A Tale of Two Markets

The Market

Today was mostly a sloppy day outside of interest rates, which I am pleased to report moved lower on the day. Lower rates means TLT rallied. Lower rates means the Utes rallied. Lower rates mean the REITs rallied.

But it’s not just that everything else sat it out today, it’s that much of the last week has seen a lot of sitting around in names that have been up a lot. Just look at the Transports. Sure, they are up and have had an upward bias, but they are mostly sideways over the last week.

A few weeks ago, I noted that Sclumberger (SLB)  which I had recommended way back last fall had run too far and needed a rest. It has spent the last three weeks resting.

And what if I told you that beloved Western Digital (WDC)  is trading the same place it was two weeks ago? It truly is!

But to me that just highlights the difference in my two Overbought/Oversold Oscillators. The NYSE finds itself above the zero line, pushing toward another overbought reading (later this week) and the Nasdaq finds itself still sitting below the zero line.

I have said all week that I think a pullback leads to another rally later in the week and I still think that will be the case, and then we’ll talk about the 493 getting back to an overbought condition by next week.

One final comment is on sentiment. The ISE call/put ratio for equities was below 2.0 again today. What strikes me is that the ten-day moving average has collapsed, much in the same way it did in November. Yet in November we had a correction that lasted a few weeks. This time we had one week of down and that was mostly in the software names. Has sentiment really changed that much? I honestly don’t know because this is the only place we see it.

New Ideas

I was asked for a target on Pfizer (PFE)  which has been creeping upward lately. I don’t have one yet. It needs to clear this resistance area. And then there is still resistance in the 29.50-30 area as you can see. So right now, my only plan is that I want to see it break out and then I would probably use a stop under 26.50 just to be sure it didn’t give it all back.

Today’s Indicator

The McClellan Summation Index is still rising. It needs a net negative of -1000 advancers minus decliners on the NYSE to halt the rise. That is not a big cushion considering how far we’ve run.

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.

Cleveland Cliffs (CLF)  seems to be trapped in a sideways pattern, unable to break out and unable to break down. For the time being I’d be inclined to sell a rally that fills that gets to 14-ish. Alternatively, if it falls to that 11 area, I’d suspect it holds.

Capital One (COF)  has not been able to lift off that second gap down which I find bothersome. But there is a decent amount of support in this 210-220 area, but I suspect it starts to stabilize in this area. I’d be inclined to nibble on it especially if it has one more trip down into that 210-ish area.

I would love to tell you Micron (MU)  is a terrible chart, but it isn’t. Is it vulnerable to a push to test that uptrend line? It is. But that is the worst thing I can say about it. In fact, a push down there would probably be a good shakeout.

I think we looked at Kinder Morgan (KMI)  about a month or so ago when it was emerging from this base (I was bullish). Up here it has done nothing wrong, but I can’t chase, especially when it has reached its first target (31.50). I would call this chart a strong hold. Some sideways action and/or a pullback into the 30-ish area would be a good digestion and a place to buy.

International Paper (IP)  is working on a base, albeit with some wild swings. There is some resistance up here in this 48-49 area. I would like to see it map out as I have drawn in blue.