $1.60-1.80 area after a correction from $2.40. I would prefer if it doesn’t break under $1.60.

Almonty Industries (ALM) should be just fine as long as it holds over that uptrend line. Just be aware earnings are in about 10 days. I have a next measured target in the $27-29 area.

Innovative Industrial Properties (IIPR) has a decent chart but it is very small-cap so it trades with a lot of thin swings. In a more liquid stock we might say $55 is where it should stop, but in a less liquid stock like this one it might come all the way down to $52-53 first. What would be great is if it could just go sideways, quietly, in this mid-$50s area before heading up again.

Biogen (BIIB) is enjoying a nice lift and has done nothing wrong. It’s a bit over-extended but pullbacks in the mid-$190s ought to be okay with a longer-term target in the $230 area. I do not want to see it back under $185-ish.