A Tale of Two Markets. Nvidia vs. Visa.
Mega-cap investors continue to live well, while the rest struggle.
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The Market
Nvidia (NVDA) got saved. Visa (V) did not.
And that is pretty much the market we have. The leakage in the majority of stocks continues while the saving of the indexes continues.
Let me offer some good news. The lines broke intraday but not on a closing basis (thus the save). Even the Russell 2000 got saved by whooshing under the flat line and closing back over it.
The number of stocks making new lows did not expand. Now, I grant you the S&P did not make a new intraday low vs. Friday, November 7th, but it came close, and the number of stocks making new lows on the 7th was 126, and this past Friday was 43.
For Nasdaq, we did see a lower low (intraday), and the new lows on the 7th were 388, whereas on this past Friday, they were 359. Still high but no increase
Then there is sentiment. On an intermediate-term basis, the slower-moving indicators are still showing far too much complacency/bullishness for my taste. However, on a shorter-term basis, similar to last Friday, we saw the put/call ratio crank up over 1.0 on Friday. Last Friday saw 1.08 while this past Friday saw 1.04.
The ISE call/put ratio tells us something similar. It’s been a while since I have written about this, but the ISE equity call/put ratio has rarely fallen under 2.0 since the April lows. You can see on the chart of the ten-day moving average that the lows since April have been in the 1.95 area. In the last seven trading days, it has been over 2.0 only once. It has taken the ten-day moving average a smidge under 1.95. If you squint really hard, you can see it is trying to turn back up.
The bad news is that none of this is intermediate-term. Those indicators are still mostly pointing down, mostly pointing to a lot of weakness under the surface. And sentiment remains mostly complacent, which I guess is a minor change from two weeks ago when it was giddy.
New Ideas
The rare earth stocks have fallen out of favor (along with all the speculative names), but our old friend MP Materials (MP) did fill a gap, rallied, and is forming a small flag. On a trading basis, as long as it stays over Friday’s low (55-ish), it ought to make another try at 65.
Today’s Indicator
The new lows are discussed above.
Q&A/Reader’s Feedback
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I was asked where I thought EOG (EOG) measures to. I have had my eye on that 114 area. There is some resistance at 112 that ought to be a problem, but 114 is much more difficult to chew through in my view.
My stance on Microsoft (MSFT) hasn’t changed since September: as long as this 500 area holds these last five or six months, it’s just a consolidation, although clearly 550 is a tough area now, having failed up there twice. If the stock turns south from here and breaks 500, I will change my view.
I do not have a target on Nucor (NUE) , which I recommended last week, as it bounced off that line. Short term, it has trouble at 155, but as long as it holds over the line, it’s okay. More importantly, it needs to get itself up and over 150 in a hurry, or I will consider myself wrong.
