It's Sad When a Streak Ends, but the Indicators Are Getting Overbought
So much for the winning streak in the QQQs. But perhaps the SOX can continue rallying.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
It’s so sad when a streak ends. I mean, who doesn’t love to watch a streak? We do it in sports all the time, so why not in markets? For example, I read last week that there have been zero no-hitters in baseball this season. That hasn’t happened since 2005.
There are all sorts of reasons this is, but the same way I don’t like to rationalize an indicator, we shouldn’t rationalize why there have been so few no-hitters this year. Of course, now that I’ve cited this baseball statistic, we’ll probably see five no-hitters as we head into the end of the season!
In any event, the QQQs ended their nine-day winning streak, but the SOX did not; it is now at nine straight days. And that means we head into the FOMC meeting a little short-term overbought.
In addition to being short-term overbought, the Daily Sentiment Index (DSI) for Nasdaq did not change on Tuesday (vs. Monday) as it chimed in at 84. That means if Nasdaq rallies on whatever Fed news we get, that DSI reading ought to scoot right over 85, setting us up for a pullback.
While I know all those seasonality folks have gotten awfully quiet since we haven’t had the seasonal pullback, I would note that I haven’t heard one person mention that next week is Rosh Hashanah, the Jewish New Year, and there is an old adage in the markets: sell Rosh Hashanah and buy Yom Kippur (the day of atonement). If we do manage a pullback later this week, I bet they start citing that one!
Mostly the indicators have not changed. The NYSE McClellan Summation Index is still trending sideways, which continues to be a little odd. Usually it goes up or down, not sideways. The number of stocks making new highs had a nice increase last week and has tailed off since. But the new lows have not picked up.
The Utes got whacked on Tuesday (I expect they will find support in the general area of last week’s low. The regional banks got hit as well. I don’t watch them as closely (I tend to focus on the bigger banks which did not get whacked) but this is the spot they should hold. If they don’t, I’d be cautious.
Energy picked up but take a look at the chart of DBC, the Invesco DB Commodity Index. This is a four-year chart and that is a base. A long one. If it were a tech stock, or more appropriately, an AI stock, folks would be salivating, but because it has 55% energy, no one cares.
Finally, I see several others are finally talking about the weakness in the restaurants now that the retailers had a good sales number and the stocks didn’t care. That’s the group rotation in this market. It’s constant.
