Will Wednesday’s Fed Meeting Break Us Out of This Either/Or Funk?
The Market
Well, the semis did not bounce today. But I did notice something interesting.
As semis (let’s use my ‘go to’ WDC) rallied, drugs (let’s use JNJ, but I could have used MRK) backed off. That tells me the Either/Or Market remains undefeated.
Does that mean if I am correct—still a big IF—and the SOX/tech is to rally, does that mean the others will pull back? Well, that has been my theme for August, and so far, I don’t see a reason to change that. Until we see that these two groups can go up or down in the market together, that situation should stick with us.
Nasdaq has now been red for eight of the last nine trading days. So has the SOX. You don’t need me to tell you that means they are short-term oversold. As always, should we get the rally, I will assess the quality of the rally and the strength behind it.
Does sentiment toward the group stay bearish? Does it turn immediately to bullish?
In the meantime, the number of stocks making new lows on Nasdaq has still not exceeded 342, the peak reading we saw back in early June and again last week. Yet the Hi-Lo Indicator sits firmly at .35, so it hasn’t budged this week. It gets oversold under .20.
That leaves us in the same place we have been since yesterday: Nasdaq/tech/semis are getting short oversold this week. There has still been no rise in the VIX and no panic in the market as a whole. The put/call ratio is elevated but not ‘hysterical’.
Let’s see if tomorrow’s Fed meeting changes any of that.
New Ideas
There is someone who keeps asking about Oracle ($ORCL). Each time in the last few months, my response has mostly been ‘oversold short term, can bounce, but that’s about all I see’. I would not change that view except to note that the selling feels like it is drying up the last few days, and so the possibility of a bounce has gone up. It’s just a bounce, though.
Today’s Indicator
The McClellan Summation Index for the NYSE is still doing very little (despite all that broadening out!). Nasdaq’s continues to the downside.
Q&A/Reader’s Feedback
Helene welcomes your questions about Top Stocks and her charting strategy and techniques. Please send an email directly to Helene with your questions. However, please remember that TheStreet.com Top Stocks is not intended to provide personalized investment advice. Email Helene here.
There is a long-standing view (and I believe stats to go with it) that you buy the stock that gets kicked out of the Dow and sell the one that gets added. Thus far, Verizon ($VZ) vs Alphabet ($GOOGL) is playing out just like that. VZ has plenty of resistance up in this area, so for the time being, I’d be inclined to buy dips toward 46-47.
Vistra Energy ($VST) keeps trying to form a base, but the sellers will not allow it to get over 170. It needs to hold this 140-ish area. For now, I will call it a trading range between 140 and 170. Aside from that, I’m not even sure what to make of the stock.
Unusual Machines ($UMAC) is sort of interesting down here. It has decent support in the mid-teens but it needs to cross that blue downtrend line to improve. I lean toward liking this chart.
If you want to take a long-term view on SentinelOne ($S), you would say this is a base being built. I would say you don’t want to see it crack under 16-ish. It just may take a long time to work itself to get over 20.
Unity Software ($U) is a decent chart as long as it stays over 26. There is just a lot of resistance all the way up, starting at 34.
