The Others Look 'Seasoned' for an Early July Rally
While not the setup I saw heading into the new month, there are a number of things lining up for those stocks left out of the recent fun, including seasonality. And playing now: Ford v Tesla.
You've reached your free article limit
You've read 0 of 1 free Pro articles.
Note: I am still on vacation. I will be back to my regular schedule one week from today. Wishing all a Happy Fourth of July!
The Market
Long-time readers will know that when it comes to seasonality trades you should not rely on me for any data. In fact, I am fond of saying that if there is a specific day or week of the year that is up or down 99% of the time and I decide to play that particular seasonality trade it will certainly be the 1% of the time it doesn’t work.
About two weeks ago I said that if we could get the market to be down in the final weeks of June I thought it would be a good set up for the "others" as we headed into early July. The statistics were lining up like that. We did not get the market down but we did get the S&P 500 flat as a pancake in the final week and the "others" up a bit.
That doesn’t leave us with the good setup I envisioned, but what I discovered is that there is now chatter everywhere about how the first two weeks of July are the best of the year. I don’t even want to check if that seasonality statistic is correct because it will surely mess with my head (see my luck with seasonality trades above!)
Here’s the best example I can give. The Volume Indicator, which gets oversold at 47% in bull markets (and the lower 40s in bear markets) has pushed down to 47%. That should leave the market in decent shape for a rally in early July. Yet the only other time I can find that this indicator has gotten so oversold with the S&P at its highs was February.
So we say fine, February was a good month in the market. But in February we didn’t have all the intermediate-term sentiment indicators leaning too bullish. For example, the Citi Panic/Euphoria had not yet crossed over to "Euphoria." The Investors Intelligence Bulls were still in the upper 50s, not the low 60s.
And we had not just had nearly four months of the others going nowhere (the RSP, the equal weight S&P, is trading where it was in early March). And the DSI for the VIX was not at 14, as it is now.
So can we rally? Heck, we should see the others lift in early July. If they can’t do it that ought to be a warning because the narrowness of the market is what has created this situation and narrow markets are not healthy.
New Ideas
I was asked if I still think Palo Alto Networks PANW can fill that gap overhead near $360. I do. But if it trades back under that $320 area I would consider myself wrong and give up.
Today’s Indicator
The HiLo Indicator for the Nasdaq is at 0.34. It gets oversold under 0.20.
Q&A/Reader’s Feedback
Helene welcomes your questions about Top Stocks and her charting strategy and techniques. Please send an email directly to Helene with your questions. However, please remember that TheStreet.com Top Stocks is not intended to provide personalized investment advice. Email Helene here.
Rockwell Automation ROK is trying to bottom. It also has a ton of resistance all the way up. I would like to see the stock cross that downtrend line that has been in place for an entire year. It would still have resistance (and therefore then pull back and retest that line) but the first step toward getting out of the malaise it has been in is crossing that line.
A few months ago I was asked about Ford F and I was not a fan but I want to come back to the chart because it tried — twice — to break $12 and couldn’t so as long as it stays over $12, it should get the benefit of the doubt now.
We finally got the move in Tesla TSLA. Now I want to move that stop up to $190-ish.
