Watching the Semiconductors for Clues
This remains an either/or market. But the semis are at an important point and we’re watching to see if they can rally here.
You've reached your free article limit
You've read 0 of 1 free Pro articles.
The Market
Note: I am going on vacation for the next two weeks. I will, however, write an edition of Top Stocks over the July 4th holiday weekend.
It was another chop-fest. Breadth using the advance/decline line was mildly positive with the S&P that was down. That’s good. When we put volume into the mix (up vs down volume) it was more in line with the S&P. That’s not so good. Or at least not good, it’s in line.
Over on Nasdaq, where six billion of the fifteen billion shares that traded were in two penny stocks, I’d say speculation abounds. I’m not great at math, but that is 40% of the volume, which by my standards is an awful lot.
The other good news is that the number of stocks making new lows did not increase today. That’s the first time in over a week.
But since it remains the semis world and we are just residing in it, the big test on Thursday will be if the either/or market continues and what will the SOX do. When I ask if the either/or will continue, I mean will the fact that the breadth held up this week, while the indexes drooped, be reversed? Maybe the indexes rally and the breadth becomes lackluster.
The other test for the SOX is if it can fill that gap up at 14500. So far, the chart still hasn’t done anything wrong. It hasn’t made a lower high, and it hasn’t broken the uptrend line. So that’s what I would watch for: a change in the pattern.
I would remind you that the Russell 2000 Momentum Index gets overbought sometime in the next week. When I perform the what-if, the date remains on or about July 1st, which makes sense because it would be right near the rebalancing and the end of the quarter.
Mostly, the market just remains sloppy except that the Utes finally crossed the downtrend line! It’s got resistance all the way up, but while everyone is focused on the Semis (as they ought to be), the Utes are up six percent this month.
As for the DSI, while GLD did not get all the way to 360, its DSI is now 10. So is Silver’s. And oil? That’s at 12. The US Dollar got to 83.
New Ideas
I have been eyeing Visa (V) for about a week now. If it can cross that downtrend line it would also cross the flattish line around 335. I think that would be a positive.
Today’s Indicator
The Volume Indicator remains mired in this 49% area. It can’t seem to get fully oversold (47%), and despite the big move in the Russell 2000 this month, it can’t seem to lift either.
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.
PayPal (PYPL) has become a serial disappointer, but there are trades to be had in it, so for the time being, I would say it’s got a chance at rallying to that 48 and maybe even 50 area. 48 would get it to the downtrend line, and 50 would fill the gap. I am wrong if it collapses under 40.
KRE an ETF to be long the regional banks, looks terrific. So why don’t I trust it? Maybe because I think the big banks had had enough of a run already. If it trades back under 73, I’d be cautious.
Nutrien (NTR) has just collapsed since it formed that island reversal in March. Each time I am asked to look at it, I believe I say short-term oversold enough to rally, but that’s it. I would say the same again. I would need to see a sign that it wants to hold before delving back in.
Papa John’s (PZZA) is trying to map out a base. I’d love to see it clear that 37-38 area. Sure, there is the spike at 39 that’s also a problem, but let’s start with chewing through 37-38 and crossing that line.
I am tempted to think this recent pullback in CDW (CDW) is the right shoulder of a head and shoulders bottom. I’ll be wrong if it breaks last week’s low; that would mean there is much more work to be done.
Mission Produce (AVO), for my taste, needs to do more work down here. But the stock trades so thinly that it might not matter. Look at how thinly it trades as you see the moves in September, December, and again in January.
Lionsgate (LION) is a stock in an uptrend. That means it’s not my style, but it hasn’t done anything wrong. It would need a lower low and/or break that uptrend line for it to have done something wrong.
I didn’t like GE Vernova (GEV) when we looked at it a few weeks ago. It had a terrific short covering rally about a minute after I said I didn’t like it. I have no idea what to do with it now. It stopped at resistance; it left those two days of trading overhead as an island (possible). For now, I’ll call it a trading range between the recent low near 900 and the highs near 1150. My confidence level on this chart is low.
Bloom Energy (BE) is about to leave the Russell 2000 later this week (the largest stock in the index), so I would prefer not to comment on it because when a stock leaves one index and moves to another, it tends to be out of the hands of the chart. I wouldn’t be surprised if it falls back near 240 or if it rallies again. Too many outside forces at work.
