The Hot Stocks Aren't So Hot Now
The hot stocks aren’t so hot anymore, so it’s no longer covering up the leakage elsewhere. Plus, let's answer your questions.
You've reached your free article limit
You've read 0 of 1 free Pro articles.
The Market
The leakage that we’ve seen in the majority of stocks has started leaking into the fan faves. That must be why all of a sudden all the folks who a week ago were ‘full steam ahead’ are now cautioning us because…wait for it..sentiment is too bullish.
Yes, sentiment is still too bullish. But it was bullish a week ago when they were bulls themselves. The only difference is that all of a sudden their hot stocks aren’t so hot anymore, so it’s no longer covering up the leakage elsewhere.
The Utes, at one point today, were down 8% from the high. That’s a lot. And it doesn’t even get a mention. The Transports finally rallied. I’m still waiting for the Industrials (XLI) to have a green day from their uptrend line.
Statistically, the breadth was poor once again, so that’s six out of the last seven trading days it has been red. The good news? The more breadth is negative, the closer we get to an oversold condition. I would say if you want to set up for a true rally Christmas week, let’s have a few more days of negative breadth because that would do it, getting the market oversold next week as we head into the final week of the year.
We will see the CPI tomorrow and the PPI on Thursday, so maybe that puts a spark into the market, which has become quite lethargic.
One final note on the Dollar. I have not had a strong view on the buck for a while. I did late in November think it had gone too far, but that was all. Now it is trying to curl under and rally again. This time I would say I think that the 107-108 area is going to be decent resistance. You see the DSI for the buck is at 85 so on a rally up into that area, I am a seller.
New Ideas
Every time I am asked about UNG, an etf to be long Natural Gas, it seems to be at the low of the range. That makes the risk/reward easy for me. We buy near the low and sell near the high. Some day this pattern will change and then we will deal with it but until then, that’s the routine.
The other question is if I still like Borg Warner BWA because it has done absolutely nothing since I first eyed it with a positive eye a few weeks ago. I still like it. But I would give up on it if it breaks that 33 area.
Today’s Indicator
The McClellan Summation Index is heading down. It needs a net differential of +1400 advancers minus decliners on the NYSE to halt the decline.
Q&A/Reader’s Feedback
If Danaher DHR is going to turn into a bottom instead of just a trade we are going to have to see it start to map out something akin to what I have drawn in blue. Right now I think short term rally but if it can’t get over 245 that will be a failure.
I am still eyeing Amgen AMGN as a candidate to bounce in the new year, as we had a gap filled and completed a measured target on that whoosh down. I don’t think it is going to be able to overcome that resistance that begins around 300-310, but a gap fill near 295 would be a decent trade.
I would love to tell you Target TGT looks poised to have seen the low, but I do not trust it. Right now all I see is a gap fill to 145-ish. And likely not without a pullback first.
I continue to think Boeing BA can do well into 2025 as it is one of the most hated stocks out there. In fairness, I liked it at 150 before it went plop to 140. But I haven’t changed my view. I have a measured target near 180.
VF Corp VFC hit its measured target at 22, so now I would like it to go sideways for an extended period of time before I jump back on. But if you like jeans, I recommended Levi Strauss LEVI near 16 and I think it is buyable into the dip.
