The Speculators Have Entered the Building
When the top volume stocks include companies we've never heard of, it means one thing: speculators.
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The Market
We snapped two streaks today. The first has to do with the S&P. It had been nearly six weeks since the S&P logged back to back red days which was the longest streak in over 60 years. It’s not a big deal because the decline is minimal.
Another streak is that the SOX was red after so many up days. And now I’m watching the Russell which has now gone four straight red days. It hasn’t gone to five since early April. Nasdaq is working on five straight and it hasn’t gone more since early August.
None of these streaks are a big deal but I look for pattern changes which is why I obsess over them.
I am not sure what to make of the fact that the Nasdaq volume has begun to log in some very speculative readings. For eleven of the last twelve trading days (so that’s more than two weeks) Nasdaq’s volume has been positive (more up than down volume). That’s pretty unusual when you consider the Russell has now been red for four straight days.
Then there is total volume. The NYSE has seen it hover in the 3.2 billion share area but Nasdaq has four of the last six trading days with over 6 billion shares traded. Today Nasdaq clocked in at 6.5 billion shares. All the while the volume in QQQ has been tepid at best.
What does that mean? It means there is a lot of speculation going on, similar to the SPAC days. It is not even close to the level of the SPAC days but we saw a similar pattern then. Today I saw that the most active stock on Nasdaq was NVDA. But numbers two and three were two low priced stocks I had never heard of. One was a Singaporean stock. It’s got a great chart but that’s what I mean by speculative.
In any event, there was very little selling again today although in many spots but we’re starting to see some stocks with decent gaps down. Today was Nucor. Last week was CSX. And the Homies are down ten percent in a straight line. So the spelling is very specific.
For now we continue to be working off the overbought condition.
New Ideas
I find myself jotting down Workday WDAY on the positive side of the ledger ever since it filled that gap around 233. They don’t report earnings until late November.
Last week I recommended Philip Morris PM and it had great earnings and a big move up today so naturally I was asked about Altria MO. I don’t like it as much because it broke that big uptrend line but as long as it holds 49 I will give it the benefit of the doubt.
Today’s Indicator
The McClellan Summation Index is still heading down. It needs a net differential of +2000 advancers minus decliners on the NYSE to halt the decline.
Q&A/Reader’s Feedback
We looked at Intel INTC a few months ago when it first got to 19 and I was uninspired with it but I did note that the price was at the measured target on the downside. I still feel that way. I would love to see it break back into that 20 area and hold because that would help extend what I think is a stock trying to build a base.
Alibaba BABAF is in the middle of nowhere right now. The best news is that it has held this 100 area for a week now but there is no support there to speak of. If the stock fell to 95-ish I’d at least say it has some support there. What it could really use is a bounce and another decline because that would probably succeed in wringing out all those folks who were late to the party. The best thing that could happen to the Chinese stocks is everyone forgets about them. Again.
Logic would say that UNG, the US Natural Gas ETF, should bounce from this 13 area as it has done for the last few months. In that case the risk/reward isn’t terrible since if it cracks under 13 you know you’re wrong and we’re off to a new layer down.
