Today's Market Was a Waste of Time. Reading This Analysis Is Not.
The market went nowhere today. But we have expectations for what it will do next. Plus, MCD, NUTR, HUMA, BAC.
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The Market
Today was truly a waste of time. Even stocks that rallied went nowhere. Stocks that sold off had the same issue.
I have said I thought we should get a rally this week. I have also said I think we get intermediate term overbought in late July/early August which is this week. That means I think we get one more rally. So let’s first explore the short term.
I noted my own Oscillator would dip under the zero line this week and it will probably do so by the end of Tuesday’s trading session. That leaves it a little bit oversold. That’s short term.
Then there is the Nasdaq Momentum Indicator which works on price. What I do here is plug in lower closes for Nasdaq to see at what point the Momentum Indicator stops going down and maybe even goes up. That occurs midweek this week.
What I have done on this ‘what if’ chart is walk Nasdaq down approximately one thousand points over the next week or so. What we see is that the indicator stops falling and starts to lift. That’s what makes it short term oversold.
Yet at the same time the intermediate term indicators are getting overbought (see the 30 day moving average of the advance/decline line below). Thus I suppose I am singing that old song of ‘one more rally’ before we head back down.
But what about the fact that I want to see the QQQs break that uptrend line? I do. I am hopeful that will happen sometime in the month of August. I believe that if we can rally short term now, then come back down in August—and maybe even break that uptrend line—we would get sentiment so bearish again that once we get the intermediate term indicators back to an oversold level we could then rally well.
New Ideas
I noted in the comments section this morning that McDonald’s MCD not going down on crummy earnings was bullish. I wouldn’t overstay my welcome because we’ve seen a lot of these pops that give it right back but if the stock can get to 270-275 I’d sell there.
Today’s Indicator
The 30 day moving average of the advance/decline line is discussed above.
Q&A/Reader’s Feedback
Humacyte HUMA had a nice breakout in May that met the measured target—in fact exceeded it. It has since corrected to test the breakout but this trip up that spike high is trouble and with the market getting to an intermediate term overbought condition I don’t think it can get through on this push up. If it can go sideways over the next 1-2 months I might have a more bullish view on it bur right now I am inclined to hold off on new buys.
Nutrien NTR is another stock that has gone nowhere in the year 2024. Is it bottoming? Possibly. Earnings are out next week and I’d say if it doesn’t crack under 48 in a major way –especially if it has bad news—then I’d be more inclined to start picking away at it.
I still don’t love the banks and that would include Bank Of America BAC. My guess is if it gets to that 40 area we’ll see a bounce but that’s the best I can say for now. The Bank Index reached its 115 target and now should need to do quite a bit of work before I warmup to this group again.
