The Market Is Up! And So Is the Number of Bears!
We got a real rally today accompanied by a change in sentiment. Let's look at the indicators to see if it's enough. And then, we'll look at META, APA, COST, and DIS.
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The Market
Finally a rally!
It couldn’t get over yesterday’s highs so in that respect it was disappointing. But there is more to discuss.
Yesterday we discussed how Nasdaq had some positive divergences, having made a new closing low and there were fewer new lows. You might have also noticed that earlier in the week, whereas I typically recommend ‘buying an index’ for a bounce I went with the QQQs.
I’ve been considering why I picked the QQQ instead of, say, SPY or IWM. They were all at similar support lines. But I think it was the sense that all of a sudden everyone was shying away from the Mag 7 type names. That’s what occurred to me today. Folks used to love to pour into those names but now they had gotten shrugs.
Yet that was where today’s rally was centered. Oh, sure, it was mostly across the board, but with all the negativity and the fact that folks have recently been gravitating toward the defensive names, that is not where they went today. Today’s buying was not in what has held up—see the Utes (which I still think are overdone up here).
Was it short covering? Maybe. But today, the index movers moved.
In any event, the upside volume chimed in at 85% on the NYSE so it doesn’t negate the 90% down day we had Monday but it is better than what we had on Tuesday which was not even over 80%.
The AAII folks turned bearish. The bulls fell off but they didn’t even drop to the levels we saw in April, rather back to the June low area (40%). But the bears soared. They are now the highest since the lows last year. Couple that with the move in the Investors Intelligence bulls (downward) yesterday and that’s a change in sentiment.
Sticking with sentiment, the NAAIM Exposure is still at 75 which surprises me but that is nowhere near where it was even in April when it got to 60. For me this reinforces the case that we should enjoy this rally while we can because we are likely to see some more downside after this.
New Ideas
I was asked about Meta (META:Nasdaq) last week after its earnings and I said I was a buyer on that gap fill around 470. It filled it and more! But look at this chart that has gone sideways since February. It’s got that spike high to contend with but that’s where all the resistance is. I would give the stock some leeway but it looks buyable to me, if you can stand the volatility it brings.
Today’s Indicators
The ten day moving average of the put/call ratio continues to rise. It is now at the levels we saw in April. This is a market positive.
Q&A/Reader’s Feedback
Disney (DIS:NYSE) finally filled the gap from last November so I would say he can now bounce. There is no base to speak of. First resistance shows up around 90-ish.
I would like APA (APA:NYSE) better if it hadn’t collapsed in the last week. But for now it has held 27 so it should bounce. Be careful if it breaks 27 though because that would be a new leg down. Just note that the stock has made lower highs and lower lows for a year now which is why a break of 27 keeps that pattern alive. Holding 27 gives it a chance to change it.
Costco (COST:Nasdaq) has some resistance at 850 but it held that uptrend line. If the stock pulls back toward that line I would probably be willing to buy it with a stop under the line because then it would offer a good risk/reward.
