Speculation Leaks From Crypto 'Garbage,' Quantum Computing Into Penny Play
The speculative air from MicroStrategy and Quantum Computing has leaked out, finding a 12-cent autonomous vehicle name instead.
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Each day after the market closes, I put my pencil to the paper to hand post a pile of stock charts.
When you use as many pencils as I do, you can get particular about the pencil you use. I am quite particular, as you can imagine. My pencils are not cheap so when I say that these last few weeks have been a waste of good lead, I mean it! Tuesday was the worst though.
The chop fest we have been living in continues. And I would love to be able to pick a side but I can’t. I rely on my indicators to guide me and they too are a choppy mess.
Nasdaq continues to bother me because of all the speculation. It subsided for a time but now it is back with a vengeance.
I have complained about what I call the "crypto garbage." We can use (Micro)Strategy where we see it has done nothing for months now. Oh, it has a downward bias, but it has not broken yet. I am still not a fan.
Remember the quantum stocks and their flying higher on nothing? I complained loudly for days (was it weeks?). QUBT has managed to get cut down by two thirds. And there was no one diving into it on Tuesday. I have said that I continue to view this as a plus. When speculative stuff like this sees the air leak out of it, it’s good, not bad.
But here’s the problem: it’s like one giant group rotation when it comes to the speculation. They moved on from crypto to quantum. This week, they found some penny autonomous vehicle company to play. And when I say penny, I mean penny — the stock trades at 12 cents.
But you see on Monday it traded 2 billion shares. Tuesday it was around 1 billion shares.
Why is this important? Because Nasdaq had finally seen volumes return to somewhat elevated from extreme and I praised that. The last two days, thanks to these penny stocks, Nasdaq volume is back at 9.5 billion shares. With 20% of it being in a penny stock.
All the while, we see the number of stocks making new lows on Nasdaq rising. Tuesday brought us 213 new lows. That’s the most since February 3, when there were 234. Nasdaq is up about 200 points since then. In other words, there are these sorts of penny stocks on the run but there is selling going on, enough that stocks are making new lows.
Yet, over on the NYSE, the breadth hangs in there. It’s not good, it’s not great, it’s steady. The McClellan Summation Index is flat so despite all this chop the indicator has not turned down.
In the meantime I have my eyes on OIH, which is trying to get better. Three hundred is big resistance but this is another chart that has been sideways for six months that hasn’t broken down. Does it want to breakout to the upside?
