A Possible Palantir Top as New Lows Expand
Intermediate-term bearishness hits the indicators.
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The Market
I’m seeing a few more folks warn us to stay away from software. It doesn’t feel like full-fledged hate yet but it’s a heckuva lot better than what we saw yesterday. Maybe because the semis fell today too. As a reminder, I noted here Thursday evening that the SOX got overbought (having been oversold nearly two months ago).
And while I know it isn’t only about software and typically I am not a fan of the CNN Fear and Greed Indicator (just because I think there are several indicators in the make-up that have nothing to do with sentiment) I must laugh when I see that yesterday it was at 61 which is Greed. Today it skipped right over Neutral and into Fear at 41. It is almost worse than the day traders at AAII!!
I can also tell you that the ISE equity call/put ratio was 1.96 which is the first reading under 2.0 since mid December.
But the rest of the market saw very little selling. Breadth was slightly positive on the day. Over on Nasdaq where so much of the selling lives, net volume was flat. Oh sure we had one of those penny stocks in there that skewed the up volume by 1.2 billion shares but I’ll even rationalize it and take that out and still 44% of the volume on Nasdaq was up today, with Nasdaq down two percent.
Quite frankly I would have preferred today be up and tomorrow be down because I do show Nasdaq with the potential to get oversold by the end of the week. I don’t know if we rally tomorrow or not but I do think we see software bounce next week at the latest. Another down day or two would convince me of it.
One thing to watch is the number of stocks making new lows. While breadth was fine the number of new lows, on both the NYSE and Nasdaq exploded today. It would be good to see that contract.
I am going to end with a bit of intermediate-term bearish news. The ratio of the S&P to Nasdaq did breakout over the line today. It can still scoot back under because it is hard to see from across the room but as you can see, a breakout like this tends to lead to a sharper sell off in the ensuing months.
New Ideas
I want to start with a follow-up on Pulte Group (PHM) which you may recall I was bullish on at the beginning of the year. It popped and dropped and last week I was asked about it again and said it was as long as it held that line. It has now popped back to where it was in early January. There is resistance here at 135. I will give it a few days to chew through that but if it falters I will probably give up on it.
I was asked by several about Palantir (PLTR) so here’s my take. It looks like a top. But it hasn’t broken down. If it can get back up and over 170 that will save it.
Today’s Indicator
The McClellan Summation Index hasn’t rolled over. All it has done is stall out. A good breadth day will take it back up. The next few days are key.
Q&A/Reader’s Feedback
I admit I rarely look at Carrier (CARR) except when I am asked but I knew I liked it last time we looked so I was hesitant to bring up the chart and look at that, it has rallied. It has rallied right to resistance. That doesn’t make it a bad chart. But it is at resistance and earnings are out on Thursday so I don’t want to get aggressive here. If earnings pull it back into the 56-58 area I would think it is a buy because I think it would rally again. If it gaps up over the resistance at 62 then I would have to figure out where the next target is.
Ionis Pharmaceuticals (IONS) hasn’t done anything wrong yet. If it can get over this resistance around 85-86 then I would have a target in the low 90s but the 90/100 rule would be in effect (90% of the stocks that make it to 90 will make it to 100). A stop feels too far away at 75 so be cautious if it can’t get through the resistance in the next week.
I went to the weekly chart of Netflix (NFLX) because the support in the low 80s has been eaten through. The blue line (73-75 but rising as time goes on) would be the next support level but this stock has had no bounce in three months which tells me waiting for a base to build is the way to go.
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