When Nvidia Sits it Out, There's Room for the Others to Rally
Can it be? New highs for the broad market, even on a day when NVDA takes a break? Let's also look at bonds, plus XBI, SQ, NVO, CMG, ULTA, NOW, and HUBS.
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The Market
Well, at least we got the rally in IWM, even if the bonds shrugged and didn’t participate. I still think bonds are going to rally.
I realize that TLT slipped below the uptrend line and it is possible that we don’t recapture the line first but rather we have one more whack to the downside. But with the DSI now at 30, I think at some point in the next week or so this rallies.
As for Friday’s rally, it was broad, but all it shows us is that when NVIDIA NVDA sits it out, there is room for the others to rally and when NVDA is working there is no room for everything else. It used to be that way with Apple, so the market has just found a new shiny toy.
So while Friday’s action changed the trend that had been in place for a few weeks now, it didn’t change any of the indicators. That would require at least another day or two on the upside. It would be my preference for Monday to be down followed by another rally midweek.
The issue with sentiment is still the same, though. The DSI for the S&P is back at 81, and the VIX barely gave up anything on Friday, so its DSI is steadfast at 15. The rally may have broadened out on Friday, but as long as sentiment remains where it is, I don’t think this is a multi-week rally, just a short-term one.
New Ideas
About a month or so ago, we looked at some charts that had high bases, namely IGV and QQQJ. They have both broken out to the upside. These are not typically my type of charts as I like them down and out, but at the same time, I have acknowledged that most of these charts have done nothing all year. In that vein, XBI is an example.
I hate that it already moved 2.5% on Friday, but I like that it continues to make higher lows and it has that flat top. I would consider myself wrong if it breaks back under 95.
Today’s Indicator
The new highs improved, but not enough to fuss over. The Hi-Lo Indicator did fall to .53
Q&A/Reader’s Feedback
I was asked for a target on Block SQ a name I liked a few weeks back. It still looks like it is trying to base. The first spot it runs into trouble is that 72-73 area.
That’s a big head and shoulders top that Novo Nordisk NVO broke down from. But was it a false breakdown? My guess is it runs into resistance on the first run up to 123-125 but I think it’s too late to be bearish on this stock now. If it fell back to the 115-117 area and refused to break it would have a little W pattern.
Chipotle Mexican Grille CMG has too much resistance overhead for me to like it here. If it breaks under 56 it isn’t dire but it would confirm the chart needs more work down here.
Ulta Beauty ULTA looks oversold. I would like to see it map out something akin to the way I have drawn it in.
ServiceNow NOW hasn’t done anything wrong, but that base it broke out of measures to this 950-1000 area, so the chart feels vulnerable to me in terms of risk/reward.
HubSpot HUBS has an awful lot of resistance overhead start at 560 and all the way up.
